23 Real Estate Jargons First-Time Buyers Need to Know

If you’re new to the real estate market, it’s perfectly normal to feel overwhelmed by the industry-specific terms and phrases you encounter. Many aspects of the buying process are legally binding, so understanding this jargon is crucial to making informed decisions.

At Ouwens Casserly, we’ve compiled a list of common real estate terms to help you navigate the property market with confidence.

1. Settlement

Settlement is the day your conveyancer transfers the remaining funds (excluding the deposit you’ve already paid) to complete the purchase, and the property officially becomes yours.

2. Cooling-off Period

The cooling-off period is a legally mandated 2-business-day timeframe that allows purchasers to reconsider their decision after receiving the executed contract or Form 1 document. There are no extensions allowed, and it doesn’t apply to properties bought at auction.

3. Certificate of Title

The Certificate of Title is a deed indicating ownership of the property. It contains important information such as ownership details, mortgages, easements, and encumbrances. Registering changes to this document typically incurs a fee.

4. Conveyancer

A conveyancer is a licensed professional who represents buyers and sellers during property transactions. They prepare essential documents like the memorandum of transfer and handle settlement arrangements.

5. Discharge of Mortgage

This document, prepared by a conveyancer, releases a property from its mortgage when the seller has an existing loan. The bank must receive the original document—copies are not accepted.

6. Memorandum of Mortgage

Prepared when a buyer takes out a loan, this document registers the mortgage on the new owner’s Certificate of Title as part of the transfer process. Only original documents are accepted.

7. Memorandum of Transfer

This document transfers ownership of the property on settlement day. Both parties must sign it, and it is lodged with the Land Titles Office (LTO) by each party’s conveyancer. Originals are required.

8. Stamp Duty

A compulsory tax paid by the purchaser, typically around 5% of the property’s value. It’s an additional cost, separate from the purchase price and deposit. Some exemptions may apply—check the government website for details.

9. Power of Attorney

This legal document authorises someone to act on behalf of another person. In real estate, it’s often used when a seller, such as an elderly parent, appoints someone to manage their property transactions.

10. Waiver of Cooling-off

A waiver document allows a purchaser to forgo their cooling-off period. It must be signed in the presence of a solicitor, who will explain the legal implications and associated costs.

11. Special Condition / Subject to…

This clause in a contract specifies conditions that must be met before settlement. If unmet, either party can withdraw. For example, if your purchase is “subject to finance” and your loan application is declined, the contract is void.

12. FHOG (First Home Owner’s Grant)

This government rebate is available to eligible first-time buyers of new homes. Certain criteria must be met, and the grant can only be used for new build contracts. Check the relevant website for more information.

13. Settlement Statement (Adjustments)

A document prepared by your conveyancer outlining the financial summary of the purchase. It includes the purchase price, deposit, rate/tax adjustments, conveyancer fees, and agent commissions.

14. Finance Broker

A licensed professional who helps buyers secure loans by assessing their financial situation and presenting suitable options from different banks. Finance brokers are usually paid by the lender, meaning their service is often free to you.

15. Vendor

The current owner of the property being sold.

16. Purchaser

The individual or entity entering a contract to buy the property.

17. Form 1 (Vendor’s Statement)

A legal document that discloses essential information about the property, such as the Certificate of Title, water rates, encumbrances, and council rates. It must be accurate and signed off by the vendor.

18. Easements

Easements are restrictions on the property, such as sewer or water pipes running underneath the land. These must be accessible at all times and may affect the usability of the land.

19. Encumbrance

An encumbrance is a legal agreement that affects how the land can be used. These are common in new land estates or properties developed as part of a larger project.

20. Right of Way

A Right of Way indicates that someone else has legal access to a section of your property, often for access purposes.

21. Lien (Caveat)

A lien or caveat indicates someone’s right to claim a debt against the property. For instance, a lien holder must be paid before the vendor receives proceeds from a property sale.

22. LMI (Lender’s Mortgage Insurance)

LMI protects lenders if a borrower defaults, and the property is sold at a loss. If you borrow over 80% of a property’s value, you may be required to pay LMI, which is typically added to your loan.

23. Probate

Probate is a legal process authorising an executor to manage and sell property as part of an estate. This differs from a will, which only nominates the executor. Probate must be granted before the property can be sold.