References
Accredited Valuers
See Valuer (below)
Actionstep and Internet Security
Actionstep is our secure, cloud-based client management system. See the Actionstep “Terms of Use” for information about privacy and security.
Additional Costs
This refers to costs chargeable when we undertake tasks that are outside of our fixed-fee.
See Costs – Additional Costs below.
Advance Care Directive
An advance care directive is a legal document made under the Medical Treatment Planning and Decisions Act 2016.
In an advance care directive, you can write either or both:
- an instructional directive with legally binding instructions about future medical treatment you consent to or refuse
- a values directive which documents your values and preferences for your medical treatment decision maker to consider when making decisions for you.
To make an advance care directive you must have decision-making capacity to do so.
More about Advance Care Directive >>
Adverse Possession
This is an old doctrine that says, basically, that where an intruder onto land remains in possession of the land for a period of time (generally 15 years) then that person acquires ownership of the land.
More about Adverse Possession >>
Agent
Most people have some understanding of the terms “agent” or “agency”, but few know the correct meaning of the term. Agency involves representation, and the taking of responsibility on behalf of the client (known as the principal). In real estate the use of the term “agent”, to describe a commission estate agent, can be quite misleading.
Most so-called real estate agents are really agent representatives.
Agent Representative
The average “estate agent” who deals with consumers on a day to day basis is NOT a licensed estate agent at all, but merely an “agent’s representative” or “agent’s rep”, and neither the licensed estate agent, nor the agent’s rep are agents in the true sense of the term. In fact, the High Court of Australia has said that using the term “agent” when referring to an estate agent is “misleading“. By comparison, a lawyer is an agent in the true legal sense, providing full representation for the client.
So, what exactly is an agent’s rep? According to the Estate Agents Act 1980:
“agent’s representative means any person who is not a licensed estate agent but who is employed by a licensed estate agent
and who performs for that estate agent any of the functions of an estate agent…”
Becoming an agent’s rep is quite simple. No real estate knowledge or experience is required, and a quick part-time training course will
qualify anyone for immediate employment as an agent’s rep. As the CEO of the Real Estate Institute of Victoria acknowledged:
“Entry-level requirements (for those entering the real estate industry) are far too lenient and low – at present you need a 50 hour course to call yourself an expert.”
(Enzo Raimondo, quoted in the Sunday Herald Sun October 13, 2002 p.78)
Agent Taint
“Agent Taint” occurs where a Vendor cannot accept an offer from a Purchaser without having to pay a commission to the estate agent, even though the Exclusive Sale Authority has been ended. Every person who has in any way become aware that a property is for sale, during the period of the Exclusive Sale Authority, is tainted, because of the likelihood that the estate agent will claim commission if the property is sold to them.
Appraisal
“Appraisal” is just another term for valuation, but is used instead of the word “valuation” because estate agents are not permitted to provide true valuations on real estate. Only an accredited valuer can provide a genuine property “valuation”.
See our section Valuers vs Estate Agents >>
Auction
An auctions is a form of sale where potential purchasers make competing offers or “bids”, with the person offering the highest bid being declared as the purchaser. Unfortunately, the auction concept is falling into disrepute with regard to the sale of real estate. This is because many of those who promote real estate auctions tend to resort to tricks and deceptions in order to make the concept work.
See our section Auctions – Tricks & Tips >>
Bait Pricing
This is a trick that involves marketing a property at a price that is lower than a price acceptable to the vendor. Estate agents using bait pricing tell vendors that it will attract more buyer interest in the property. Any form of marketing that involves “invented” figures is fraudulent.
See Price Ranges below.
Best Practice
The term “best practice” is used to describe a way or method of accomplishing a business function or process that is considered to be superior to all other known methods. Lawyers Conveyancing has been certified as a “Quality Endorsed Legal Practice” to the rigorous standards required under LAW 9000. An example of “best practice” methodology is our approach to real estate negotiations.
More about “Quality Endorsed Legal Practice” >>
Body Corporate
Now called an owners corporation. See “owners corporation” below.
Body Corporate Certificate
Now called an owners corporation certificate. See “owners corporation certificate” below.
Buyer’s Agent
A buyer’s agent or buyer’s advocate is simply a commission estate agent who requires the purchaser to pay a commission in return for being introduced to a property. The concept of the buyer’s agent is quite misleading, as the buyer’s agent does not have the legal skills or qualifications to properly negotiate the purchase of real estate, and must always refer the client to a lawyer in all but the most simple of transactions.
Caveat
A caveat is a means by which a Certificate of Title at the Land Titles Office can be “tagged” to show that someone has an interest in the property.
A caveat prevents the Registrar Of Titles from registering another interest against the title without first giving notice to the person who lodged the caveat. Generally speaking, once a caveat has been lodged against a property, nothing else can be lodged against the property without the consent of the person who lodged the caveat.
Certificate of Occupancy
A simple explanation:
As the name implies, the Certificate of Occupancy certifies that a home can be lived in. It is a requirement of most local government or shire councils that an occupancy certificate be issued prior to the purchaser of a home taking occupation.
More about Certificates Of Occupation >>
Certificate of Title
Imagine a huge book kept at the Land Titles Office, in which every block of land in the State of Victoria has its own page. Of course, such a book would have many volumes and many pages (folios). If you wanted to identify a particular block of land, you would find out its volume and folio number, and use these numbers to look up the relevant page. To find out who owns the land, you would simply turn over the page, and see whose name was last added to the page. This person is the owner. But where do you find the Volume and Folio numbers? Click the following link to find out…
More about Certificates Of Title >>
Certification
The planning authority “certifies” a plan of subdivision when it is satisfied that the plan is in compliance with the all requirements. Upon certification the plan of subdivision is lodged at the Land Titles Office.
Certified Copy
A true copy of an original document that has been sighted and certified by an authorised person* and noted as follows: ‘I certify that this document is a true and complete copy of the corresponding page of the original’. This certification must have the certifier’s name, title, registration number (where applicable) and be signed and dated.
*An authorised person includes:
- Legal practitioner
- Justice of the Peace (JP)
- Magistrate
- Notary public
- Police officer
- Dentist
- Veterinary practitioner
- Pharmacist
- Certified Practising Accountant
- Member of Parliament
- Minister of religion
- Medical practitioner
- Officers of the State Revenue Office.
Chattels
See Fixtures & Chattels (below)
Choosing a fixed fee service
We have prepared a list of some of the more common non-standard conveyancing transactions to extend our range of fix fee services. If your matter is standard conveyancing, just leave the window as it is. Or, if you matter is of a non-standard type, please make your selection from the drop-down list of options.
Client Dumping
The term used to describe the “sacking” or “firing” of a client by a Licensed Conveyancer, usually at short notice. Commonly used to get rid of a conveyancing matter that has become too complicated, too time-consuming, or where the client is perceived as troublesome. The Conveyancers Act 2006 recognises that sometimes a conveyancing matter may have to be referred to a lawyer for expert attention, and allows a Licensed Conveyancer to “dump” a client in certain circumstances.
Client Dumping
The term used to describe the “sacking” or “firing” of a client by a Licensed Conveyancer, usually at short notice. Commonly used to get rid of a conveyancing matter that has become too complicated, too time-consuming, or where the client is perceived as troublesome. The Conveyancers Act 2006 recognises that sometimes a conveyancing matter may have to be referred to a lawyer for expert attention, and allows a Licensed Conveyancer to “dump” a client in certain circumstances.
Commission Estate Agent
This term is used to differentiate between the licensed estate agent who operates under an “Estate Agents Licence” and an agent in the representative sense.
The average estate agent is not really an agent in the true sense of the term. In fact, the High Court of Australia has said that using the term “agent” when referring to an estate agent is “misleading”.
In comparison, a Lawyer Estate Agent is an agent in the true legal sense, providing full representation for the client.
