Useful Terms

The following definitions have been provided to assist you with your Property Conveyancing. 

Application fees – Fees charged by a lender, to consider your loan application.

Certificate of Title – The document issued by the Department of Lands indicating who is the owner (registered proprietor) of a parcel of land, or a lot in a strata plan, otherwise commonly known as a “Title Deed”.

Daily interest – Interest calculated on a daily basis.

Deposit – On exchange of a Contract the purchaser is required to pay a deposit being the payment of a percentage of the purchase price, which can either be 10% or 5%. The deposit is held by the stakeholder (usually vendor’s selling agent) in its Trust Account pending settlement. The Deposit can also be invested pending settlement with interest shared equally between the vendor and purchaser.

Deposit Bond – Used where a Purchaser does not have a “cash deposit”, usually provided in the form of a guarantee, issued by a bank. 

Guarantor – A party who agrees to be responsible for the payment of another party’s debts.

Holding deposit – A goodwill deposit paid by the Purchaser to the agent as a sign of good faith.

Joint tenancy – The common ownership of land by several people, with the right of survivorship; that is on the death of one joint owner, the land as a whole, passes to the survivor(s) without the need for a Will.

Lenders mortgage insurance (LMI) – Insurance taken out by the lender to safeguard against loss in the event of default by a borrower. The borrower pays a once-only premium. The insurance is for the benefit of the lender, not the borrower.

Loan to valuation ratio (LVR) – The ratio of the amount lent to the valuation of the property.

Mortgage – An interest in land for the purposes of securing the repayment of debt. A default under a mortgage by the Mortgagor (borrower) may lead to the Mortgagee (lender) exercising a power of sale of the property in order to obtain repayment of all of the debt.

Mortgagor – The person who mortgages his property as security for the repayment of the mortgage debt, or the borrower.

Mortgagee / Mortgage Holder – The person to whom the property is mortgaged, or the lender.

Positive Covenant – A condition imposed by, or for the benefit of a statutory body or local council that binds the owner of land to perform a specified act keep a stormwater retention pit free of debris.

Principal – The capital sum borrowed and owing, on which interest is paid.

Rate Adjustments – The calculation of the proportion of Council, Water rates, water usage, Strata Levies and Land Tax, (if applicable) payable by a purchaser to the vendor on settlement.

Registered Proprietor – The owner of a parcel of land or a lot in a strata plan, as noted on a Certificate of Title.

Security – An asset that a borrower offers to a lender, of which the lender can take possession and sell if the loan is not repaid.

Settlement cheques – The bank cheques handed over by a purchaser and/or his lender on settlement.

Stakeholder – The person, usually the agent, who holds the deposit in trust pending settlement

Standard variable loan – A loan product with comprehensive features such as an extra repayment option. The interest rate will fluctuate up and down depending on the market, and repayments on these loans can be either interest only or principal and interest.

Tenants-in-common – Where more than one person owns separate, defined portions of a property. For example; two people could own the property 50/50, 40/60 or even 10/90. If one person dies, their portion forms part of their estate rather than automatically inherited by the other owner(s) as it does with joint tenancy. Each owner can hold a specific share of ownership and has the right to dispose of their interest.

Unencumbered – A property free of a mortgage.

Valuation – A report detailing a registered valuer’s professional opinion of the value of a property’s value.

Vendor – The person selling the property.