HELPFUL ADVICE REAL ESTATE TERMS A - Z
Category Advice
Real Estate Transaction terms got you perplexed? See our comprehensive glossary to guide you in understanding common terms used in a real estate transaction.
ALIENATION
In the context of real estate, 'alienation' refers to the sale, exchange of donation of immovable property (or, 'land') and commonly used in some sale agreements as well as the legislation referred to as the Alienation of Land Act 68 of 1981.
AUCTION
This refers to the method of selling a property to a person who makes the highest bid.
BODY CORPORATE
The controlling body of a sectional title scheme made up of every single owner of the various units in the scheme. Until such time as the developer has sold the last unit, he remains a member of the body corporate.
BODY CORPORATE RULES
Rules for the control, administration and management of a Sectional Title scheme.
BOND
See 'Mortgage Bond'.
BREACH OF CONTRACT
If either a Purchaser or Seller does not perform according to the terms of the agreement of sale they have signed, they are deemed to be "in breach". Under these circumstances, the agreement usually states what rights the other party enjoys. In this way, performance and breach will also apply to a lease agreement concluded between a lessor (landlord) and lessee (tenant).
CAPITAL GAINS TAX
This is a tax levied on the disposal of immovable property where a gain is made by the Seller.
CONTRACTUAL CAPACITY
The capacity that the law recognizes a contracting party enjoys in order to enter in a contract lawfully.
CODE OF CONDUCT
A set of ethical rules drawn up by the Estate Agency Affairs Board to regulate estate agents' ethical conduct. This code is enforceable by law through disciplinary committees appointed by the Board.
COMMON PROPERTY
In a sectional title complex, common property is the land on which the buildings are built, together with those parts of the building that are not included in a particular section, i.e. stairwells, lifts, carports, swimming pools, etc
COMMISSION
The professional fee (commonly expressed as a percentage of the selling price) estate agents charge for carrying out real estate duties such as selling, letting etc.
CONTRACT
A legally enforceable agreement, i.e. an agreement of purchase and sale or an agreement of lease.
CONVEYANCER
An attorney who is qualified to attend to deeds office transactions such as the transfer of property from a Seller to a Purchaser or the registration of mortgage bonds and servitudes.
COOLING OFF RIGHT
Certain Purchasers of immovable property have the right to revoke an offer to purchase or terminate a sale agreement. The Purchaser has five working days to "cool off' which commences the day after he has signed - not the day the contract was signed by him. Public holidays and weekends do not count so be especially careful over the Easter long weekend. This is generally referred to as a "cooling off right".
This right to cool off applies only in respect of properties which are used or intended to be used mainly for residential purposes and only if the purchase price is R 250,000 or less.
This right does not apply in certain instances e.g. if the Purchaser is a company, close corporation or a trust.
CONDITION
A stipulation in a contract upon the fulfilment of which depends that of another. (see also, "Resolutive Condition' and 'Suspensive Condition').
CSOS
The Community Schemes Ombud Services.
DEFECTS
A Patent Defect is a defect in the property that is clearly visible to the naked eye. A Latent Defect is a defect which exists but is not visible or discoverable upon a reasonable inspection of the property and which substantially impairs its utility of effectiveness.
DOMICILE
The official physical address that a party to a contract nominates as being one's place of residence and where one can receive legal process, such as receiving of summons. In a contract, this will formally be referred to as the domicillium citandi et executandi.
DEPOSIT
The down payment a Purchaser makes when buying a property, either in the form of cash or a guarantee, i.e. the deposit may well be coming from the proceeds of the sale of an existing property.
DUPLEX
A sectional title unit on two levels with stairs.
EXCLUSIVE USE
In a sectional title property, the owner of a specific unit can not become the exclusive owner of a portion of the common property but for his ownership of his undivided share. Certain portions can be set aside for the exclusive use of a particular owner (e.g. parking bay or garden) and this could be done either through Body Corporate Assignment or a Notarial Deed of Cession.
FLISP
Finance Linked individual Subsidy Programme which is a Government subsidy programme to assist low income earners to purchase their first home.
FREEHOLD
A free standing house on a plot of ground with its own Lot or Erf no.
FIXTURES AND FITTINGS
When land is sold, all the permanent improvements are included by law i.e. house, garage, outbuildings, etc together with all movable items which have been permanently fixed to the house or building referred to as permanent fixtures.
From a Seller's point of view, anything that he wishes to take with him that is clearly considered a permanent fixture owing to the fact that it is screwed / nailed to the floor/wall/ceiling should be clearly indicated in the sale agreement, otherwise the Purchaser would rightfully expect it to stay.
LEVY
An amount paid monthly by the owners of a sectional title unit to the sectional scheme for the running and maintenance of the scheme and can cover costs such as insurance, maintenance, security etc.
LEVY CLEARANCE CERTIFICATE
A clearance certificate issued by the Body Corporate of a sectional scheme prior to the transfer of ownership of a unit where all levies are paid up.
MANDATE
An instruction or authority given to an estate agent to render a particular estate agency service for a client for which the agent will receive remuneration.
MARKETING PRICE
The price at which a property is advertised to the world at large - commonly referred to as the listing price.
MARKET VALUE
The price a willing and able Purchaser will pay to a willing and able Seller in a particular area for a similar type of home at any one given time, i.e. the most probable selling price.