Commission Rage
“Commission Rage” is the term we use to describe a form of commission-driven greed, that causes otherwise decent individuals to engage in improper behaviour.
Common Property
This is the land on a plan of subdivision that does not form any of the lots, but is the subject of shared ownership by the Lot owners as members of the body corporate. Common property may take the form of land, air space, space below the ground or buildings.
Company Ownership
A company is a corporate person (see definition of “corporate person” below) for the purposes of land ownership, and so a company can be registered on title at the proprietor (see definition of “proprietor” below) of land.
Company Share Scheme
This was the first type of “unit” development. While it appears to be similar to a strata unit development, is really quite different.
More about Company Share Scheme Properties >>
Concessions and Rebates on Purchases
There is a wide array of concessions/rebates available to purchasers of real estate.
As we are unable to match the precise circumstances of a particular client with specific options available, we advise that you should undertake due diligence by visiting the website of the State Revenue Office of Victoria, and their various Calculators, to determine whether any entitlements are available in relation to this purchase.
We also recommend the ASIC Property Investment page. Finally, eligibility for the various concessions/rebates can alter according to the way you structure your finances, including the way you “own” the property (e.g. a financial adviser may recommend ownership by a company, rather than in the names of individuals). For this reason, we also strongly recommend that you obtain financial advice from a qualified adviser if you have any doubts about your position – see the ASIC Financial Advice page.
Conditioning
Conditioning is the term used to describe a process of convincing the vendor to accept a lower price, in order to bring about a sale and to secure a commission for the estate agent.
There are many forms of conditioning, including the following:
- Estate agent falsely states that the market has “slumped” in order to have the vendor accept a low price.
- Estate agent provides false low “offers” so that the vendor is more likely to accept a slightly higher genuine offer.
- Estate agent finds “faults” in the property, using them to “talk down” the vendor’s asking price.
Conditioning essentially involves a conflict of interests, often includes misleading and deception conduct, and may lead to criminal deception.
See also “Deception in Real Estate” below.
Conditions
Conditions are the “rules” of the Contract of Sale. They tell the parties who is responsible for what, the dates by which things must be done, and what will happen if things are not done as agreed. Conditions take the form of General Conditions (which are standard inclusions in most Contracts) and Special Conditions (which are inserted in particular Contracts by one or other of the parties. It is most important that the estate agent is never permitted to draft or insert special conditions into the Contract.
Conflict of Interests
A conflict of interests occurs when a person who has a duty to act in the interests of a client also has a duty to act against the interests of that same client. A conflict of interests also occurs when a person who has a duty to act in the interests of a client is in a position where he/she may be tempted by money or some other motive to act against the interests of that same client.
More about Conflict Of Interests >>
Contract of Sale
The Contract of Sale is the term used to describe the document prepared by a lawyer, and used to formalise the sale of real estate. However, the word “Contract” has more than one meaning:
| 1. | Contract can mean an agreement; or |
| 2. | Contract can mean the document that sets out the agreement. |
Contract Note
This is another nasty device used by estate agents (see also the “Exclusive Sale Authority”). The name of the document is the first trick – Contract Note. To most people the term “Contract Note” suggests that the document is something less than a Contract, and that a real Contract will be drawn up later.
Playing along with this misunderstanding, many estate agents never use the word “Contract” – they simply call the document an offer, saying that it is not a Contract unless it is accepted.
Strictly speaking, this is true. A Contract does not come into being until there is an “offer” by one person and an “acceptance” of that offer by another. The problem is that the person who signs the offer only discovers that it has become a Contract when the agent rings to say “congratulations, the Vendor accepted your offer, can you come in and pay the full deposit.”
Most estate agents use and prefer the Contract Note over any other form of Contract. This is because the Contract Note allows the estate agent to take control of the sale closure.
More about the Contract Note >>
Conveyancer – Licensed Conveyancer
The Conveyancers Act 2006 was introduced after the Victorian government intervened to stop untrained, unqualified and inexperienced non-lawyer conveyancers from taking advantage of consumers. Unfortunately, the Conveyancers Act 2006 did little to remedy the problems of corruption and consumer exposure to uninsured risk.
It has been recognised that the severe constraints on the legal work and advice Licensed Conveyancers can offer to consumers, and the limited coverage of their professional indemnity insurance, renders them an expensive and risky alternative to lawyer conveyancers in the provision of conveyancing and real estate related services.
See also “Licensed conveyancer or lawyer conveyancer?“
Articles:
Licensed Conveyancers – A Risk For Consumers >>
Licensed Conveyancer Corruption Must Be Stopped! >>
Licensed Conveyancers – PI Insurance Problems >>
Licensed Conveyancers – Client Dumping >>
Conveyancing Work
Section 4 of the Conveyancers Act 2006 Section 4 provides a definition of “conveyancing work”.
According to Section 4 “conveyancing work”
“…means legal work carried out in connection with any transaction that creates, varies, transfers, conveys or extinguishes a legal or equitable interest in any real or personal property, such as, for example, any of the following transactions—
(a) the sale of a freehold interest in land;
(b) the creation, sale or assignment of a leasehold interest in land;
(c) the grant of a mortgage or other charge.
…conveyancing work includes—
(a) legal work involved in preparing any document (such as an agreement, conveyance, transfer, lease or mortgage) that is necessary to give effect to a transaction of a kind referred to in subsection (1); and
(b) legal work (such as the giving of advice or the preparation, perusal, exchange or registration of documents) that is consequential or ancillary to a transaction of a kind referred to in subsection (1); and (c) any other legal work that is prescribed by the regulations as constituting conveyancing work for the purposes of this Act.”
In effect, “conveyancing work” is confined to the transfer of ownership transaction, and the legal work required to achieve this.
Conveyancing work does NOT include work associated with variations to the sale or purchase agreement, or the procuring of finance.
Conveyancing work does not include extraneous tasks or representing a client in their personal dealings with a bank or other lender. (See Mortgagee Costs below.)
Additional costs may be charged for work that is beyond the conveyancing work involved in a standard conveyancing matter. (See ” Costs – Additional Costs” below)
See also: Licensed Conveyancers – A Risk For Consumers >>
Conveyancing Kits
In their promotional material, conveyancing kit-writers don’t emphasise that those who use the kit will still have to pay for rate and planning certificates, title searches, postage, transport to settlement, etc.
There is also an assumption that kit-users have plenty of spare time, and that their time is of no value. Otherwise, the amount of time needed for reading and learning about conveyancing has to be taken into account.
More about Conveyancing Kits >>
Cooling Off
Section 31 Sale of Land Act provides a statutory “cooling off” period, during which a purchaser can terminate a contract within 3 days of signing it. Click on the following link to find out about the benefits and problems associated with “cooling off”.
Corporate Person
A corporate person is a company, as opposed to a natural person (see definition of “natural person” below).
Costs – Additional Costs
These are costs generated by work that is beyond the conveyancing work associated with a standard real estate conveyancing matter, and which are NOT included in the quoted fixed-fee. For example, the work associated with changes made to the contract between the day of sale and settlement, and work required in correcting mistakes made by other parties to the transaction may generate additional costs. For further information see our “Conveyancing Costs FAQ” and “Additional Costs Line Items“.
Costs – Costs Agreement
The Legal Profession Uniform Law requires that a lawyer must enter into Costs Agreement with the client. The Costs Agreement is a written agreement between the client and the law practice, about the payment of legal costs.
Costs – Disclosure of Costs
The Legal Profession Uniform Law requires that a lawyer must provide a client with a statement disclosing the basis on which legal costs will be calculated, together with other information relevant to the way in which legal costs are charged.
Covenant
A covenant is a way in which the use of one person’s land can be controlled by another, and is commonly to protect the “amenity” or value of an area. A developer, for example, could prevent the building of front fences, the parking of heavy vehicles or the building of low-quality homes in a new estate by placing a special condition in the Contract of Sale, requiring the Purchaser to register a restrictive covenant on the Purchaser’s new title.
