Property transactions have a specific vocabulary. Agents, conveyancers, banks, and the government use terms that mean precise things, and misunderstanding them can lead to misreading a document or missing a deadline.
This glossary covers the core terms you will encounter when buying property in Victoria. For the full end-to-end journey, see our guide to the Victorian property buying process and timeline.
Contract and legal terms
Auction
A public sale in which the property goes to the highest bidder above the vendor's reserve price. At auction, there is no cooling-off period and the contract is unconditional on signing. Registered bidders must be ready to sign and pay the deposit on the day.
Caveat
A formal notice registered on the property title indicating that a third party claims an interest in the property. A caveat must be resolved before title can transfer. Common reasons include unpaid debts secured against the property, disputed ownership, or a buyer protecting their interest between signing and settlement.
Contract of sale
The legally binding agreement between the vendor and purchaser that sets out the price, deposit, settlement date, and all conditions of the sale. In Victoria, residential contracts use a standard form but can include special conditions. The purchase is binding when both parties sign.
Cooling-off period
A three-business-day window after signing a private treaty contract during which the buyer can withdraw. Exercising this right costs 0.2% of the purchase price. There is no cooling-off period after an auction purchase. Read the full guide on the cooling-off period.
Default
Failure by either party to meet their obligations under the contract. If the buyer defaults, the vendor can usually terminate the contract and retain the deposit. If the vendor defaults, the buyer can pursue specific performance or damages. Default is serious and has financial consequences.
Exchange
The point at which both parties have signed the contract and it becomes legally binding. In Victoria, exchange and signing are effectively the same event. There is no separate exchange ceremony as in New South Wales.
Finance clause
A special condition making the purchase conditional on the buyer obtaining approved finance by a specified date and loan amount. If the condition is not met, the buyer can usually exit and recover the deposit. Not all contracts include a finance clause, particularly those signed at auction.
General conditions
The standard boilerplate terms in a Victorian contract of sale, set by the Law Institute of Victoria and the Real Estate Institute of Victoria. They govern risk, default, inspection rights, and settlement adjustments. They apply to every residential sale and rarely change.
Section 27
A provision of the Sale of Land Act 1962 allowing the vendor to access the deposit before settlement under specific conditions. The vendor must serve a Section 27 statement on the buyer, who then has 28 days to object. Read our guide on Section 27 deposit release.
Section 32 (Vendor's Statement)
A disclosure document the vendor must provide before the buyer signs. It discloses title details, encumbrances, planning information, outgoings, and other material facts. It is not part of the contract but is a precondition for signing. See our complete Section 32 guide.
Settlement
The final step in the buying process. On settlement day, the buyer pays the balance of the purchase price, the vendor's mortgage is discharged, and title transfers to the new owner. In Victoria, most settlements now occur electronically through the PEXA platform. See our guide to settlement day.
Special conditions
Terms added to the contract to reflect the specific circumstances of the sale. Common examples include finance clauses, inspection clauses, and lease-back arrangements. Where a special condition conflicts with a general condition, the special condition prevails.
Vendor's Statement
Another name for the Section 32. The vendor prepares it (usually through their conveyancer or solicitor) and must provide it to the buyer before they sign.
Title and property terms
Certificate of Title
The official document recording ownership of land and any registered interests (mortgages, easements, caveats). In Victoria, land title is administered electronically by Land Use Victoria. When you buy, the certificate of title is updated to name you as the registered proprietor.
Covenant (restrictive)
A restriction registered on title limiting how the land can be used or what can be built on it. Common examples include restrictions on building materials, maximum heights, or the number of dwellings. Covenants bind all future owners of the land.
Easement
A right registered on a property's title that allows a third party to use part of the land for a specific purpose. Common easements include drainage easements, utility easements, and carriageways. An easement restricts what you can do in the affected area. Read our guide to reading a title search for more detail.
Encumbrance
Anything registered on a property's title that affects ownership or limits the owner's rights. Mortgages, easements, caveats, and covenants are all encumbrances.
Folio identifier
The unique reference number for a parcel of land in Victoria's title register. It typically appears as a volume and folio number. Your conveyancer uses it to identify the specific title.
Title search
A search of the land title register confirming ownership and identifying any registered interests. Your conveyancer orders this as part of settlement preparation. A title search shows mortgages, easements, caveats, and covenants registered on the property.
Finance and mortgage terms
Deposit
The initial payment made on signing, typically 10% of the purchase price (5% is common in private treaty sales). The deposit is held in the vendor's agent's trust account until settlement.
