USEFUL TERMS commonly used in 'buying and selling property'
Description of the terms
Auction means the sale of property by any means (including the Internet) whereby:
(a) the highest, the lowest, or any bidder is the purchaser, or the first person who claims the property submitted for sale at a certain price named by the person acting as auctioneer is the purchaser, or
(b) there is a competition for the purchase of the property in any way commonly known and understood to be by auction.
Within the Torrens system, caveat constitutes a statutory injunction preventing the Registrar-General from registering dealings, until certain preliminary procedures shall have been observed. an injunction to the Registrar-General to prevent registration of dealings with the land until notice has been given to the caveator. A caveat may be lodged by the caveator who claims to have an interest in the subject land.
Certificates commonly required in property transaction
This is a planning certificate under s149 of the Environmental Planning and Assessment Act 1979 (NSW). Broadly speaking, the certificate shows the zoning and use of the land.
This certificate shows the amount payable of water rate of the property as required under S66 of the Sydney Water Act 1994 (NSW).
This certificate shows the amount of due or payable to the council as required under s603 of the Local Government Act 1993 (NSW)
This certificate shows if there is any land tax charged on the property as required under s47 of the Land Tax Management Act 1956.
Certificate of Title
Simply speaking, the Certificate of Title is the registered proprietor's copy of the folio identifier held by the Registrar General. The document certifying title is the original folio of the Register held by the Registrar-General (s 40, 44). Strictly, the Registrar-General is not required to issue a duplicate folio of the Register, which is called a certificate of title, unless requested to do so (s 33(5), (6)). However, as a matter of practice, a certificate of title is issued to the registered proprietor (or mortgagee) of the parcel. The certificate of title is important in conveyancing transactions and is generally required to be produced to the Registrar-General when registering further dealings (s 38(1), (2), (3)).
Contract for the sale of land
Contracts for the sale of land possess several special features:
• once the contract is made the purchaser acquires an immediate equitable interest in the property on the assumption that he can obtain specific performance of the contract.
• the contract may involve many implied terms as to how title will be established etc which derive from the general land law and the practice of conveyancers.
• the legislature has imposed various obligations in this sort of contract which do not generally apply.
[recommended to be handled by qualified lawyers]
Cooling off period
Cooling off period applies to the sale of residential land, which gives a purchase the right to rescind the contract within 5 business days (s66S of Conveyancing Act). However, a vendor can request a purchase to provide a s66W certificate which has the effect of waiving any entitlement to a cooling off period (s66T(1)). Cooling off period also does not apply in the following conditions:
• auction sale
• contract is made on the same day as the property is auctioned but passed; and
• contract is made through option.
Co-ownership: tenancy in common and joint tenancy
Where two or more persons hold land as tenants in common, each has a proportionate interest in the land (as specified in the instrument). In contrast to a tenancy in common, under a joint tenancy each joint tenant is seised of the whole, along with the other joint tenants. Joint tenants do not hold proportionate shares in the property as tenants in common.
Dealing represents all legal activities affecting title to property. Common examples of dealing include sale of land contract and leasing. The Conveyancing Act defines dealing as any instrument other than a grant or caveat which is registrable or capable of being made registrable under the provisions of this Act, or in respect of which any recording in the Register is by this or any other Act or any Act of the Parliament of the Commonwealth required or permitted to be made.
Deposit (and Holding Deposit)
Deposit is the earnest for the performance of the contract.
• If the contract proceeds, the deposit becomes part of the down payment and deduct from the final payment.
• If the deposit is paid subject to certain conditions being fulfilled and those conditions are not fulfilled, the vendor cannot retain the money and have to return to the purchaser. Conditions can be "subject to purchaser obtaining finance" (must be drafted into special consideration)
Holding deposit: money paid by a purchaser before a contract is entered into does not ordinarily impose any obligation on either parties. The money must be refunded to the purchase if the contract is not entered into later.