A covenant is an encumbrance on the title.
Current Market Value
The current market value of a property is determined according the following standard:
The price at which a willing but not anxious vendor would sell, and at which a willing but now anxious purchaser would buy.
Theoretically, if someone bought the property at current market value as an investment, then decided to sell it again, they should be able to find someone else who is prepared to pay the same price in the same market, and so on.
This formula was developed by the High Court of Australia in the case of Spencer v The Commonwealth. This was a case about the compulsory acquisition of land, and the owner of the land felt that the compensation offered by the government was inadequate. The High Court had to decide as to how the value of a piece of land should be determined on the day ownership changed.
Justice Isaacs said,
“To arrive at the value of the land at that date, we have, as I conceive, to suppose it sold then, not by means of a forced sale, but by voluntary bargaining between the plaintiff and a purchaser, willing to trade, but neither of them so anxious to do so that he would overlook any ordinary business consideration. We must further suppose both to be perfectly acquainted with the land, and cognizant of all circumstances which might affect its value, either advantageously or prejudicially, including its situation, character, quality, proximity to conveniences or inconveniences, its surrounding features, the then present demand for land, and the likelihood, as then appearing to person best capable of forming an opinion, of a rise or fall for whatever reason in the amount which one would otherwise be will to fix as the value of the property.”
The Vendor’s aim, when selling real estate, is to establish the current market value of the property and then to seek offers over the current market value. The Vendor is seeking a Purchaser who is anxious to buy. In other words, the Vendor wants to sell to someone who wants the property as a home and is prepared to pay a higher price in order to secure the property he or she really wants.
The best way to determine the current market value of a property is to consult an accredited valuer.
Deposit
A deposit is an amount of money, usually 10%, paid by the purchaser to secure the contract of sale. Generally, if the purchaser repudiates the contract, the deposit will be forfeited.
Deposit Bond
A deposit bond is really an insurance policy. The policy allows the vendor of real estate to claim against the policy if the purchaser does not pay the full price at settlement, or if the vendor becomes entitled to a forfeited deposit.
Deception In Real Estate
Deception is a major problem in the real estate industry. Falsely telling a purchaser that “someone else is interested” in a property, providing fictitious information to a vendor regarding the value of a property in order to win a listing, and “dummy bidding” are just a few examples of deceptive tactics used in the real estate industry.
The types of deception used are many and varied, but they all have one thing in common – they involve some form of trick. In any situation where a party is led to believe in a situation that does not really exist, and they are “tricked” into acting contrary to their interests, there is probably a form of deception involved. Click on the link below for a thorough examination of the criminal offence of deception as it applies to some real estate practices. (See also Private Auctions below.)
Disbursements
Disbursements are the out-of-pocket costs associated with a matter, as opposed to the legal costs charged for the service being provided.
For example, in a conveyancing matter the legal costs include the preparation of legal documents and the processing of documents associated with the transfer of ownership. Disbursements include the amount paid to the Land Titles Office for the title search, and amounts paid to rating authorities for rate and planning certificates.
Dual Occupancy
Dual occupancy is the term used to describe a subdivision where a house block is subdivided so as to enable and additional dwelling the be built on it. A dual occupancy development involves at least a two lot subdivision.
Easement
An easement is a right that allows one person’s land to dominate another person’s land by exercising some right of the dominated land. The land that benefits from the easement is called the dominant land, while the land affected by the easement is called the servient land.
Common examples of easements are:
| • | The right of a farmer to move cattle along a path across a neighbour’s paddock; |
| • | The right of water authorities to run sewerage pipes across suburban properties; |
| • | The right to use a private carpark. |
| • | An easement is an encumbrance and will usually appear as a registered easement on the title, but unregistered easements do exist, and can arise as a nasty surprise after a Contract has been signed. |
Encumbrances
This is the term used to describe a claim that one person has against another person’s land. It is important to remember that an encumbrance is against the land and NOT the owner of the land. This means that if the land changes hands, the new owner takes both the land AND encumbrances attached to it.
If the encumbrance takes the form of a debt, then the owner of the land may not be able to sell it until the debt has been paid. If the encumbrance takes the form of a restriction of the owner’s use, then action can be taken against the owner if the restriction is breached. Similarly, if the encumbrance takes the form of a right that another person has (e.g. a right to use a path across the land), then action can be taken against the owner of the land if that right is interrupted.
Escorted Inspections
The escorted inspection is where purchasers are escorted to, and shown through a property by the commission estate agent.
Consumers have been conditioned to believe that the escorted inspection is a service, when in fact the opposite is true.
The escorted inspection is really a device used by the commission estate agent to maintain control over the vendor, the property, and the purchaser, so that the commission estate agent seems like an indispensable link between all three. It also assists the commission estate agent to “prove” that the commission estate agent actually “introduced” to purchaser to the property, and to thereby satisfy the requirements of the Exclusive Sale Authority.
A careful examination of the escorted inspection reveals that it actually impedes the progress of the sale, it promotes improper conduct, and it places the vendor at risk with regard to security and insurance.
More about Escorted Inspections >>
Estate Agent
See Agent above.
Exchange of Contracts
This is the procedure by which the real estate sale is finalised.
Having received details of the purchaser’s offer, either by way of a bid or a sale note prepared by the real estate agent, the vendor’s lawyer prepares the Contract of Sale of Real Estate and has it signed by the vendor. The contract is then sent to the purchaser’s lawyer.
The purchaser’s lawyer arranges for the purchaser to sign the contract, and then sends it to the vendor’s lawyer to complete the exchange.
When each lawyer has received a signed contract from the “other side” of the transaction the sale is complete.
Exclusive Sale Authority
This is the document by which an estate agent is able to exclusively secure the Vendor, the property being sold, and all persons who enquire about the property for a set period of time, and then indefinitely until the Vendor cancels in writing.
Devised by estate agents, and distributed through the Real Estate Institute of Victoria, it is one of the most complex and deceptive documents a consumer will ever encounter.
The Exclusive Sale Authority consists of an apparently simple and straight-forward front page, and a back page of classic “fine-print” which qualifies and often contradicts the information provided on the front. For example, the front page of the
Exclusive Sale Authority states that the Authority is for a specific period of time, but this is contradicted by a condition in the “fine print” that allows the period to run indefinitely until the client cancels the Exclusive Sale Authority in writing.
It is a major challenge for any consumer to read the entire document and make sense of it, and Extreme caution should be exercised by any consumer intending to sign an Exclusive Sale Authority.
More about the Exclusive Sale Authority >>
Extraneous Tasks
Tasks that are not legal tasks, and are not directly related to the conveyancing transaction, are known as extraneous tasks. It is important to differentiate between conveyancing tasks and extraneous tasks, as there can be serious implications for both the lawyer and the client in terms of costs and liability if the distinction is not maintained.
More about Extraneous Tasks >>
Fidelity Insurance
Fidelity insurance protects the clients of professionals against theft or misappropriation of funds by the professional person or an employee while the client’s funds are under the control of the professional person.
Conveyancers are not required to carry fidelity insurance, and few conveyancers do.
Simply put, if your lawyer had a secret gambling problem and took the proceeds of your property sale to a casino and lost it, there would be little point in trying to sue the now bankrupt lawyer. However, the lawyer’s compulsory fidelity insurance would cover the loss.
Fiduciary Relationship
A fiduciary relationship imposes the highest duty known to the law, and requires a person who acts on behalf of another to always act in the utmost good faith. For example, a person acting as trustee owes a fiduciary duty to the beneficiary of the trust.
In agency law the agent owes a fiduciary duty to the client (known as the principal), and must never allow his own interests to conflict with those of the client.
Another aspect of the fiduciary duty is that the agent must make full disclosure to the client.