MORTGAGE BOND
A limited real right of security held by a money lender (i.e. financial institution) as security against the repayment of a mortgage loan.
MORTGAGEE
The person or financial institution lending money to someone else against registration of a mortgage bond over the latter's property. Often referred to as the bondholder.
MORTGAGOR
A person who borrows money and who grants registration of a mortgage bond over his property to secure repayment of the loan.
NOMINEE
A person nominated or appointed by another person for a specific purpose. Sale agreements sometimes contain a clause that the property is sold "to the Purchaser or his nominee".
NULL AND VOID
Without any legal effect. An agreement of sale which is null and void is not valid in any respect and cannot be enforced by either party.
OCCUPATION
The right to be physically present on a property. A Seller must give a purchaser occupation of a property, which means that he must remove his furniture and hand over the keys so that the Purchaser can take actual occupation.
OCCUPATIONAL INTEREST
A Purchaser who takes occupation of a property before it is registered in his name usually is required by the Seller to pay a monthly amount for such occupation. This is referred to as occupational interest or occupational rental.
OPTION
An Option is an offer to buy/sell or let/hire property, coupled with an undertaking by the offer or not to revoke the offer for a period of time. In order for an option to be valid, a Seller has to sign the document stating a time period and a certain amount. In this instance, the Purchaser would be free to buy or not to buy.
POSSESSION
It is a fundamental right of a contract that a Seller must give a Purchaser "possession" of the property sold. "Possession" denotes the right to legally control a property which is not always the same date as "Occupation": For instance when buying a sectional title property, prior to the sectional title register being opened and registration of transfer being possible.
e.g. Seller owns a block of flats and applies to sell the individual flats as sectional title units. The contract might say that the purchaser has possession on the 1st May, but that occupation would only be on 1st July because the flat is currently occupied by a tenant whose lease expires on the 30th June.
REGISTRATION AGAINST TITLE DEEDS
The sale of a Property is registered in the local Deeds Office and the transaction is recorded on the Title Deed. It is only at this point that the Seller receives the money from the Purchaser.
RESOLUTIVE CONDITION
A clause in an agreement of sale or lease in terms of which the agreement will become null and void only if the event stipulated in the clause occurs, e.g. 'If the sectional title register is not open by a certain date'. It is the opposite of a suspensive condition, (see note under Suspensive Conditions).
SECTIONAL TITLE
The Sectional Titles Act 95 of 1986 made it possible, in the case of a block of flats, for each unit to be owned by a different person.
SHAREBLOCK
Under a shareblock scheme a person acquires a share in a company entitling him to use and occupy a specific apartment, flat or office, in a building owned by the company, which is a shareblock company.
This differs from sectional title as the owner does not become the owner of the unit, but merely acquires the right to use and occupy it.
SIMPLEX
A sectional title unit on one level.
SEMI-DETACHED
Two separate homes side by side joined together, with one common dividing wall.
SERVITUDE
A registered right which a person/entity has over the immovable property of another. It usually entitles the holder of the servitude to do something on the property. A common example is a registered right of way to travel over property owned by another.
STSMA
Sectional Title Schemes Management Act 8 of 2011.
SUB-DIVISION
When land is sub-divided, it is divided into two or more portions. A specific legal and technical procedure must be followed.
SUSPENSIVE CONDITION
A clause in an agreement of sale or lease in terms of which the agreement will become enforceable only if the event stipulated in the clause occurs, i.e. a mortgage bond being granted.
TITLE DEED
A legal document showing proof of ownership, filed in a deeds office, containing details of the property and its owners.
TOWNHOUSE
A general term for either a simplex or duplex.
TRANSFER DUTY
The tax levied on the purchase price of a property when transferred to a second party - the Purchaser being responsible for the payment of transfer duty. Depending on the purchase price, the transaction may enjoy an exemption from this tax if it falls below the threshold amount.
TRUST
A trust is not a legal entity as such and cannot enter into an agreement in its own name. All agreements binding a trust must be concluded by the Trustees of the Trust, authorized in writing by the Master of the High Court.
TRUST ACCOUNT
A bank account in which the account holder holds money in trust for another person until occurrence of a certain event. The money in such an account is referred to as trust money. Every estate agency business must have a trust account which must be audited by an auditor every year.
VALUATION
A valuation in the true sense of the word can only be given by a Registered Valuer. For example, a Valuer gives a valuation based on a replacement cost when insuring the house against fire or flood, i.e. what it would cost today to rebuild it at today's building costs.
When asked to tell a Seller what he thinks the property is "worth", an estate agent is in actual fact merely giving him an informed opinion of what a willing and able Purchaser will pay for his type of property in that particular area and at that particular time. It is generally referred to as a "market assessment".
VIRTUAL TOUR
An online means to presenting a property to prospective Purchaser, often in the form of videos or interactive media content.
VOETSTOOTS
It has become common practice in South Africa for a Seller to contract out of his liability for defects, that is to say the Purchaser buys the home "as is".
The only time this clause will not protect the Seller is if he knows there is a latent defect and he does not disclose it or, even worse, tries to hide it in an attempt to defraud a Purchaser.
ZONING
Zoning limits the purpose for which a property may be used e.g. residential, commercial, industrial etc.
Author: Wakefields Real Estate
