Conveyancing Terms

Conveyancing terms and property law can be confusing and is easily misunderstood. What these words mean, and whether they apply to your conveyance can vary depending on the property and the type of transaction involved. 

The following definitions includes frequently used conveyancing phrases and words. Or if you need more help, 


Adjustments are the agreed sharing of rates and other charges between the seller and the buyer of property as part of financial settlement of the sale. They’re based on the principle that the vendor is responsible for all property charges up to and including the day of settlement and the Purchaser is responsible for these costs from the day after Settlement and ongoing. If the property is leased, the same principle applies to rent that is being paid by the tenant.  The vendor is entitled to the rent up to and including the day of Settlement and the Purchasers entitlement starts from the day after Settlement ongoing for the term of the lease. Usually, adjustment calculations are made by the Purchasers’ conveyancer and given to the Vendors conveyancer as a Statement of Adjustments for agreement in the week or so before Settlement. This creates mutual agreement between the buyer and the seller. Examples of charges that Adjustments are calculated for include,
  • Council and water rates,
  • Owner Corporation fees, and ,
  • Land tax,
  • Rent and any other property income.

Adverse possession

Adverse possession is a legal principle that enables the occupier of a piece of land to have ownership transferred to them under certain conditions. For adverse possession to be agreed by the Registrar of Land, the occupier of the land claiming adverse possession rights must prove they have had uninterrupted and exclusive possession of the land for at least 15 years.

If the claim of adverse possession is granted, Title to land in question is registered in the name of the claimant.

Building Permit

Building permits certify that a building complies with relevant building regulations. They are is issued by building surveyors according to approved plans and specifications. 

A building permit is designed to ensure:

  •  building practitioners who have worked on the project are registered and their work is insured, 
  •  proper documentation was prepared so that construction was carried out correctly and according to building legislation,
  •  key stages of the work are independently inspected,
  •  the building was is suitable for occupation.

A building permit will specify that either an occupancy permit or a certificate of final inspection is required on completion of the building work. 

Not all building projects require a building permit. Possible exemptions may include:

  •  some minor alterations or demolitions
  •  uncovered pergolas associated with houses
  •  some garden sheds with a floor area less than 10m2
  •  repair work for maintenance purposes.

Information about when a building certificate is required is available by following the following link to the Victorian Building Authority.


caveat is a notice registered on the Title to a property. It’s a warning that someone other than the owner claims a right or has a non-registered interest in the property. Caveats registered by purchasers are recommended to warn others they have an interest in the property through a Contract of Sale. Caveats are often registered by parties to family law matters, court cases involving the owner, bad debts or second mortgages. 

Conditional offer

In a private sale, you can negotiate with the seller to make the sale subject to certain conditions, such as:

  •  getting approval for a loan (‘subject to finance’)
  • the sale of an existing property
  • the successful completion of a building or pest inspection.

If the contract is subject to finance, you should always nominate a lender in the relevant section of the contract. 

When you buy at auction, you cannot put conditions on the contract – for example, a longer settlement period – without the seller’s agreement.

Contract of Sale

The contract between a vendor and purchaser is the primary document setting out the obligations of the parties. It establishes the rights and obligations of the parties to be performed over a period of time, culminating with payment by the purchaser of the purchase price and transfer by the vendor of the title to the property. This exercise is known as settlement and traditionally occurs 60 or 90 days from signing of the contract.

The fundamental requirements in relation to a contract are that it must be in writing and signed by the parties. Apart from those basic requirements there is no compulsory form of contract and a contract may be as simple as a single page setting out the fundamental terms, known as an open contract, or in the form of a lengthy document containing many conditions.


A professional licensed by the Victorian government who provides legal advice and assistance on property matters, preparing Section 32 Vendor Statements and Contracts of Sale, Transfer of Land documents and who assists with financial settlement between buyers and sellers of land and their mortgage lenders. 

Cooling off

cooling-off period of three clear business days applies to private sales of residential and small rural property sales. The cooling-off period gives a buyer time to consider their offer, the contract of sale and the vendor statement. It begins from the date you sign the contract, not from the date the seller signs it.

If you decide you no longer want to buy the property within the three days allowed, you MUST give written notice to the seller or the seller’s agent. Providing you comply with the requirement to give written notice of cooling off, you will be entitled to a full refund of any money paid, less $100 or 0.2 per cent of the purchase price, whichever is greater.
The cooling-off period does not apply if:

  •  the property was purchased at a public auction or within three clear business days before or after a public auction
  •  the property is used mainly for industrial or commercial purposes
  •  the property is more than 20 hectares and used mainly for farming
  •  you previously signed a contract for the same property with the same terms
  • you are an estate agent or corporate body.


If more than one person owns land then those owners are co-owners. There are two forms of co-ownership:

  •  joint tenancy and
  • tenancy in common.