Further, the agent has a duty not to make a secret profit from the fiduciary relationship.
When considering the term “agent” it is important not to confuse the role of the commission estate agent with the legal definition of agent.
Finance – “Subject To Finance”
Signing “subject to finance” simply means that the Purchaser is not yet sure as to whether their home loan has been approved by the bank, and wants to be able to cancel the Contract if the bank fails to approve their loan application.
More about “Subject To Finance” >>
First Home Owner Grant (FHOG)
In Victoria the First Home Owner Grant application form is usually submitted to the State Revenue Office through a purchaser’s lender, as most of the larger banks act as agents for the State Revenue Office for the purposes of deducting and paying stamp duty and processing stamp duty concession applications.
The same applies with the FHOG application. Of course, it always remains the responsibility of the purchaser to investigate the eligibility for the grant before making any decisions based an an expectation of the grant being made, and to this end we always direct clients to the FHOG page of the State Revenue Office website.
It is also the responsibility of the purchaser to ensure that the FHOG application is completed fully and correctly. We request clients to provide us with a copy of the completed FHOG application for two reasons. First, as an indication that the application is being made and that the client has this matter under control. Second, so that we can be in a position to confirm to a client’s lender that the application has been attended to by the client, and to provide the lender with a copy if we are requested to do so.
Fixed Fees
A fixed fee is a single all-inclusive charge for service. It is possible to quote a fixed fee where the service being provided is of a standard and quantifiable kind.
Commission, on the other hand, is a charge determined by reference to the value of a sale. It is an unfair method of calculating fees in relation to the sale of residential real estate.
Fixtures & Chattels
Fixtures are things that are permanently attached to the land so as to become part of the land. Chattels are things that are not part of the land. When land is sold, all fixtures (the house, and things permanently attached to the house) will pass to the Purchaser as part of the land.
If a chattel is to be included in the sale, it must be specifically listed in the Contract. If a fixture is to be removed from the property by the Vendor and therefore not included in the sale, then this must be specifically mentioned in the Contract.
Fraud
Fraud is the gaining of an advantage by improper or unfair means. At present, fraud is a major problem in the real estate industry.
Full Agency Representation
While lawyers, conveyancers, and commission estate agents all have involvement in real estate sale or purchase transactions, only one of these has the ability to provide “full agency representation.”
Full agency representation is the term we use to describe the situation where the Lawyer Estate Agent actually represents the client through all stages of the sale process, providing legal services and representation from the first listing of the property for sale, through the sale negotiation stages, and all the way through the conveyancing process until final settlement.
Full agency representation contrasts with the simple “introduction agent” function of the commission estate agent, and the basic clerical functions of the conveyancer, neither of whom are qualified to actually represent a client in a true agent capacity.
Gazumping
Gazumping is where a vendor agrees to sell real estate to a purchaser, but then sells it to someone else; usually for a higher price or more favourable conditions. The practice is generally regarded as unfair and unethical.
Gazumping is fairly common in the UK, where contracts are usually not finalised until the end of the sale transaction. However, it is rare in Victoria, as parties do not regard a sale as having taken place until contract have been signed.
In Melbourne a form of “contractual gazumping” has emerged. This occurs where the estate agent inserts a condition into the sale contract, allowing the vendor to cancel the contract and to sell to someone else who offers “more favourable terms”.
More about “Contractual Gazumping” >>
General Law Land
This is land that is not under the operation of the Transfer of Land Act. Ownership of general law land is determined by examination of the “chain of title”, a collection of documents showing that the land has been transferred from one person to another over many years. A chain of title must show every dealing associated with the land for the past 30 years, if good title is to be established. These days, the purchase of any general law land must be converted so that the land is brought under the operation of the Transfer of Land Act.
Goods & Services Tax (GST)
How can you find out if your real estate sale will trigger a liability to pay Goods and Services Tax (GST)? If you are the vendor of residential real estate in a typical real estate transaction, then it is highly unlikely that you will have to pay GST on the sale. However, you are ultimately responsible for determining your tax position, and so it is important to do some homework on the GST and how it may affect your property sale. Because everyone’s circumstances are different, it is not possible to give general advice on GST liability in individual cases. The only way to determine whether or not GST will be applicable in a particular real estate transaction is to obtain an opinion for your financial advisor or accountant.
Independent Legal Advice
When a person needs legal advice it is important that the person providing that advice not only knows the law and how to apply it, but is also in a position to provide that advice without bias. The lawyer must always be totally “independent” of the matter. In other words, the lawyer should never be personally involved in the matter, and should not be acting for, or advising anyone else who is involved in the matter or who stands to gain anything from it.
See Legal Advice below.
Instructional Directive
An instructional directive:
- is a statement of your medical treatment decision
- takes effect as if you had consented to, or refused, the medical treatment.
You should only complete an instructional directive if you know the medical treatment that you want or do not want in the future, as health practitioners are bound to follow your instruction.
Making an Advance Care Directive is one way of recording your medical instructions.
Instructions
This is the term used by lawyers to describe what the client wants done. However, it goes beyond this. Taking instructions is not just a matter of doing as the client directs. The proper taking of instructions requires the lawyer to use his or her legal knowledge and skills to ensure that the client is in a position to make the best decision. This is part of the lawyer’s fiduciary duty.
After finding out what the client wishes to do, the lawyer will advise the client as to the legalities involved, and the options available to the client as the client pursues his/her goal.
A client is entitled, not only to make the final decision, but also to be in a position to make the best possible decision, based on the best possible advice.
Only after the lawyer has listened, considered, advised, and then been told which direction the client wishes to take, can the lawyer regard him/herself as having been properly instructed.
Insurance – Duty Of Disclosure
When you apply for, or change or renew an insurance policy you have a legal duty of disclosure, which means you need to disclose anything that may influence the insurer’s decision to insure you, and on what terms the insurer will insure you.
For example you need to disclose anything that might:-
- increase the risk to be undertaken by the insurer
- not be evident to the insurer, but may influence the insurance policy
- not be evident in the course of business but may influence the insurance policy
This duty applies when you renew or change an existing insurance policy. For a new policy you need to fulfil your duty of disclosure, but you do probably not need to disclose anything further unless you have been specifically asked about it. However you must be honest in your answers to any questions your are asked, and you need to tell the insurer anything that a reasonable person in your circumstances would include in answering such questions, without hiding anything relevant to the matter, as the insurer will use these answers to determine whether on not to provide insurance.
It is also important to realise that your disclosure is made about yourself and any other persons to which you want to be covered by the insurance policy.
If it is apparent that this duty of disclosure has not been fulfilled, and/or that you have acted fraudulently, then the insurer may reduce or refuse to pay a claim or even cancel the insurance policy.
Introduced
The term “introduced” is used by the commission estate agent to determine the point at which the vendor becomes liable to pay the commission.
By using a carefully worded definition of “introduced”, the commission estate agent is able to claim the commission in the most unlikely of circumstances.
Joint Proprietors
Joint proprietorship is where two people own 100% of a property together, with neither holding separate shares. This gives rise to the concept of survivorship” (see definition of “survivorship” below). If one of the joint proprietors dies, their name is removed from the certificate of title, leaving the survivor as the sole proprietor of the property. Jointly owned real estate cannot be left to beneficiaries in a Will, because the survivor automatically becomes the sole proprietor and so the property does not form part of the deceased’s estate. This form of ownership is most common among married couples or those in long-term relationships where each proprietor wants to ensure that the other will gain full ownership of the property on the death of the other. Compare this form of ownership with Tenants in Common (see definition of “Tenants in Common” below).
Land Tax
If you have never received a Land Tax invoice from the State Revenue Office, then the property you intend to sell probably does not attract Land Tax. Land Tax is calculated according to a person’s total land holdings, and the only way to be certain as to whether or not Land Tax may be payable is to check with the State Revenue Office. The link below will take you to the relevant page of the State Revenue Office website.
