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GLOSSARY

Just like in any specialist industry, real estate agents also appear to speak in their own language at times. To assist you in better understanding our language, we have provided the glossary below. Of course, please feel free to contact us if there is anything else that we may clarify for you.

Account sales
A statement provided by an agent to a principal (vendor) giving full account for all deposit money received in a sale less commission, advertising costs and other disbursements.

Act
A set of rules that has been passed by Parliament, received Royal Assent and become law.

Agent’s representative
An employee who is authorised in writing to act on behalf of an estate agent and to perform the functions of that agent as specified. Not a licensed agent.

Agents in conjunction
Estate agents from unrelated agencies, working together to undertake a transaction and who share the commission for that transaction.

Appraisal
An opinion of the market worth of a property without resorting to a full-scale valuation.

Assignment (of lease)
The transfer of a lease from one tenant to another tenant.

Auction of land
A public sale of property in which the highest bidder at or beyond the reserve price is normally the purchaser of the property.

Authority to act
A document signed by an estate agent and given to an employee (agent’s representative or another estate agent), authorising the employee to perform the functions of an estate agent as set out in section 4 of the Estate Agents Act.

Authority to sell
A legally binding document that is signed by the vendor. It details the agreement between the vendor and the agency. Many aspects of the authority to sell, such as commission, advertising costs and the authority period, are negotiable between the parties.

Bond
An amount paid as an assurance that the tenant will not breach the conditions of the tenancy, for example the tenant will pay rent and on vacating will leave the premises in a state of good repair and order. See security deposit.

Breach of contract
The breaking of one or more of the terms or conditions of a contract.

Building permit
A permit issued by local government authorities for the erection of a building or for structural alterations to a building.

Business day
Any day other than a Saturday, Sunday or a gazetted public holiday.

Buyer’s advocate
An estate agent who acts solely for the purchaser by sourcing suitable properties and representing the purchaser throughout the buying process.

Buying agent
An estate agent or an agent’s representative acting on behalf of a purchaser to arrange the purchase of a property.

Caveat
A note on the title that an interest in the land is claimed by a third party.

Caveat emptor
A Latin expression that means ‘let the buyer beware’; it is the purchaser’s responsibility to assess the quality of the purchase (the property or business) before buying.

Certificate of Completion
A document issued by a building surveyor on completing the final mandatory inspection of the property. It is not evidence that the building complies with the Building Act 1993 or building regulations. See Certificate of Occupancy.

Certificate of Occupancy
A document issued by a building surveyor, which shows that the building is suitable for occupation. It is not evidence that the building complies with the Building Act or building regulations. See Certificate of Completion.

Certificate of Title
A document that shows who owns the property, the size of the land and whether there are any limitations on the title such as mortgages, easements or encumbrances.

Chattels
Moveable personal property or furniture. Also referred to as ‘goods’ in the context of a sale of property.

Commission
The fee paid by the principal (vendor or landlord) to the agency for undertaking a transaction relating to the sale, purchase, leasing or management of property. The amount of commission is negotiable between the principal and the agency. It may be either a flat fee or a percentage (or a combination of both) of the purchase price or the rental collected.

Commission income
The income that accrues to salespeople from their share of the commission that an estate agency earns from the sale of property.

Common law
The system of laws originated and developed in England and based on court decisions, on the doctrines implicit in those decisions, and on customs and usages rather than on codified written laws.

Common property
Areas of a property that are used by and belong jointly to all the owners of a strata title property. This applies to common driveways, paths, courtyards, stairs, passageways, lifts, lobbies, fences, common garden areas and other facilities in multi-dwelling complexes.

Condition report
A report on the condition of residential property to be leased where a bond is to be taken. The condition report must be completed by the agent and given to the tenant before the tenant takes possession of the property. The tenant must sign and return one copy of the condition report within three business days of occupying the premises.

Contract of Sale of Real Estate
A legal document prepared by the vendor’s solicitor that outlines the conditions of the sale. The contract of sale is legally binding when signed by both the purchaser and the vendor.