Installments of purchase money
A deposited plan is a plan of subdivision of land that has been registered at the Department of Lands. Each plan is allotted a distinguishing number.
Disbursement refers to the expenses which are paid by the solicitor on behalf of client.
An easement is a right belonging to one person to use in a particular manner, and in connection with his own land, land belonging to another. Positive easements give rights of entry upon another person's land to enable something to be done on that land. Negative easements consist of rights to prevent something being done. Common examples are rights of way (the right to cross one parcel of land to gain access to another parcel of land) and rights of drainage (the right of drain water from one parcel of land across another parcel of land).
Enquiry & Searches
The Integrated Titling System (formerly the Automated Land Titles System (ALTS)) maintained by the Department of Lands allows various online searches to be made, including:
• searches for which a fee is payable (eg Computer Folio Certificates and Historical Search Certificates), and
• free searches (eg as to delivery details of certificates of title following the registration of deposited plans or registration of dealings affecting computer folios).
Exchange of Contracts
Parties (vendor and purchaser) become bound by a contract for the sale and purchase of land by an exchange of counterpart contracts. The procedure of exchange usually involves each party signing a copy of the contract and physically exchanging it for the other party's signed copy.
Freehold and leasehold estate
Estates (legal term to describe those interests of the land) in land are classified according to the length of time for which they are to endure: estates of freehold and estates less than freehold (including leasehold estate). Estate of leasehold was an estate for a fixed term of years. Estates of freehold are created where the length of the duration of the estate in uncertain (as long as the obligation is fulfilled).
Any charge on land (other than a covenant charge) created merely for securing the payment of a debt. Mortgagor is the borrower of the debt while mortgagee is the lender.
Property dealings are required to be registered in the register maintained by the Registrar-General. The Register is comprised of folios, dealings, instruments and records, as specified in the relevant laws. The significance of what constitutes the Register in respect of land is that the Register must be searched to ascertain the state of the title to the land and those interests that are noted in the Register are protected under the Torrens title system.
The act of registration confers on the dealing a quality of indefeasibility and protection on a bona fide party acquiring an interest in the land.
A requisition on title is a requirement by a purchaser that certain things had to be done by the vendor in order to bring the vendor's actual title into line with the title promised in the contract. If the vendor does not comply then, subject to the contract, the pruchaser can rescind.
The document of title and other items are handed over in exchange for the cheques and other items. Settlement is usually arranged to be 6 to 8 weeks after sale advice to allow time to the conduct of search and enquiry.
Specific performance is an equitable remedy to both the purchaser/vendor to compel either party to complete the sale/purchase.
Stamp duty is imposed on transactions and certain instruments that fall within one of the head of the Duty Act 1977 (NSW).
There are many varieties of surveys and the one commonly used survey in conveyancing is identification survey, a type of boundary survey. An identification survey report includes:
a title description
the dimensions and boundaries of the site in the title document
the improvements stand on the land and
the location of any easements.
Torren Title System
The system was developed in South Australia and adapted by the New South Wales by the Real Property Act 1990. Torren Title System is a system of "title by registration:. A purchaser only gets title of land by registering the transfer documents. Title is granted by way of registration. Title under the system derives from Registrar-General's act in registering an instrument, not from the parties' act in executing the instrument. Registration is the source of title.
The passing of any estate or interest in land under this Act whether for valuable consideration or otherwise.
On completion of a sale a seller is obliged to deliver the property with vacant possession which means clear of occupants and of objects which are not included in the sale. It is a legal obligation to ensure that a property is in a state fit to be occupied at a given point in time.
Section 66R of the Conveyancing Act 1919 (NSW) (the Act) requires a vendor to prepare a contract for residential property before the property can be offered for sale. In accordance with Section 66R(2) the required documents include (1) a copy of the proposed contract and (2) the documents required by section 52A. If the vendor does not make the disclosure required by attaching the prescribed documents, he will be subject to a maximum penalty of 10 penalty units (i.e. $1,100) and the purchaser is entitled to rescind the contract and get the deposit return.