Lawyer Estate Agent
This term describes a lawyer who provides full representation for clients in real estate sale transactions. All lawyers who represent their clients in sale negotiations are “estate agents” as defined in the Estate Agents Act 1980. However, the
Lawyer Estate Agent has a much higher responsibility than the commission estate agent, because of the professional service standards and duties required under the Legal Practice Act 1996. In addition, the Lawyer Estate Agent actually represents the client in a true agent capacity.
More about the concept of Agency >>
Legal Action
Legal action is the term used to describe the process of suing someone in order to rectify a wrong, or to be compensated for loss.
Taking legal action should always be regarded as a last resort, as it is inevitably costly in terms of money and stress.
Legal Advice
The giving of good legal advice involves the obtaining of an understanding of what the client wants to achieve, the checking of relevant documents, having a sound understanding of relevant principles of law or researching finer points of law, and then explaining to the client what options are available.
Licence Agreement
Sometimes a purchaser may wish to occupy the property before settlement; or a vendor may wish to continue to occupy the property beyond settlement. A Licence Agreement is a simple contract whereby one party grants another party the right to occupy the property. The difference between a licence and a lease is that the lease is a form of “ownership” of the property for a period of time, and the lessee is entitled to remain in occupation for the period of the lease. The licence, on the other hand, can be revoked at any time. If the licence is revoked, the occupier must leave the property and rely on whatever remedies are provided for in the licence.
Licensed Estate Agent
“Licensed Estate Agent” is the term used to describe a person who is responsible for the agent representatives he or she employs in a real estate agency business.
While qualifying for an Estate Agent’s Licence is a simple process, access is restricted to applicants who have been employed by an existing agency for at least 12 months full time, and who have sufficient wealth to invest in a real estate business. The licensing regime effectively favours “insiders”, who tend to be closely aligned with large franchises.
Most who enter the real estate industry find it easier to operate as an agent representative.
NOTE:The average “estate agent” who deals with consumers on a day to day basis is NOT a licensed estate agent at all, but merely an agent’s representative.
Listing
This is the term used to describe the arrangement between a vendor and an estate agent, whereby the agent becomes entitled to a portion of the proceeds of the sale of the vendor’s property.
Estate agents rely on a contract called the Exclusive Sale Authority to bind the vendor, the property and all enquirers, to the agent. This document is so heavily biased in favour of the estate agent that obtaining a listing with it is almost as good as “money in the bank” for the agent. (See also Exclusive Sale Authority)
Lot
A lot is simply a separately identifiable piece of land, part of a building, or air space, that is created when a plan of subdivision is registered.
Medical Treatment Decision Maker
Everyone has the right to make their own medical treatment decisions. However, anyone can experience an injury or illness that means they are unable to make decisions, either temporarily or permanently.
If this happens to you, Victoria’s Medical Treatment Planning and Decisions Act 2016 specifies who has legal authority to make medical treatment decisions for you. This person is called your medical treatment decision maker.
You may want to choose your medical treatment decision maker by appointing someone to this role.
More about “Medical Treatment Decision Maker” >>
Mortgage
A mortgage is basically a scheme or an arrangement whereby one person borrows money from another, and promises to pay the money back in return for offering land as security for the loan. The offer of land as security becomes an interest in the land for the lender. The land itself becomes encumbered by the mortgage.
The lender’s rights over the land are formally recognised by way of registration on the title at the Land Titles Office.
When the loan is repaid, the lender provides the borrower with a Discharge of Mortgage. This document is then registered at the Land Titles Office to discharge (cancel) the mortgage.
The person who offers the mortgage to the lender is known as the mortgagor and the lender is known as the mortgagee.
Mortgagee
See Mortgage.
Mortgagee Costs
Purchasers who are borrowing to make their purchase should take care to avoid unfair mortgagee costs. These are cost generated by the lender “behind the back” of the borrower, through direct contact with the borrower’s conveyancing lawyer and are often in breach of the Consumer Credit Code. (NOTE: Lawyers Conveyancing has a policy of directing lenders to seek a client’s authority before generating such costs.)
Names In Important Documents
It is often said of a forgetful person that they would even forget their own name, but it is surprising just how often people involved in real estate transactions get themselves into trouble because of incorrect names on important documents.
Most common is where a real estate agent simply writes a name in short form on a Contract of Sale. For example, a contract may indicate that a property has been sold to “Bob Jones and Sue Jones”, when in fact the purchasers’ full names should have been stated as “Robert Percival Jones and Susan Marion Jones”. Some purchasers may not want to disclose a second given name because they find it embarrassing. For example, “Barak Hussein Obama” might appear on a contract simply as “Barak Obama”.
Correcting an incorrect or incomplete name is not a simple matter, and sometimes the discrepancy is not discovered until it is too late. It is quite common for settlements to be delayed (with consequential costs and penalties demanded by the vendor) because a lender has discovered at the last moment that a purchaser’s name as it appears on the Contract of Sale does not include all of the names provided on the mortgage documents. Even worse, is when a lender requires a new set of mortgage documents to be prepared and signed by the purchaser, which can delay settlement by a week or more in some cases.
We strongly advise all parties in a real estate transaction to state their names in full, just as the name appears on a birth certificate, passport or other important formal document.
Natural Person
A natural person is simply a human being, as opposed to a corporate person (see definition of “corporate person” above).
Negotiation
Negotiation involves conferring or discussing matters with another person, with a view to reaching some form of compromise or agreement.
To be effective as a negotiator, your representative must be well informed about the rules and laws associated with the matter under negotiation, and must have precise instructions as to their capacity to negotiate on your behalf.
A Lawyer Estate Agent is a qualified lawyer, has professional indemnity insurance to cover the legal advice offered during negotiations, and has experience not only in real estate negotiation but also in various other forms of negotiation (including pre-court negotiation, and advocacy).
Nomination
Whenever there is a transfer of ownership of real estate there is a likelihood that a Stamp Duty liability will be triggered.
A common example is where one person buys a property at auction, and then seeks to have another person’s name added to the purchase as a “nominee”. The need to make a nomination can also arise where a bank requires a co-borrower to be registered on title as a co-proprietor, or a financial advisor suggests that the property should be owned by a company as a “trustee” (this is quite common where the property is being purchased for a self-managed superannuation fund. Another common situation is where only the husband or wife is present to sign a formal offer, and to save time and to get the deal done as quickly as possible, the agent suggests that the other spouse can be nominated later as a co-purchaser.
The State Revenue Office regards the initial sale by contract as one transfer, and the later addition or substitution of a purchaser as a second transfer. All of these situations will trigger a Stamp Duty liability (i.e. requiring two lots of stamp duty to be paid) unless a sub-sale exemption applies. This requires special documents to be prepared and executed in order to obtain an exemption.
The Nomination Statutory Declaration gives notice to the vendor and to the State Revenue Office that a nomination is being made. If required, we will prepare these documents, arrange their execution, and ensure that they are delivered to the appropriate parties before settlement. We charge for this service as an optional extra (see “Optional Extras” below).
Offer
For the average consumer, the term offer has a simple and straight-forward meaning. However, when applied to the law of Contract, it has a very specific meaning. The confusion between these two meanings is often manipulated, and used against consumers.
Off The Plan
This term describes the sale of land that does not yet exist as a separate “Lot”. The land is described as a proposed Lot only. The Vendor of an “off the plan” lot is obliged to complete the subdivision process or building of units, and to have the Lots individually created through registration of the plan of subdivision.
Offers Over Method
The “Offers Over Method” of pricing real estate involves determining the current market value of the property (see Valuer below) and then seeking offers over that figure.