The word ‘tenancy’ in this context describes ownership and is not associated with renting or leasing property. The phrase ‘joint proprietors’ is now often used to describe joint tenants.


Covenants are restrictions registered on the Title to land. The limit the way property owners can use their land. The word ‘covenant’ means ‘promise’, and in the context of property conveyancing is used to describe restrictions, encumbrances, that have been placed on the use of land. 

Occupancy Certificate

Most new building work, including additional buildings, renovation or additions to existing buildings, requires a Building Permit  and a Occupancy Certificate or a Compliance Certificate or a Certificate of Electrical Safety before you can legally occupy or use the new or extension.

A Occupancy Certificate will specify the class of building, which indicates the type of occupancy and uses applying to the building. Occupancy Certificates are issued by Registered Building Practitioners if the building work and any associated electrical, gas fitting and plumbing work comply with Australian building standards. 


When you make a written offer to purchase a property, you will be asked to pay a deposit either in full, or a partial amount, with the remainder to be paid by a date set out in the contract of sale.

A deposit is usually 10% of the purchase price being offered but 5% deposits are becoming more common as property becomes more expensive.  

Deposits are usually paid to sellers real estate agent who must hold it in a trust account until settlement. It can also be transferred to the sellers conveyancer trust account if this is instructed by the seller. 

Under certain circumstances, the purchasers deposit can be released to the seller before settlement. For this to happen:

  •  the contract must be unconditional
  •  you must be satisfied with the proof of debts information provided by the seller.
  •  28 days must have passed after the date the contract was signed.

A deposit will be returned to you if the seller does not accept your offer.


A contract default occurs when a party to a contract fails to do what they promised to do. Severe financial penalties can apply when a default on the sale of land occurs because of the very substantial amounts of money involved. Purchasers can lose deposits. Solicitor expenses can be necessary if Court proceedings are threatened or start to recover losses or damages experienced because of a contract default by either party to the contract.   

Early release of deposit / Section 27

In Victoria, Section 27 of the Sale of Land Act 1962 establishes a procedure allowing for release of the deposit to the vendor prior to settlement.

Sellers are required to give purchasers written information detailed in the Sale of Land Act and supporting evidence about the debts against the property in writing to satisfy the purchaser that if the deposit is released, there is enough money in the purchase price to pay out all loans and debts against the property at 

If a purchaser is not satisfied with the debt information provided by the seller they must state their objection and reasons in writing within 28 days of the Early Release of Deposit notice being given to them or their conveyancer. If no objection is received within the 28 day notice period, the seller can direct the real estate agent to release the deposit to them. 


An easement is a designated area of land that gives councils, or other authorities, access rights through a property to install, replace or upgrade essential service  infrastructure like drains, gas pipes or data cables.

Easements can be either registered on the land title or implied by underground utility providers under a number of different laws. Property owners can be required to ensure that both registered and implied easements are kept clear, and that there is an area leading up to each easement from which it can be accessed.

Buyers should ensure that the property they’re interested to purchase doesn’t have easements that would prevent them from future development development of the land or renovation of any buildings on the land. 

Registered easements on a property will be registered on the property Title or detailed on the surveyors Title Plan – the land surveyors’ map with easement locations. They are often along the property boundary, but may be anywhere on the property.

Unregistered or implied easements are the area immediately over and often 1m to either side of an underground utility. Implied easements are not usually listed on the land Title.  Locating an implied easement can be a challenge The Conveyancing Place can help with. Get in to touch if further information or assistance is required. 


An encumbrance is a legal claim on a property that affects the owner’s ability to transfer the ownership of the property. Encumbrances are identified on the Title under the heading “Encumbrances, Caveats and Notices”. 

The most common form of encumbrance is a mortgage. Encumbrances limit or prevent certain actions being taken in relation to the land or set standards that must be met in developing the land. In addition to a mortgage, other common forms of encumbrance include,

  •  Restrictive covenants,
  •  Section 173 agreements,
  •  Easements.

Encumbrances not detailed on the land Title are usually available in other documents associated with the Title and can be very old, historic documents or more recent documents created under planning or environmental laws. 

Exchange of contract

A contract is exchanged when the purchaser’s written and signed offer is also signed by the seller.  On occasions, two identical contracts, or parts of the same contract, can be signed and dated as part of the exchange of contracts. An “exchanged” contract is binding for both parties

Final inspection

Prior to settlement, the purchaser is entitled to a final inspection of the property they are about to purchase. The Conveyancing Place recommends final inspections are completed early in the week prior to settlement so that time is available to follow up any issues that might be identified. 