Conveyancing
Transferring the ownership of a property from the vendor to the purchaser. It is often performed by a solicitor or conveyancer.

Cooling-off period
The period of three clear business days after the purchaser signs the contract of sale for residential or rural property of not more than 20 hectares, during which the purchaser may withdraw from the purchase. The cooling-off period does not apply in certain circumstances, including where property is sold by auction.

Co-owners
Where a number of people have joint ownership of a property. See tenants in common and joint tenants.

Co-owner bid at auction
A genuine bid by one or more of the co-owners of a property to purchase the property.

Counter offer
A new offer as to price, terms or conditions made in reply to a prior unaccepted offer. that creates an obligation on the owner of a property not to do something. For example, a covenant could state that no more than one dwelling may be built on the land. A covenant runs with the land and the liability to comply with it or the right to take advantage of it passes from owner to owner.

Covenant
In real estate, a covenant is an agreement.

Damages
Money ordered to be paid as compensation for injury or loss.

Deed
A document in writing where an agreement is reached, obligation entered into or property conveyed. It is signed under seal.

Defect of title
Any matter, for example an encumbrance or an illegal structure built without a permit, which restricts the purchaser from obtaining a clear title to the property.

Deposit
An amount of the purchase price paid by the purchaser, usually at or around the time of making a written offer. It is usually 10% of the purchase price. The deposit must be held in a trust account by an estate agency or by the solicitor or conveyancer, or may be held jointly in a trust account by the vendor and purchaser.

Disbursements
Expenditure by the estate agent on behalf of the principal including, for example, advertising expenses, rates, taxes and insurance.

Domestic building insurance
Insurance taken out by builders to protect home owners from loss arising from defects to a building or for incomplete work. Builders must take out domestic building insurance for most home building or renovations with a contract price over $12,000. However, the insurance may only be claimed against where the builder has died, is insolvent or has disappeared.

Dummy bid
A false bid made or accepted by the auctioneer. Dummy bids can include bids made by a non-genuine bidder and ‘fictitious’ bids pulled out of the air by the auctioneer. Any bid made on behalf of the vendor by anyone other than the auctioneer under the auction rules is considered a dummy bid. Dummy bidding is illegal.

Duration of lease
The period of the lease. The remaining time for which the property is leased. Also known as the lease term.

Easement
A right held by one person to make use of the land of another. For example, land set aside for drainage and sewerage pipes.

Encumbrance
A third party’s right that obstructs the unencumbered use or transfer of a property. Examples are easements, mortgages and caveats.

Enforceable undertaking
A promise in writing that is enforceable through the Magistrates’ Court.

Estate agent
A licensed person who is authorised to act on behalf of another person to bring about the sale, purchase, lease or management of a property or business.

Estimated selling price
The price an estate agent estimates a property will attract. It must be recorded on the authority to sell as either a single figure or as a range where the difference between the top and bottom figures does not exceed 10%, for example, $400,000-$440,000.

Ethics
The standards governing the conduct of real estate practitioners. The standards may be set in legislation or by an industry body and are based on the principle of right conduct.

Exclusive agency authority
The vendor appoints a single agency and, regardless of who is the effective agent of the sale or lease (including the principal or another agency), the appointed agency is entitled to the commission.

Extension of lease
An agreement extending or renewing the terms of a lease for a period beyond the initial termination date.

Fee simple
The fullest and highest possible ownership of property. Ownership of unlimited duration, where ownership passes to heirs or beneficiaries on the owner’s death.

First Home Owner Grant
A scheme funded by the Victorian Government that provides first home owners with a non-means tested one-off payment. More information can be found at .

First Home Owner Boost
A scheme funded by the Australian Government that provides a one-off non-means tested grant for people entering a contract between October 2008 and December 2009 to purchase their first home.

