Glossary

Conveyancing terms - New South Wales

Agent – usually means the Estate Agent, but at times can used generally mean a person representing a buyer or a seller of property, including an attorney appointed under a Power of Attorney, a Guardian, Executor, Trustee, or Company Director.

Agency Agreement - in the context of NSW property transactions it means the fee agreement between the Estate Agent and the seller.

Approved structure – this is any physical structure on the land that is Council approved. In other words, a Development Application (DA) was submitted and approved for that structure. Council may require unapproved structures be rectified to meet particular standards, such as the Building Code, or Council may even demand that the structure be demolished if it was built without the requisite approval.

Building Report – a report about whether any structures on a piece of land are encroaching on the land of a neighboring property. It can help to identify unapproved structures on the land. To obtain a building report, a certified surveyor must conduct a survey of the land and provide a report for that property.

Caveat – is a warning which can be found on the title search of a property that there is a charge on the land. For example, the owner of the land owes money to another person or entity and on the sale of the property, that person or entity must be paid from the sale proceeds. Typically placed on the title by unsecured creditors and claimants to ensure they get paid, it is a helpful but not secure means of obtaining payment on the sale of the property.

Clearance Certificate – there are various types of clearance certificates. Most of them relate to tax liabilities. In other words, if a seller owes tax on a property, and pays it or is exempted from paying it, they will receive a clearance certificate in respect of that property and for that particular tax. This certificate is then shown to the purchaser’s legal representative and it can be relied on. This means that the purchaser can be certain tax all property taxes have been paid by the seller and the purchaser will not receive requests to pay owing and unpaid taxes of the other party in the future. Examples include clearance certificates for Land Tax and CGT Residential Withholding.

Cooling-off period – a period of usually 5 days (or 10 days for off-the-plan property purchases) in which the purchaser is allowed to cancel the contract without incurring severe financial penalties (including the forfeiture of any deposit paid or due). In some instances, no cooling-off period is waived by the buyer by delivery of a so-called Section 66W Certificate to the seller.

Completion Date– The date contracts were signed and exchanged. This date is the date from which any taxes and duties due at a property settlement (or in some cases, prior to settlement) are calculated or determined.

Compliance certificate – a certificate that proves that something about the property is compliant, in other words, that it meets certain health and safety standards. An example is a Swimming Pool Compliance Certificate.

Costs Agreement – the agreement a buyer or seller signs with their solicitor or conveyancer agreeing to pay for their services.

Deposit – this is usually an amount equal to 10% of the agreed purchase price (including any GST) that is put down and held by the estate agent pending settlement. Sometimes, where no agent is involved, the seller’s solicitor will hold the deposit pending settlement.

EDR – means Electronic Duties Return. It is an assessment of Transferee Duty (known commonly as “Stamp Duty”) and other taxes payable on the purchase of vacant and improved land in NSW.

ELNO – means Electronic Lodgment Network Operator. This is an online platform on which property settlements and other categories of legal transactions can occur. The only operational ELNO in NSW is PEXA. Most conveyancing transactions will take place on PEXA.

Encumbrance – means anything affecting land in a way that restricts what an owner may do with the land. Common encumbrances include rights of way, easements for drainage of water, and covenants in respect of fences, building materials that may be used, and so on.

Exchange of contracts – two duplicate contracts are signed and exchanged. One contract is signed by the buyer, and the other contract is signed by the seller. These contracts are either physically or electronically swapped or “exchanged”. Once exchanged, unless a cooling-off period applies, the terms of the contract become immediately legally binding on the buyer and seller and the contract cannot be cancelled without legal repercussions such as forfeiture of a deposit and claims for monetary loss incurred by the party that is not at fault. The exchange of contracts is sometimes followed by a cooling-off period in which time the purchaser can cancel the contract in that time and only incur a relatively small penalty.

Fee estimate – an estimate of fees and other expenses that a buyer or seller will have to pay to their solicitor or conveyancer by the end of the sale or purchase process.

FIRB – means Financial Investment Review Board. All buyers who are not Australian Citizens, Australian Permanent Residents or certain categories of New Zealand Residents must obtain permission from FIRB (a so-called FIRB clearance certificate) to be able to purchase property in Australia. This should be done prior to making any offers to buy property in Australia. There is a significant fee involved in obtaining consent from FIRB.