Foreign Residents Capital Gains Withholding

Australian capital gains tax law requires that purchasers of property with a market value of $750,000 or above withhold 12.5% of the purchase price at Settlement and pay this amount to the ATO unless the seller provides a Foreign Residents Capital Gains Withholding Clearance Certificate (FRCGWC).

The process for applying for this Certificate is simple and can be done online at the ATO website – .  Or, if you provide The Conveyancing Place your Tax File Number (TFN) and give us your permission we can make the application on your behalf. 

Inclusions & Exclusions

A list of goods on a property that are either included or excluded from the sale. Both should be listed in the contract to communicate exactly what is included in the sale of the property when the transfer of ownership is finalised at Settlement.

Joint tenant

A Joint tenant has an equal interest with another person listed on a property Title. In this type of property ownership, a right of survivorship exists. If one of the joint tenants dies, 100% ownership goes to the surviving joint tenant who becomes a Sole Proprietor of the property.

The right of survivorship in joint tenancy means that regardless of the deceased tenant’s Will, the property will still go to the surviving tenant.

Joint tenancy is common for people in married or de facto relationships because married or de facto relationship partners typically share ownership of property and other assets. Unless you specify otherwise when purchasing property, the law assumes that your purchase is a joint tenancy.

Land Tax

If you own property in Victoria, you may have to pay land tax.

If you own additional property to your home, you pay land tax if the total taxable value of all the Victorian land you own, individually or jointly, as at 31 December in any given year, is equal to or exceeds $250,000 ($25,000 for trusts). For each year you own land in Victoria with a total taxable value equal to or above the relevant threshold, you must pay land tax.

If your home is the only property you own you will not pay land tax. A persons home and “Principal Place of Residence” is exempt from Land Tax. 

Land Transfer Duty

When you acquire property you must pay land transfer duty (commonly called as stamp duty) on the transfer of the land from one individual to another. The amount of duty depends on the value of your property, how you use it, if you are a foreign purchaser, and if you are eligible for any exemptions or concessions.

Some transfers of land e.g. between spouses or as a beneficiary of a Will do not attract Land Transfer Duty. 

License Agreement

A License Agreement gives a purchaser allows them to move into the property they are buying with their possessions before settlement for the property has taken place. The “License” is granted by the seller of the property and a daily or weekly fee is often charged. 

License Agreements operate under the Contract of Sale and exempt from the Residential Tenancy Act. They are commonly entered into if there is a delay to settlement, caused by the Vendors inability to settle the sale for some reason. 

Licensor – The person or entity who is granting a license.

Licensee -The person or entity receiving pre-settlement access to the property. 


mortgage is created when an owner or purchaser of property borrows money from another, usually a bank, and promises to repay that money at a later time using the property as security for that promise. In this way the lender, or mortgagee, gains a legal interest in the property and the owner/purchaser’s interest is correspondingly reduced or restricted. 

A mortgage is registered as an Encumbrance on the Title to the property. It is removed by paying back all money borrowed and all fees and charges for the mortgage. Property cannot be sold and transferred to another person until the mortgage is paid in full.


The person or entity who provides the loan to the property owner. 

Mortgagee sale

mortgage loan creates an enforceable legal claim on an asset, including land.  When money is borrowed to buy a property, it is offered as security by the mortgagor, the borrower, in favour of the mortgagee, the lender of the money.

If the borrower does not meet any of the requirements of the loan mortgage, e.g. misses payments, the mortgagee is entitled to bring the mortgage to an end and sell the property to recoup the money they have loaned.  

The sale of the mortgaged property is called a mortgagee sale


The property owner who borrows money using the property as security for the loan. 


Buy and selling property in Victoria requires the agreement to be in writing. An offer to purchase includes details of the proposed price, deposit, settlement date and any conditions of the offer e.g. subject to finance or a pest and building inspection. Usually these details are written into the Contract of Sale and signed by the purchaser.  

If a real estate agent is managing the sale, they will write the details of your offer into the Contract of Sale and ask you to sign the offer. The agent will take your offer to the seller. If your offer is accepted by the seller they will sign underneath your signature and contract binding on both parties is created.  

Off-the-plan (OTP)

When a property is purchased off-the-plan, you are agreeing to buy a property before its built based on plans and specifications detailed in the Contract of Sale.

Many experts consider buying OTP risky because of things like uncertainty about the quality of the final building and the buyers circumstances being unknown sometimes 2 -3 years in advance.  

On the other hand, there can be substantial land transfer stamp duty savings and their can be a worthwhile increase in the value of an OTP property between the time of signing the contract and eventual settlement. 

OFT properties are often part of land subdivisions that are yet to be registered with the Land Titles Office. Until the subdivision is registered, settlement of a sale can’t happen and sometimes lengthy. Be aware that once building is completed and the subdivision is registered, purchasers are usually contracted to settle their purchase within 14 days. Arrangements for any mortgage loan need to be organised well in advance because their can be substantial financial penalties if a purchaser is unable to settle on time.