Option Descriptions (Conveyancing service choices)
Purchasers can choose from a number of packaged service options, depending on the type and the location of the property being purchased. It is important the the correct option is chosen, as delays and costs can result if an incorrect choice is made and the work we have done has to be altered. The following information is provided to assist you in determining which conveyancing package is the correct one for your matter.
1. Conveyancing – purchase of a house, unit or land INSIDE the Melbourne metropolitan area $895*
This is the most common type of purchase matter. If you can answer “YES” to each of the following questions, this is likely to be your best option:
Q1. Are you an Australian resident buying a block of land or a house or a unit in a block of 4 storeys or less for residential purposes? (This indicates that it is standard residential real estate.)
Q2. Is water provided to the property by Yarra Valley Water, City West Water or South East Water? (This indicates that it is in the Melbourne metropolitan area.)
Q3. Is there to be a specific settlement date, without having to wait until a new Certificate of Title to be issued? (This indicates that it is no an “off-the-plan” purchase.)
2. Conveyancing – purchase of a house, unit or land OUTSIDE the Melbourne metropolitan area $950*
If you answered “YES” to Q1. and Q3. above, but the property is serviced by a water authority other than the three metropolitan authorities, then the property is outside the Melbourne metropolitan area.
3. Conveyancing – purchase of a house, unit or land “off-the-plan” (i.e. unregistered subdivision) $1100*
If you answered “YES” to Q1. and Q2., but settlement cannot take place until a new plan of subdivision has been registered and a new Certificate of Title has been issued for the property, then it will be an “off-the-plan” purchase. That is, you are buying a property than is depicted in a plan of subdivision, but which does not yet exist as a separate parcel of land or unit.
4. Conveyancing – purchase of a unit in a high-rise development ( 5 storeys or more) $990*
If you answered “YES” to Q.2 and Q.3 but you a purchasing a unit in a development that is 5 storeys or more, then this is a “high-rise” development.
5. Conveyancing – purchaser not residing in Australia $1,320*
If you are currently living outside of Australia (whether or not you are an Australian citizen or you have permanent residence status), this is the option you should choose. However, this option is not applicable if you have appointed someone who is residing in Australia to represent you under a Power of Attorney.
6. Conveyancing – purchaser not residing in Australia, purchase of a unit in high-rise development (over 4 storeys) including “off-the-plan” $2,200*
If option 5. above applies, AND either or both of options 3. and 4. also apply, then this is the option you should choose.
7. Conveyancing – commercial property or a non-standard residential matter – Contact us for a quote*
If none of the above options are appropriate to your matter, please contact us so that we can work out an appropriage fixed fee option for you.
Optional Extras
To keep our standard fixed fee as low as possible we have included only those components that are required in all conveyancing transactions. This saves clients from having to contribute to cost of certificates or legal services that are not always needed. Of course, some clients may need additional services in order to have their conveyancing transaction completed the way they want it, or to take into account requirements imposed by lenders or other third parties.
To keep costs under control, and known in advance, we have included some of the more common additional services as “optional extras” that a client can choose at the start of the transaction, and fixed their costs at a discounted rate. For example, the preparation of a Power of Attorney would ordinarily cost $330 for a client who engages our firm for this service alone, but we cap the cost at $110 when it is offered as an “optional extra” in a conveyancing context.
Owners Corporation
When a block of land contains common property an owners corporation is created. An owners corporation manages the services and common property: shared walls, driveways and buildings for flats, units and multi-story apartments.
Owners Corporation Certificate
This is the statement provided by an owners corporation to any person who requires it. It contains specified information about the owners corporation, including financial information.
Some owners corporations are non-functioning, and an owners corporation certificate is not required. In other cases the owners corporation is small, and is operated by one of the unit owners. A small owners corporation is unlikely to charge a fee for a basic owners corporation certificate. The most common situation, however, is where a management company has been appointed to operate the owners corporation, and the management company is entitled to charge a fee for the certificate. Obtaining an owners corporation can cost as much as $170, depending on the management company’s fee structure.
In multi-storey developments where lifts, car-stackers and gymnasium facilities are provided, there may be multiple owners corporations registered on title. Sometimes it is necessary to purchase two or more owners corporation certificates from the management company for use in a conveyancing transaction.
Penalty Interest
The standard form Contract of Sale of Real Estate provides for the payment of penalty interest if either party delays the payment of money. The most common form of delay is the postponement of settlement.
More about Penalty Interest >>
PEXA – What is PEXA?
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Plan of Subdivision
Basically, the plan of subdivision is a map of a large area of land that has been divided into small blocks of land or “Lots”.
The plan shows the dimensions of each Lot, and its location in relation to every other Lot in the subdivision. Each Lot is separately numbered.
When the plan of subdivision is registered, each lot is identified in terms of its Lot number and the number of the plan of subdivision. Each Lot is registered by way of a Certificate of Title bearing distinct Volume and Folio numbers to identify the title, and the title itself records the Lot and Plan Number of the Lot it represents.
Power of Attorney
A Power of Attorney is a document by which one person can appoint another person to “stand in their shoes” and do things on their behalf.
In the context of a real estate transaction, a General Power of Attorney may be prepared to allow the person appointed as attorney to sign documents and to do other things on the grantor’s (the person who appoints the attorney to act for them is known as the “grantor” of the power) behalf. There are various forms of Power of Attorney, but the one most commonly used in conveyancing transactions is the General Power of Attorney, prepared for the specific purpose of allowing the attorney to complete the conveyancing process.
If a client intends to travel overseas, or for some other reason desires to appoint someone else to look after the conveyancing transaction on their behalf, we can prepare an appropriate Power of Attorney. When requested in conjunction with a conveyancing matter, we charge a lower fixed fee as an “optional extra” to the conveyancing (see “Optional Extras” above).
Pre-Approval of Home Loan
The terms “pre-approved” or “approved in principle” both mean the same thing – the home loan is NOT approved. For a full discussion on finance and when it is and is not approved, see “Subject to Finance”
Pre-Contract Legal Advice
Advice provided by a qualified lawyer prior to the signing of a Contract to buy or sell real estate. By obtaining pre-contract legal advice a consumer is able to consider what matters should be investigated before deciding to buy, what responsibilities have to be fulfilled before selling, and what special conditions may have to be inserted into a Contract to protect his/her interests.
See also Independent Legal Advice above.
Price Ranges
Also called a “buyer enquiry range” this is a trick that involves the invention of two figures: one much lower that the vendor intends to accept, and the other much higher than the vendor expects the property to make. Purchasers are expected to make offers somewhere in between the two false figures. Any form of marketing that involves “invented” figures is fraudulent. The Northern Territory government recently wrote to all estate agents in that State, warning them that price ranges and buyer enquiry ranges amount to misleading and deceptive conduct.
Primary Client
The “Primary Client” is the person who is appointed as the person who gives us instructions and receives information and advice on behalf of all the parties we are representing. If there is only one person involved, then that person will be Primary Client. However, if there is more than one person involved, then a single Primary Client must be appointed. The reason we require a Primary Client is to limit the risk of inappropriate release of private information, to ensure there are no conflicting instructions received, and so that we can be sure that there is someone who has full knowledge of what is happening as the conveyancing transaction progresses. Of course, the Primary Client can be changed at any time. What is important is that we are dealing with one person, with one email address at a time.
Conflicting instructions – Imagine a contract where a couple are purchasing subject to finance, and the wife instructs us that a loan approval extension is required because the loan has not yet been approved. The husband misunderstands what his wife has told him about the home loan, and instructs us that the contract is already unconditional because the loan has been approved. If we act on the wrong instructions the result could be catastrophic. We find that a Primary Client is more likely to take their responsibility seriously, and not assume that someone else has sorted things out. Also, we can be sure that when we receive instructions from the Primary Client those instructions are given on behalf of all persons involved.