Discharge of mortgage
The process of formally removing a mortgage from title when the vendor repays their loan. The vendor's bank must arrange discharge before settlement so the title can transfer free of that debt.
LMI (Lenders Mortgage Insurance)
Insurance that protects the lender (not the borrower) if the borrower defaults on a loan with less than 20% deposit. The cost is borne by the borrower, usually added to the loan balance. Read our full explainer on lenders mortgage insurance.
LVR (Loan-to-Value Ratio)
The ratio of the loan amount to the property value, expressed as a percentage. A $600,000 loan on an $800,000 property is a 75% LVR. Loans above 80% LVR typically require LMI.
Mortgage
A loan secured against a property. The lender holds a registered interest in the property as security. If the borrower does not repay, the lender can sell the property to recover the debt. The mortgage is registered on title and discharged when the property is sold.
Offset account
A transaction account linked to a mortgage where the balance reduces the loan balance for interest purposes. A $40,000 offset on a $600,000 loan means interest is calculated on $560,000.
Pre-approval
A conditional indication from a lender of willingness to lend a certain amount, subject to the property being accepted as security and the borrower's situation remaining unchanged. Pre-approval is not a guarantee of finance. See our guide on mortgage pre-approval.
Land Transfer Duty (stamp duty)
A state government tax on the transfer of land, calculated on the purchase price. In Victoria it is formally called Land Transfer Duty but widely referred to as stamp duty. First-home buyers may be eligible for exemptions or concessions. See our guide to stamp duty in Victoria.
Planning and property terms
Owners corporation (OC)
A legal entity created automatically when land is subdivided and owners share common property. All owners are members and pay annual levies for maintenance, insurance, and administration. Read our full guide on owners corporations.
Planning overlay
An additional planning control layered over the base planning zone. Heritage overlays, flood overlays, bushfire management overlays, and design and development overlays are common examples. Each one adds specific requirements or restrictions. See our guide on planning zones and overlays.
Planning zone
The zoning applied to land that determines permitted uses and what requires a planning permit. Residential zones include Neighbourhood Residential Zone, General Residential Zone, and Residential Growth Zone. Each has different rules for density, building height, and development.
People in a property transaction
Buyer's agent
A licensed agent who represents the buyer in searching for, assessing, and negotiating property. Unlike a selling agent (who represents the vendor), a buyer's agent works exclusively for the purchaser.
Conveyancer
A licensed professional who handles the legal transfer of property. They review the Section 32 and contract, manage settlement, and ensure title transfers correctly. Read our guide on the role of your conveyancer.
Mortgagee
The lender in a mortgage arrangement, typically a bank or financial institution. The mortgagee holds security over the property.
Mortgagor
The borrower in a mortgage arrangement. The mortgagor grants the lender a security interest in the property in exchange for the loan.
Vendor
The seller of the property.
What is PEXA and how does it affect settlement?
PEXA (Property Exchange Australia) is the electronic platform used for most property settlements in Victoria. Instead of meeting in person to exchange physical documents and bank cheques, conveyancers and lender representatives complete the settlement online in real time. Funds are transferred electronically and the title register is updated immediately on settlement completing. As a buyer, you do not interact with PEXA directly. Your conveyancer manages the settlement on your behalf and confirms when it is complete and keys can be collected.
What is the difference between a conveyancer and a solicitor?
A licensed conveyancer is a specialist in property transactions. A solicitor is a lawyer who may also do conveyancing work but has a broader legal qualification. For straightforward residential purchases, a conveyancer is usually sufficient. For more complex transactions involving trusts, estates, or significant legal disputes, a solicitor may be preferable. Both can do the conveyancing work. Solicitors generally charge more.
Sources
- Consumer Affairs Victoria: Buying and selling property: the regulator's plain-language guidance on the buying process and the terms used in it.
- Sale of Land Act 1962 (Vic), section 32: the source of the Section 32 (Vendor's Statement) disclosure terms.
- Land Use Victoria: Land registration glossary: the land registry's own definitions for title, easement, covenant, caveat, and related terms.
Sources verified 25 July 2026.
General information only. This article is not legal or financial advice. Consult a licensed conveyancer, solicitor, or financial adviser before making decisions about your specific situation.
Get your Section 32 in plain English.
Upload your documents and we'll send back a plain-English summary in about 10 minutes, flagged for the conversations worth having with your conveyancer.
Get a report →