Purchasing a home can be time-consuming and confusing, mostly because there are tons of legalese and jargon used in the industry that normal people are not used to. If you don't have a good firm basis in this terminology, you may find yourself with an even lengthier and more costly process when it comes to purchasing a property.
So to help you, we've decided we're going to do a really quick real estate jargon glossary. We will also include some of the legalese terms so that you can be armed with all the knowledge you need to make your process smooth and less stressful.
Difference Between Jargon and Legalese
To many, it may sound like the same thing when you use the words jargon and legalese. But there is definitely a difference, and before we get into giving you a glossary of these terms, we wanted to make it clear what that was. Jargon tends to be more about the property itself and the kitschy little words or phrases that real estate agents use to describe the home.
On the other hand, legalese is a legal term that is used during the entire process. These tend to be more about the agreement and financing than the actual property itself. Often this includes legal documents and actions that have to be taken to complete the process of purchasing a home or property.
Even before you start the process of all of the legal aspects of purchasing a home, there are tons of terms that you will be exposed to that you may not understand. That's because before you even get to the legal aspect, you have the process of finding the home that suits you and your needs.
Here are some key pieces of jargon that will help you understand what the real estate agent is trying to tell you as you view a wide range of homes:
An ideal purchase as your first three-bedroom home - This is a perfect choice if you really need two bedrooms and a small study or storage area. Frequently the third room in this home will not be big enough to even be considered a bedroom.
Compact - Aesthetically, this may be a great home, but it is going to be extremely small.
Character - This is a unique home that is not to everybody's taste. Typically this means that a property is not conventional or normal when it comes to aesthetics.
Cute/Cosy -The property or home may be beautiful, but it's going to be small and not a great fit for anyone looking to have more than one person in it.
In need of modernization - Typically, this is a home that really was built in one of the past decades and probably will require a complete renovation. Ideal for people who like retro looks, but if you're looking for a newer vibe, this is not your choice.
Needs a little TLC - The property will require a lot of work and renovation. Typically that entails a lot of work and quite a bit of money invested into the property after the purchase.
One of a kind/Quirky - It's cute but not for everyone when it comes to taste.
Potential - There's always potential when it comes to purchasing a new property or home, but when this term is used, you can bet that there's going to be a lot of work to be done which will mean that it's going to take longer to get into and may cost you a pretty penny.
The property has excellent transport links - You might be close to the local bus route, but odds are that you're going to have to deal with a busy freeway or railway line close to the home.
Traditional - This term means that the house is an older one and that the home will need work done unless you're into the retro look.
Once you've actually found the home, then it's time to really dig in and understand the legalese terms that are associated with the purchasing process.
Abatement - This is a reduction in the price of the property that usually happens when a flaw is found.
Agreement of Sale - This is the simple contract of sale and purchase that happens between the current owner and the future owner. It is a binding document that discusses the price, conditions of the home, and date of sale.
Appraised Value - This is the estimated market value of the home as determined by an appraiser.
Bond Assurance - This can also be called home loan insurance. Often this is taken out of a life insurance policy to ensure covering the rest of the loan in case of death or disability.
Bond Originator - A bond originator submits and secures loan applications on behalf of property buyers. As your partner in submitting home loan requests, they do all the groundwork on your behalf to initiate a bond from the most suitable banking institution.
Bridging Loan - This is a loan that is temporarily given to the buyer before their previous property has been sold.
Clearance Certificate - A legal document issued by the municipality that details rates, taxes, and levies to be paid once the transfer of property has taken place.
Conditions of Title - These are conditions that limit the owners' rights and are found on the title deed to the property. Within these things like servitudes and building, limitations are documented.
Conveyancer - This is a special form of attorney that has been deemed a conveyancer. They are allowed to attend transactions at the deed office when it comes to the transferred property as well as the registration of bonds.
Deed of Sale - This is a legal document that records the transfer of ownership from the previous owner to the future owner. Within this document, the terms of agreements are outlined.
Fixtures & Fittings - This terminology indicates attachments in the home that are permanent. This can include things as hobs, eye-level ovens, or curtail rails. It may even contain flats or guesthouses that are attached to the larger property the home sits on.
Freehold - This is a type of property where the owner is entitled to use of the entire property and takes all responsibilities. On the other hand, something called sectional title properties are larger properties where things like flats and guesthouses can be sold individually.
Initiation Fee - This is a fee that the bank will charge to be able to cover the first costs of the process of putting a home application through. This can include things like a credit report being run or property appraisal needed.
Pre-Approval – There are two definitions under this entry. 1. This is the process that the potential bank will utilize to look over the potential buyer's finances. This process determines how much of a risk the potential purchaser is and how much money the bank would be willing to lend to them. 2. The process in which a loan application has already been successfully completed and the underwriting guidelines of the bank are met to allow a bond to be granted.
Prior Occupation - This is the right of the buyer to be able to take control over the property before the transfer has taken place. It is an agreed rental document that can be utilized in registration or if the transfer has taken place.
Offer to Purchase - A legal document that outlines the proposed purchase price and conditions between the buyer and the current owner.
Subject-to-Sale - This is the timeframe in which a sales contract will become binding between the two parties. Typically this takes a period of 60 days.
Suspensive Condition - This is a provision with the sales completion until a specific condition is met.
Title Deed - Legal document that is filed in the deeds office and is a valid proof of property ownership. This contains all the details of the property, the sale agreement, and any other legal documents necessary in the transfer process of the deed.
Now maybe the process of purchasing a home won't be as confusing as you have a good base of the jargon and legalese used in it.