CONVEYANCER: a Conveyancer is a legal specialist who is qualified to act in a property transfer.
CONVEYANCING: this is the legal process involved in transferring the title of a property from a seller to a buyer.
VENDOR: this is another name for the Seller of a property.
PURCHASER: this is another name for the Buyer of a property.
DEPOSIT BOND: a bond is secured usually by a Company (ie. Royal & Sun Alliance). It is not an insurance policy but rather a guarantee that that Company will pay the deposit to the Vendor if the Purchaser cannot. However, it is not a loan and the whoever issues such Bond will sue the Purchaser for the deposit money, plus any other expenses, that Company incurs. The bond usually costs 1.2% of the deposit amount.
5 DAY COOLING OFF PERIOD: usually a Sales Agent will exchange Contracts. You usually pay a 0.25% deposit. During the 5 business days, you would usually make sure your loan is unconditional and that you have carried out your Pest and Building Reports, Strata Reports, etc. If you do not want to complete the purchase, you will have a right to get out of the Contract. You will advise this office immediately you do not wish to buy.
We will advise the Vendor’s Conveyancer/Solicitor in writing, as this is the only way you will be able to legally “get out of the Contract”. You will also lose the 0.25% deposit to the Vendor. In other words, only the Purchaser can get out of the Contract in this time and not the Vendor.
AUCTION: auctions are the most stressful way to purchase a property. You must be ready to buy the property when you attend the auction (strata, pest and building reports carried out, deposit, finance ready, etc). Once the hammer goes down and you are the successful bidder, you must buy the property. There is no getting out of it. Be very careful when you go to an auction.
VACANT POSSESSION or SUBJECT TO TENANCY: a property is either sold as vacant or sold subject to the existing tenant remaining in the property, either under a lease or an expired lease. If vacant possession is given, then upon your final inspection, you will inspect the property to make sure the property is vacant – however, it does not have to be spotless, just empty.
If the property is subject to tenancy, then the tenant will remain in the property and will be advised of the sale. You should contact them to make arrangements for payment of their rental unless you organise an agent to do this on your behalf.
UNCONDITIONAL APPROVAL: this is what you need to purchase a property (unless you have your own money and do not need the aid of a Bank). Your lender will determine when the loan is “unconditional” and you should receive a letter, in writing, from your lender stating that.
SEARCHES: These usually include a search at the Local Council, Water Board and Land Tax Office.
For example, if you are buying from a company, it might be necessary to carry out a search at ASIC; or if you are buying a house in an area where mining has taken place, a coal mining search will be necessary to ensure that there are no records indicating that the property is at risk; or, if you are buying in the countryside, rural searches might be necessary.
EXCHANGE OF CONTRACTS and EXCHANGING CONTRACTS: this is the event described earlier in this guide and which creates a contract binding on both seller and buyer. It is not possible to back out once contracts have been exchanged, at least without risking serious financial penalties.
DEPOSIT and REDUCED DEPOSIT: the sum paid by the buyer on exchange of contracts. Customarily 10% of the purchase price but, the amount of the deposit is becoming very much a negotiable item. 5% is often acceptable,
If you have difficulty in raising a deposit, perhaps because you are getting a 100% mortgage, we might be able to arrange for exchange to take place on the basis of a deposit bond. In return for an insurance premium, payment of the deposit in the event of your default is guaranteed by an insurance company. This office can organise such bond provided you have full loan approval.
SETTLEMENT FIGURES/STATEMENT: a financial statement showing how much is due on completion, which includes your proportion of council and water rates, strata levies, rental, etc.
DISBURSEMENTS: Some solicitors or conveyancers describe some of their own charges as disbursements, e.g. postage and photocopying. With Northern Beaches Conveyancing Service, these extras are not added to your account, they are included.
CONTRACT RACE: the situation which arises when a vendor decides to accept, subject to contract, two or more offers on their property and sell to the person who is first to exchange contracts. This is not a popular practice because it will lead to at least one person wasting the money spent on pest and building or strata reports and legal fees.
GAZUMPING: this describes the action of a seller who, having accepted a buyer’s offer, subject to contract, decides before contracts have been exchanged to accept a higher offer from someone else.
CHAIN: with the increase in homeownership, many people move by selling one house and buying another. So a significant part of the housing market depends on several people buying and selling their houses at the same time.