If your legal agreements leave you cross-eyed, fear not: Private Property has defined and simplified the top 20 property terms you should know.
Top 20 property terms
Let’s get right down to it: clearing up the confusion you may feel when confronted with legal terminology or property industry jargon is a must. Private Property believes that anyone who ever needs to find a new home (that’s you!) has the right to be empowered by knowledge, and to fully understand the terminology attached to the property agreements, leases, and contracts they sign. That’s why we’ve created this list of the top 20 property terms you should know:
1. Agreement of sale
Whether you’re buying or selling your home, the transaction will be confirmed when you sign an agreement of sale. This legal document outlines the terms and conditions related to the sale of the property.
When you’re looking to sell your home, a property appraisal will be conducted. The buyer, seller, or your bond originator, may request this, as a property appraisal will assess your property and determine its true value, often taking into account the circumstances surrounding the property sale.
3. Asking price
Armed with the right information, and usually, with the advice of your estate agent, you’ll define an asking price for your property, when you put it up for sale.
4. Assessed value
The outcome of having your property appraised or assessed leads to a final definition of value that your property is worth. This is known as the assessed value and can be calculated by an appointed financial institution, bond originator, or similar. The assessed value of your property is directly linked to the number of rates, taxes, or levies you pay for the property.
In many respects, the way you access the financing for buying your property is defined by the different types of finance your chosen financial institution has to offer. If you’re looking to buy a new home, you may opt for financing through a bond, mortgage, or home loan. Simply put, however, a bond for your property will be the legal contract you sign with your financial institution, that outlines the agreement whereby they lend you the money to buy your home, and the terms and conditions related to the way you pay the money back.
6. Buyer’s market
When there’s an abundance of great properties on sale, interested property buyers rejoice, because supply exceeds demand. In a buyer’s market, property prices are kept relatively low as competition to make a sale can be quite fierce.
7. Capital Gains Tax
There are only two certainties in life: death and taxes. And, when you’re a property owner, Capital Gains Tax is a reality. If you’re selling a property that’s increased in value since you bought it, you’ll need to pay Capital Gains Tax to SARS. If you’re buying an investment property, the payment of Capital Gains Tax will also apply. If you’re unsure about whether or not you need to pay Capital Gains Tax as part of a property purchase or sale, consult your estate agent and make sure you know what’s due to the taxman.
If you’re ever confronted with this term, simply swap it out for the word “transfer”. In property terms, cession means that the rights to a property have been transferred from a seller to a buyer.
9. Conditions of title
When you buy a property, you’re also buying the property’s Title Deed (we explain that term below). The conditions of the title outline all the terms and conditions related to owning the property, and what is expected of you as an owner.
In the world of property, the legal paperwork and framework are managed through a specialized sector of legal eagles who focus on Conveyancing. This specialized sector of law focuses on the transfer, sale, and purchase of property.
Depreciating assets are not always the best idea, but sometimes they’re essential for your lifestyle (spoiler alert: generally speaking, cars are depreciating assets). Depreciation is the process whereby something you buy decreases in value over time.
12. Initiation fee
If you’re signing up for a home loan or bond, your financial institution will charge you an initiation fee. Just so you know: they are legally obligated to. This fee covers the costs of starting your loan agreement and the administrative tasks attached to doing so.
A full walkthrough of a property. An inspection can be conducted by the buyer, the seller, an estate agent, or an accredited professional. When you’re purchasing a property, it’s recommended that you not only conduct a full inspection but that you also call in the professionals to ensure you’ve covered all your bases. That means hiring a professional building inspector, or other professionally accredited person or company, depending on what you need to check on.
Consider a levy a required cost that you need to pay for the privilege of living where you do. Levies are most commonly payable when you live in a sectional title complex or estate. These levy payments are important, as they’re managed by a Body Corporate, and are used to improve security, enhance your property’s amenities or appearance, and can help to improve your property value.
15. Market value
The market value of your property is a value definition that takes into account the features of your property, the current market conditions, and what other properties similar to yours may have sold for.
16. Offer to purchase
When you’re in the process of selling your home, you’re waiting on the arrival of an offer to purchase. An offer to purchase is a written document that outlines the price an interested buyer is willing to pay for your property, and any related terms and conditions.
17. Property transfer
The process of buying and selling a home can be referred to as a complete process of property transfer.
18. Title deed
When you buy your home, you don’t only pay for the physical building and land. You also pay to own the title deed. A Title Deed is the legal document that confirms you own the property you have purchased.
19. Seller’s market
A seller’s market is often the dream for people looking to sell their property. In short, a seller’s market occurs when the economic conditions and related circumstances create a situation whereby property prices remain high, and demand exceeds supply.
Make no mistake: a voetstoots clause has been the bane of many people’s lives in the past. Don’t ignore it if you’re signing a document that has one! Voetstoots simply means “as is”, so if you purchase a property with a broken ceiling, it is your responsibility to fix it. Never sign one without conducting professional and thorough inspections of the property you’re looking to purchase!