Inappropriate disclosure – If someone contacts us for information, and this person is not the Primary Client we will not disclose sensitive information to them. For example, a person may contact us to confirm the purchase price or some other form of information at a stage in the transaction where such information is still quite sensitive. A genuine caller will understand when we tell them that such information must be obtained from the Primary Client, and that communication with us must be through the Primary Client. This also saves us time in having to deliver the same information to more than one person.
Full knowledge of the transaction – In some transactions there can be 4 or more purchasers clubbing together to buy a property. We can send one single email to the Primary Client, who can then forward the email to all of the others involved. If someone fails to receive certain information, they can follow up with the Primary Client. This also avoids the problem of “Chinese Whispers” which can occur if we provide information to someone other than the Primary Client, and the message is then relayed to the Primary Client via numerous others.
Principal Place of Residence Concession (PPR)
In Victoria the Principal Place of Residence concession application form is usually submitted to the State Revenue Office through a purchaser’s lender, as most of the larger banks act as agents for the State Revenue Office for the purposes of deducting and paying stamp duty and processing stamp duty concession applications.
The same applies with the PPR concession application. Of course, it always remains the responsibility of the purchaser to investigate the eligibility for the concession before making any decisions based an an expectation of the concession being made, and to this end we always direct clients to the PPR page of the State Revenue Office website.
It is also the responsibility of the purchaser to ensure that the PPR application is completed fully and correctly. We request clients to provide us with a copy of the completed PPR application for two reasons. First, as an indication that the application is being made and that the client has this matter under control. Second, so that we can be in a position to confirm to a client’s lender that the application has been attended to by the client, and to provide the lender with a copy if we are requested to do so.
Private Auction
The “Private Auction” is a scheme or sale method which uses secrecy as a tool of control. The estate agent tells the purchaser that he or she is competing with another purchaser, but without revealing details of the competing offer. The refusal to disclose competing bids or offers is usually accompanied by the claim that such disclosure is somehow “unethical”.
A Private Auction usually starts with words similar to, “There is another offer on the table” or “You’re nearly there, you just need to come up a bit” or “We need you to change your offer”.
The Private Auction may also involve a set date, on which the vendor is supposed to open sealed envelopes and select the highest offer.
Private Auctions are easily used as a vehicle for deception, due to the secrecy involved. (See also Deception In Real Estate above.)
More about Private Auctions >>
Professional Indemnity Insurance
Professional indemnity insurance is held by a professional person to ensure that any claims of professional negligence made against the professional person can be met. To put it another way, there is not much point in suing a professional person if they do not have enough money to pay for your loss – so professional indemnity insurance comes in to cover the cost.
Note: Conveyancers do not carry professional indemnity insurance equivalent to that of lawyers… [more]
More about Professional Indemnity Insurance >>
Proprietor
This is the term used in Land Titles Office documents (including the Certificate of Title) to describe a natural person or a company that is registered on title as being the owner of land in Victoria. Under the Torrens system of land ownership in the state of Victoria, a person whose name appears on the Certificate of Title as “proprietor” is deemed to be the owner of the land described in the certificate, subject to some exceptions (e.g. fraud or mistake).
Rates
This is the term used to describe amounts payable to the local council and the water authority for services provided to a property. Rates are adjusted on a pro-rata basis, together with any other outgoings that are payable as a consequence of land ownership.
Real Estate Institute Of Victoria
The Real Estate Institute of Victoria is the professional body representing real estate agents in the State of Victoria. Known as the R.E.I.V., it also acts as a lobby group to protect and further the interests of real estate agents.
Registrable Documents
These are the documents, usually collected at settlement in return for the payment of the balance of the purchaser price, that are lodged at the Land Titles Office to transfer ownership of the property to the purchaser. They must be property signed or endorsed so as to allow registration.
Requisitions On Title
These are a series of questions formally served on the Vendor of a property by the Purchaser, by which the Purchaser discovers any issues relating to “title” (i.e. the right or capacity of the Vendor to legally sell the property). Requisitions often include a variety of other questions that are not related to “title”, and can run to many pages.
Many lawyers now replace the right to submit requisitions on title with warranties in the Contract of Sale.
Residential Tenancy Agreement (Lease)
Leases of residential real estate usually take the form of a Residential Tenancy Agreement. If you are selling a property which is currently occupied by a tenant, and the tenant is to remain in the property after settlement of the sale, it will be necessary to include a copy of the Residential Tenancy Agreement in the Section 32 Vendors Statement. Click this link to see an example of a Residential Tenancy Agreement.
Retirement Villages
While most people understand the term “Retirement Village” as meaning a form of unit accommodation, it often comes as a surprise to find that there are different ways of “owning” or “occupying” a retirement unit.
More about Retirement Villages >>
Safekeeping of Certificate of Title
The Certificate of Title is a valuable document, and replacement a lost title can be expensive and time-consuming.
We store all Certificates of Title in a fireproof safe, and record each in our Deeds Register. Each title document is accounted for, and is not permitted to leave our office without the ID and signature of the person collecting it (whether this person is the owner or someone appointed by the owner to collect the document), or it is posted by Registered Mail or professional courier service.
We store clients’ titles at no cost on an indefinite basis. (If our law firm should merge, change hands, relocate or close down, the Law Institute of Victoria will ensure that all valuable document we hold are transferred to another law firm, and the transfer recorded so that the title can always be traced.)
More about the Certificate of Title
Searches & Certificates
Searches and certificates are the means by which information about a property can be obtained from government and local authorities. Because the information is provided in the form of a certificate, and the issuing authority has “certified” the information contained in the certificate, a person who purchases a certificate and relies on it may be entitled to compensation from the authority if the information contained in the certificate is not accurate.
A vendor of real estate is required by law to disclose certain information to intending purchasers. If this information is incomplete or inaccurate a purchaser may be entitled to cancel the contract. Breaching this rule is a criminal offence.
The purchaser of real estate must fully investigate the property in order to find out whether any other person will have rights over the property. A neighbour may have a right to cross the property, or the property itself may have accrued debts which the new purchaser will be expected to pay. Part of the process of investigating the status of real estate includes obtaining relevant searches and certificates.
More about searches and certificates >>
Section 27 Deposit Release Statement
Section 27 of the Sale of Land Act says that the deposit paid by a Purchaser on the purchase of real estate can be released prior to settlement in certain circumstances.
Section 32 Vendor’s Statement
This is a statement given to the Purchaser by the Vendor prior to the signing of a Contract of Sale. If the statement is not provided prior to signing of the Contract, the Purchaser may have the right to cancel the Contract. Click here for further information.
More about the Section 32 Vendor’s Statement >>
Section 173 Agreement
Basically, a Section 173 Agreement is an agreement between a planning authority and the owner of real estate.
It usually starts as an agreement between the authority and the developer of an estate, whereby certain works are supposed to be completed, but is then registered on title. This means that the obligations and/or restrictions imposed by the council on the developer, continue to bind the new owner of the land.
Example:
Settlement
Settlement is the term used to describe the moment when all of the parties involved in a sale of real estate meet together and exchange documents and cheques to complete the matter. Often there are four parties at settlement: the Vendor, the Vendor’s Mortgagee, the Purchaser and the Purchaser’s Mortgagee. Usually each of these is represented by a lawyer or other representative.
Settlement normally takes place at the office of the party who holds the Certificate of Title (generally a bank). Documents and cheques are examined and confirmed as being in order, exchanged, and the parties leave. That’s all there is to settlement.
Shared Ownership
Ownership of real estate can be shared by more than one proprietor (see definition of “proprietor” above). There are two alternative means of ownership, being “Tenants in Common” (see definition below) and “Joint Proprietors” (see definition above).
Sole Proprietor
A sole proprietor is someone who owns real estate in their name only. Only one name is registered on title, and only that person is regarded as the owner of the property.
Solicitor
The terms “solicitor” or “legal practitioner” or “barrister” are just other terms used to describe a lawyer.