Fittings
Items that can be removed without damaging the property, such as garden ornaments, lighting and drapes. They must be listed in the contract of sale if the purchaser wants them to remain with the property.

Fixed term tenancy
A tenancy where there is an agreement that ends on a specified date. Except where the tenant has breached the law or the tenancy agreement, the landlord is not entitled to terminate the tenancy agreement before the expiry of the fixed term. On expiry, a fixed term tenancy automatically continues as a periodic tenancy.

Fixtures
Items that are attached to the property and cannot be removed without causing damage to the property, such as bathroom suites, built-in wardrobes and kitchen stoves. They are usually included in the sale.

Freehold
See Fee simple.

General law title
The original system of land titles. A general law title comprises all the documents that show a property’s complete historical record of title ownership. For the title to be ‘clear’ it must be traceable for a minimum of 30 years without a break, up to and including the current ownership. When the property is resold, the title will be converted to a Torrens title. See Torrens title.

Goods and Services Tax (GST)
A consumption tax of 10% levied on the final consumer of the goods or services. The supplier of the transaction is responsible for collecting the GST and sending it to the Australian Taxation Office.

House
A building in which people live; a residence for human beings.

Implied easement
An encroachment upon property that is not expressly noted on the title but is needed, for example for access or light.

Improvements
All work done or material used on and for the benefit of the land that improves the values of the land. Does not include work done or material used for the benefit of the land by the Crown or by any statutory public body. Improvements can take the form of, for example, buildings, fences, driveways and retaining walls.

Insolvent
A person who has ceased to pay debts in the normal course of business and is bankrupt or in an administrative arrangement with creditors.

Insurance
A method of guaranteeing or indemnifying an individual or company against loss from a specified hazard. For the payment of an agreed premium, the insurer issues a policy to the insured that gives financial protection for a stated period of time.

Investment property
Property in which a person invests to get a return on money.

Joint tenants
The form of ownership where two or more people purchase a property in equal shares and if one dies, that person’s share of the property passes to the surviving ownerls. See co-owners and tenants in common.

Landlord
The owner or head lessor of leased property.

Land usage
The use being made of land or the uses permitted under zoning ordinances. Zoning ordinances act to control land usage in a community.

Late bid
A bid that is made by a prospective purchaser after a property has been knocked down at auction to the successful bidder.

Lease
Document detailing the conditions agreed between the landlord (lessor) and the tenant (lessee). ‘Lease’ is the preferred expression for commercial and industrial property. ‘Tenancy agreement’ refers to residential property.

Leasehold
Property held under a lease that is to continue for a period of time.

Leasing
The activity of sourcing a tenant, negotiating rental and ensuring that all the legal documentation and requirements are completed before the tenant takes possession.

Legal capacity
Capacity to legally enter into a contract.

Legislation
Laws in the form of Acts and Regulations enacted by a state government or the federal government.

Lessee
See tenant.

Lessor
See landlord.

Licence (estate agent, conveyancer)
Formal permission from a government authority to undertake real estate transactions on behalf of other people.

Listing
The agency obtains the written authority of the principal to act on the principal’s behalf and records the property or business as being available for sale or for lease.

Listing agent
The estate agent or agent’s representative who lists the property on behalf of the estate agency.

Maintenance
The process of keeping a property in the condition appropriate for its use.

Managing agent
An estate agent who manages the property on an ongoing basis on behalf of the landlord. Management includes, for example, collecting the rent, lodging and claiming the bond, inspecting the property and advising the landlord on maintenance, resolving disputes and representing the landlord before VCAT.

Mortgage
A written contract giving the lender of finance certain rights over specific property, for example, the house being bought by the borrower being encumbered as security for the loan.

Mortgagee
Person or organisation that lends money under a mortgage agreement.

Mortgagee sale
If the mortgagor (borrower) defaults on the mortgage, the mortgagee (lender) can seek to recover the debt by selling the property that was the security for the loan under the mortgage.

Mortgagor
A person who takes out a mortgage on a property.