Property Terminology Guide: Understanding the Basics in NSW
Are you thinking of buying or selling a property in New South Wales (NSW)? It's essential to understand the various terms and concepts related to real estate to make informed decisions. Here's a guide to help you understand the most common terms used in NSW real estate:
Certificate of Title
A Certificate of Title is a legal document that provides information about the ownership of a property. It includes the name of the owner, a description of the property, and any interests or rights that may affect the property. It's important to note that a Certificate of Title isn't a guarantee of ownership, but it is an essential document in the sale of a property.
Conveyancing
Conveyancing is the legal process of transferring the ownership of a property from one person to another. This process includes preparing legal documents, such as contracts of sale and transfer of title, and conducting property searches to ensure there are no encumbrances on the property.
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Cooling-off Period
A Cooling-off Period is a period of time after the exchange of contracts where the buyer has the right to withdraw from the sale. In NSW, the Cooling-off Period is five business days. During this time, the buyer can back out of the contract without incurring any penalties.
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Covenant
A Covenant is a legal agreement that restricts the use of a property in some way. For example, a covenant might prohibit certain types of activities on the property, such as running a business or keeping livestock. Covenants can be imposed by a local council or by the developer of a housing estate.
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Deposit
A Deposit is an amount of money paid by the buyer when purchasing a property. The deposit is usually 10% of the purchase price and is held in trust until settlement. The deposit shows the seller that the buyer is serious about purchasing the property.
Easement
An Easement is a right that allows someone else to use a portion of your property for a specific purpose. This might include allowing someone to access their property by crossing your land or allowing a utility company to install a pipe or cable on your property. Easements can be granted by agreement or imposed by law.
Land Tax
Land Tax is an annual tax paid by property owners based on the value of their land. The amount of land tax owed varies depending on the value of the land and is calculated by the NSW government.
Mortgage
A Mortgage is a loan that is secured against a property. When a person borrows money to buy a property, the lender will take out a mortgage on the property to secure their investment. The mortgage is registered on the Certificate of Title and must be discharged when the property is sold.
Property Description
Every property has a description that includes information about the lot number, plan number, street address, and any other relevant details. This information is used to identify the property and ensure that it is accurately registered with the land titles office. It's essential to ensure that the property description is accurate when buying or selling a property.
Settlement
Settlement is the final stage of a property transaction where the balance of the purchase price is paid, and ownership of the property is transferred to the buyer. Settlement is usually done through the buyer's solicitor or conveyancer.
Stamp Duty
Stamp Duty is a tax paid by the buyer when purchasing a property. The amount of stamp duty owed varies depending on the value of the property and is calculated by the NSW government. It's important to factor in the cost of stamp duty when budgeting for the purchase of a property.
Strata Title
A strata title is a form of ownership where a property is divided into several units, each of which is owned by individual owners. This form of ownership is common in apartments and townhouses. Each owner owns their individual unit as well as a share in the common areas of the building or complex, such as the entrance, elevators, and common gardens. Strata titles also come with by-laws that govern the rules and regulations of living in the complex, such as noise levels, parking, and pet ownership. It is important to understand these by-laws before purchasing a strata-titled property.
