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Money used to create income, either as an investment in a business or an investment property.
Capital Gain
The gain on the sale of a capital asset.
Cash Flow
A measure of cash inflow and outflow from the business. Positive cash flow means more money is coming into the business than is leaving it. Negative cash flow is the opposite.
Cash Out Clause
A clause in the Sale and Purchase Agreement that allows the vendor to give notice to the purchaser that another offer has been presented. This provides a defined period for the purchaser to confirm that they are able to go unconditional. If the purchaser is unable to go unconditional within this period the vendor is legally allowed to accept the other offer.
Caveat
A warning on a title to a purchaser that a third party might have some interest or right in the property.
Certificate of Title
A description of a property with the name of the registered owner, encumbrances, ie: mortgages or easements on the property.
Chattels
Moveable and removable items of personal property. In real estate transactions, chattels included in the sale usually include the stove, television aerial, carpets, blinds, curtains, drapes and light fittings. However, unless chattels are specified in the agreement, they are not sold as part of the property.
Conditions
Terms of the contract which are required to be met before the transaction may proceed.
Collateral (Security)
An asset (such as a home) that guarantees the repayment of a loan. The borrower risks losing the asset if the loan is not repaid according to the terms of the loan contract.
Commission
A proportion (usually a percentage) of the sale price of a property paid to a real estate agent for negotiating a real estate transaction. The seller pays the commission.
Common Property
Area of building, land or amenities within a strata title property that are shared by all owners, eg: a driveway.
Conditional Agreement
This is a legally binding contract, but it is subject to conditions being satisfied, usually by the purchaser. The conditions will be detailed in the agreement and may, for example, require that you are able to sell your existing home by a set date or to arrange finance by a certain date. Conditions can also be included by the purchaser that require the seller to do something by a specified date - for example, that settlement will take place only on the conditions that the house is painted, the windows repaired or that rubbish around the section is removed. Note: Purchasers' conditions usually do not prevent the sale-taking place, but may allow the purchaser to delay settlement without penalty or claim damages if the conditions are not met in time.
Construction Loan
Also called Building Loan for financing the cost of construction. The lender makes payments to the builder at periodic intervals as work progresses.
Covenant
Terms, conditions and restrictions noted on the title. A covenant may affect future plans or resale of the property.
Cover Note
A document issued by an insurance company giving temporary insurance until a formal policy is issued.
Credit Report
A report of an individual's credit history prepared by a credit bureau and used by a lender in determining a loan applicant's credit worthiness.
Cross Lease
This type of ownership is common where there is more than one home on a block of land. You are all owners of the land and you each lease your home. The lease may provide for an exclusive use area for each cross-lessee. It's like owning a freehold property but there are some restrictions.
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