Penalty interest

An amount charged by the vendor when there is a contract of sale default by the Purchaser. a payment agreed in the contract of sale on a settlement is delayed. This amount can also be charged when a purchaser cannot meet a payment deadline set out by the contract.

Pre-approved loans

The preliminary approval of a loan for a property is issued by a lender before a property has been purchased. The lender will assess your income and expenses, including credit card and other debt repayments, and confirm the maximum amount they will lend you. You will also be given an indication of the interest rate you will be charged, what the monthly repayments will be as well as details of loan set up fees and any other charges.  

Pre-approved loans are usually valid for 90 days. If you go past the 90 days approval process before you purchase and settle a purchase, the lender will want to confirm there have been no changes to your circumstances that would change the amount they will lend or the terms and conditions of their loan. 

Residential property

Residential property is:

  •  land capable of being used solely or primarily for residential purposes and that may be lawfully used in that way.
  •  land which includes a building, or part of a building, that a person intends to refurbish or extend so the land is capable of being used solely or primarily  for residential purposes and that may be  lawfully used in that way.

Residential property does not include commercial residential premises, a residential facility or a supported residential service or retirement village which may be lawfully used in that way. 


Settlement is when the promises made by both parties in the contract of sale are completed. It’s a serious important legal process overseen by the Reserve Bank of Australia and Secure Electronic Registries Victoria (SERV) the organisation appointed to administer the Land Register by the Victorian government.

The settlement date is written into the contract of sale. The settlement period is usually 30 to 90 days but can be longer. Settlement takes place in a highly secure digital on-line settlement workspace the buyer and sellers legal representatives , banks and their solicitors are registered to use. The process has two parts,

  •  Financial settlement
    – the balance of the purchase price, after the deposit is taken into account, is paid to the seller.
    – the sellers mortgage loan is paid to the mortgagee in full. 
    – all property outgoings such as rates are adjusted between the purchaser and the seller. The seller is responsible for these charges up to and including the day of settlement and the purchaser is responsible from the day after settlement.
  •   Land Registry lodgement
    – electronic land transfer and mortgage registration documents are created for lodgement with SERV.
    – when these documents are signed by your legal reps and accepted by SERV the property Title is transferred from the seller to the purchaser.   This involves removing the sellers name on the Title and replacing it with the purchasers name recorded as the owner of the land on the official land Title register.
    – because the sellers mortgage is paid out in full at settlement, their lenders’ name is also removed as the mortgagee on title.
    – if the buyer has arranged a mortgage loan secured by the property, their lender is registered on Title as the mortgagee.  

Once Settlement is completed, the purchaser takes possession of the property (unless otherwise arranged earlier under a licence agreement for example).

Section 32 / Vendor Statement

Section 32 of the Sale of Land Act 1962  details information a  seller must disclose about the property to a purchaser about the property before they sign an offer to purchase.  Failure to disclose the required information or to knowingly provide false information can lead to purchasers legally abandoning contracts and substantial financial penalties for the vendor. 

Special conditions

These are additional contract terms that over ride a contracts General Conditions.  Many Special Conditions delete General Conditions considered by the Law Institute of Victoria and other authorities to fairly balance the related but different interests of both buyers and sellers. If you’re presented with a contract with Special Conditions please contact The Conveyancing Place for a contract review to make sure there are no red flags or unfair terms.

Tenants in Common

Tenancy in common is a popular type of property ownership that means two or more people co-own property in defined shares. The shares can be equal or unequal. For example, one tenant in common can own 99% of the shares, and the other tenant in common own the remaining 1% of the property. There are often more than two tenants in common owning shares in a property. 

Unlike joint tenancy, there is no right to survivorship in a tenancy in common. If one of the owners dies, the other tenants in common shares in the property don’t change. This means, each tenant can choose to sell their shares or give them away in their Will without affecting the ownership share of the other Tenants in Common.

Tenancy in common is typical for co-owners who contribute varying amounts to purchase a property or investors who buy property together. Regardless, each party can choose how to dispose of their shares.


The person or entity that owns and is selling the property.

Verification of Identity (VOI)

Buyers and sellers of property are legally required to have their identity independently verified. VOI standards and regulations have been created for electronic conveyancing and must be complied with. These regulations include a list of acceptable identity documents. 

More than one document is required and different combinations of documents are acceptable if one or another of the documents is not available. The documents used must be original documents and copies are not permitted.


Zoning is a land planning classification that outlines the use of land and the buildings situated on it. This classification may include whether or not the buildings are industrial or residential and specifies how the zones of the land can be used.

Make sure the property you are considering to buy has zoning that will permit you to use it for the purpose you have for buying. 

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