First Home Buyer Assistance Scheme – is an exemption or reduction of the transferee duty payable by first home buyers.

First Home Buyers Choice - an option available for first home buyers to pay an annual ongoing property tax instead of transferee duty (stamp duty). This is an option for first home buyers who do not qualify for the First Home Buyer Assistance Scheme.

First Home Owners Grant – a cash payment of up to $10,000 for first home buyers buying off the plan or buying vacant land with a view to building a home on it.

First Home Loan Deposit Scheme – is a government guarantee to help first home buyers enter the property market without having to pay mortgage duty.

First Home Super Scheme – is a scheme for individuals to enter the property market by using salary sacrifices paid into their superannuation funds to fund the purchase of a property.

Guarantor – a person who guarantees payment of the mortgage. This could in effect be the same person borrowing the mortgage funds, but it could also be a family member or other person.

Lodgment – refers to the lodging of documents, in NSW, to Land Registry Services, which is the repository of all information relating to land in NSW.

Mortgage – a loan for funding the purchase of land and structures on the land.

Mortgagee – the bank, entity or individual loaning a buyer money for the purchase of property.

Mortgage Insurance – a significant insurance cost usually paid by persons who are not able to save a large deposit for the purchase of a property

Mortgagor – the person or entity borrowing money to finance their purchase of property.

Occupation Certificate – a certificate issued by the local Council confirming that a dwelling is fit for occupation.

Order on the agent – a notice to the Estate Agent that settlement has been finalized and the deposit the agent holds can be paid to the vendor and the keys the Agent holds can be given to the purchaser.

Pest and Building Report – a Report usually completed by a builder and/or pest controller about the conditions of any structure on a property such as a dwelling or commercial premises.

PEXA – an ELNO (see above).

Priority Notice – is a notice placed on the title for a property by a buyer after exchanging contracts to warn the seller’s creditors that the seller has exchanged contracts for the sale of the land to a particular purchaser. It prevents certain of the seller’s creditors from frustrating the sale.

Registration – the process of being registered in a public register as the owner of a property or other asset.

Registration certificate – a documents that proves that something has been registered with the relevant authority. An example is a Swimming Pool Registration Certificate. This certificate is proof that the Swimming Pool is registered with the Swimming Pool Authority.

Registration notice - notice that a purchaser’s title in a property is registered. The notice is received after settlement.

Reports or Property Reports – these are reports a buyer would obtain in respect of the property being purchased. These may include a Pest and Building Report, Strata Report, Building Reports and so on.

Requisitions on title – a set of questions about a property or asset that the buyer asks the seller to answer. The seller must respond with Replies to the Requisitions on Title.

Stamp Duty- See Transferee Duty.

Searches – these are reports ordered from Land Registry Services, which is the repository for all information affecting land in NSW. Types of searches include Title Searches, Dealings and Deposited Plans.

Section 66W Certificate - a certificate signed by the purchaser’s solicitor or conveyancer which confirms that the purchaser is waiving their cooling-off rights and has been given advice about this.

Settlement – this is the day and time on which the purchaser pays the balance of the purchase price in exchange for ownership of the property or asset. It usually occurs a few weeks after exchange and once any cooling off period has expired. Also called “Completion”.

Settlement period – this is the number of days, weeks or months between date of exchange of contracts and date of settlement.

Survey/ Peg-Survey or Survey Report – Where a buyer wants to be satisfied the boundaries of a property do coincide with the fence line or presumed fence line, the buyer may commission a surveyor to conduct s survey of the property and deliver a report. This is normally done prior to exchanging contracts. While recommended in all property purchases, boundaries are more likely not to be accurate the larger the piece of land being purchased.

Strata Report – a report commissioned by the buyer of strata property before exchanging contracts. The report gives the buyer insight into financial matters affecting the strata (such as the position of the Administrative and Sinking Funds) as well as decisions and proposals made by the Body Corporate that may affect a buyer.

Transferee Declaration – a statutory declaration that is signed by all buyers of property in NSW verifying their citizenship or visa status as well as the details of the property they are purchasing. Purchasers can complete this form online.

Transferee Duty – It is paid by all purchasers of property in NSW, except for certain limited categories of home buyers such as first home buyers.

Verification of Identity – also called VOI, is the process of identifying a buyer or seller.