Glossary of Property Terms
When buying or selling a property you will hear a lot of terms that may not be clear to you when you start. Here's our CENTURY 21 insider's guide:
- Authority to sell: this legally binding document signed by the seller details the agreement between the seller and the agent.
- Body corporate: when a property is on strata or community title each owner, for example in a block of flats, becomes a member of the body corporate. This group is responsible for the maintenance of the common property like walkways, lifts, gardens etc. As a lot owner you will pay a contribution to the body corporate, generally on a quarterly basis. Always factor in the body corporate fees when assessing whether to buy a property, as this cost is on top of your council and water rates, and any other regular property ownership outgoings.
- Buyer's agent: will search for properties for you, conduct background checks on the property and area, negotiate with agents and bid at auction for you. Payment may be a percentage of your purchase price or a flat fee.
- Capital Gains Tax: based on your marginal income tax rate in the year you sell an investment property, this tax applies to the gain your property has made between buying and selling, less inflation.
- Certificate of title: the document that shows who owns the property as well as all the associated detail of size, whether there is a mortgage registered on the title, etc. Your solicitor or conveyancer will conduct a titles search as part of your purchase procedure.
- Commission: paid by the seller of a property to the estate agent, generally on the sale of the property and usually a percentage of the selling price. This commission is negotiated in advance and stated in the 'Authority to Sell' document.
- Conveyancing: the legal process of transferring the property from one owner to another, including all appropriate checks and searches. Your conveyancer will usually liaise with the other party's conveyancer to arrange deposits and settlement payments.
- Depreciation: you may be able to claim depreciation on an investment property based on the time you have owned it.
- Negative gearing: when the costs associated with owning an investment property exceed the income received in that tax year. This may be offset against the tax you pay on other income that year.
- Open for inspection: a set time each week when a property will be open to the public.
- Reserve: the price set by a seller as a minimum at auction – once this price has been reached at bidding, the property is 'on the market' and will be sold under the hammer to the highest bidder.
- Settlement: the date on which the sale of a property becomes final and the title passes from one person to another. The balance of the sale price is paid on settlement day and the new owner takes possession.
- Vendor: the person who owns and is selling a property.
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