The term “barrister” is used to describe a lawyer who appears in court on behalf of clients. Barristers usually avoid accepting clients direct, and prefer to act on behalf of lawyers in a form of “sub-contacting” capacity.
Many law firms described their lawyers as “Barristers & Solicitors”. In the State of Victoria, all lawyers can describe themselves as “barrister and solicitor”, and all are equally entitled to represent their clients in court.
We prefer the term “lawyer” because it is readily understood by everyone as meaning a person whose role it is to advise and assist clients in matters of law.
Solicitor Supervised
The Legal Practice Act prohibits unqualified people from giving legal advice or performing legal work. This means that conveyancers are not permitted to offer any form of legal services to their clients, even though conveyancing matters essentially involve legal issues.
Because most consumers would be reluctant to use conveyancers if they knew that their conveyancer could not perform the legal work associated with a conveyancing matter, the concept of “solicitor supervision” has been developed to make conveyancers appear more credible.
More about “solicitor supervision” >>
Stamp Duty
This is a government charge incurred by the Purchaser of real estate, and payable to the State Revenue Office prior to lodging of the Transfer of Land at the Land Titles Office. It is usually paid by the Purchaser’s lender after settlement, with funds retained from the loan moneys. If there is no lender involved, a cheque will be obtained from the Purchaser and paid to the State Revenue Office by the Purchaser’s lawyer.
Stamping & Lodging
This is the term used to describe the process of taking the registrable documents (obtained at settlement) to the State Revenue Office, payable stamp duty and having the Transfer of Land “stamped” to show that stamp duty has been paid, and then lodging the documents at the Land Titles Office for registration.
Standard Conveyancing Transaction
Conveyancing is a legal process, and we can anticipate the time and work required to take a matter from the day we are appointed, to the day of settlement and closing of the file. Our fixed fee is based on our assessment of a matter as being of a “standard” type. However, if you have incorrectly identified your matter as standard, when in fact it involves unusual issues, or if you make changes to the matter between the day of sale and the date of settlement, or if a dispute arises between you and another party, then the matter is no longer standard. In such cases additional costs may apply. If these costs are beyond those allowed for in our Costs Disclosure Statement we will contact you for instructions to proceed with the non-standard work.
Statement of Adjustments
This document sets out the way in which rates and other outgoings have been apportioned as at the day of settlement. It shows the purchase price, the deposit paid, the amount of rates paid for the rating period and the proportion of those rates to be paid by the Purchaser for the period beyond the settlement date.
Strata Title
This is the term used to describe a title where there is a building on land. The title covers not only depth and width, but also the height between upper and lower boundaries.
Stratum Title
In a stratum subdivision the building is subdivided into lots, with common land, i.e. driveways, stairwells, gardens being owned by a service company and appearing on the subdivision as an additional lot.
Stratum units are regarded as unattractive because of difficulties and complexities involving the operation of the company, Corporations Law obligations, and a reluctance on the part of lenders to accept them as security.
Each lot owner holds a certificate of title for their lot, together with shares in the service company. The lot owners enter into an agreement which governs matters concerning owners’ responsibilities and contributions to the operating expenses associated with maintenance of the common land.
Purchaser intending to obtain finance for the purchase of a stratum unit should first check with their lender to ensure that the unit will be accepted as security. Purchasers attending auctions are often at risk because there is little opportunity to have the Section 32 Vendor’s Statement checked by a lawyer, and they may be unaware that the property is a stratum unit!
Subject To Finance
Where the purchaser had not yet received formal home loan approval, and wants to be able to end the contract in the event that the home loan is rejected, the contract can be made “subject to finance”.
This means that a condition is added to the contract that allows a fixed period of time, by which the home loan must be approved. If the home loan is not approved, then the purchase may elect to end the contract. Purchasers should always ensure that the finance condition is drafted by their lawyer, or at least with advice from their lawyer. It is often the case that estate agents draft finance conditions such that the purchaser can’t help but breach the terms, and risk losing the deposit.
More about Subject to Finance >>
Survivorship
This concept arises where two people (most commonly a married couple or persons in a long-term relationship) own real estate as joint proprietors (see definition of “Joint Proprietors” above). If a person who shares joint ownership in a property dies, the surviving proprietor (see definition of “proprietor” above) automatically becomes the sole proprietor of the property. An application is lodged with the Land Titles Office to inform the Registrar of Titles of the death, and the named of the deceased is then removed from the Certificate of Title, leaving only the name of the survivor on title as the sole proprietor.
Transfer of Land
This is the document by which the Vendor and the Purchaser direct the Registrar of Titles to transfer ownership of the property from the Vendor to the Purchaser. It may also direct the Registrar to include a covenant or other encumbrance on title.
Tenants in Common
This is the term used to describe ownership of real estate where each proprietor (see definition of “proprietor” above) owns separate shares in the property. The shared ownership may be on a 50/50 basis, or the shares may be unequal. For example two partners may each own 50% of the property, or one may own 10% and the other 90%. Compare this form of ownership with “Joint Proprietors” above.
Trust Ownership
A trust is a legal concept whereby one party has legal ownership of a property, but they own it as a “trustee”. A trustee is a person who is trusted by another person to look after the property for the benefit on another, known as the “beneficiary” of the trust.
A trust per se is not a person as far as the law is concerned (see definitions of “natural person” and “corporate person” above), and so a trust cannot be registered on title as a proprietor (see definition of “proprietor” above). Thus, if a trust has been established, and the trust is to include real estate, then the trustee must be registered on title as the legal owner of the property. So how does anyone know if the proprietor of real estate owns it as a trustee? Just looking up the legal owner of real estate does not reveal as to whether or not it is owned by a trustee, as the certificate of title will record the name of the trustee – which may be a natural person (see definition of “natural person” above) or a corporate person (see definition of “corporate person” above).
It is the Trust Deed, the document which establishes the existence of the trust, that declares the trustee as being entitled to own property for the trust. Determining whether or not property is owned in trust is by reference to the Trust Deed and trust records.
If a purchaser is considering whether or not a property should be owned by a trustee it is most important that financial advice is obtained from an accountant or licensed financial adviser.
Unfair Fees In Real Estate
A commission estate agent is paid at a rate that is equivalent to $675 per hour, according to author and journalist Terry Ryder.
More about unfair real estate fees >>
Valuation
See Valuer below.
Valuer
A valuer is a professional person whose role it is to determine the current market value of a property. Valuers are tertiary trained, and accredited by the Australian Property Institute (API).
See also Valuers vs Commission Estate Agents >>
Values Directive
A values directive is a statement of your values and preferences for your medical treatment.
Thinking about your values and preferences, talking about them, and recording them, is a process known as advance care planning.
Making an Advance Care Directive is one way of recording your values and preferences. You can do this in other ways as well.
Variation to Contract
Where the parties to a contract agree to change the contract after it has been signed, the change cannot be enforced by either party unless the party against whom the change is to be enforced has signed a document setting out the details of the change. (See “Real Estate Contracts” for more information on this requirement.)
The document by which the parties give legal effect to the agreed change is known as a Variation to Contract.
Common examples of variations to the contract include:
- Changing the settlement date to allow for early settlement.
- Changing the settlement date to allow for later settlement.
- Adding new terms or conditions.
- Deleting existing terms or conditions.
- Any other change in the contract that requires the parties’ written authority or signatures.
Where a Variation to Contract is required as part of a conveyancing transaction we charge a fixed fee as an optional extra (see “Optional Extras” above).
More about “Variation to Contract” >>
Vendor’s Offer To Sell
This is a formal contract of sale, signed by the vendor, and submitted to the purchaser as the vendor’s formal offer to sell the property. If the purchaser accepts the vendor’s written offer, the sale is complete.
The vendor’s offer to sell is usually made in response to an acceptable bid received from the purchaser (see “Bid to Buy” Form above).
