Don’t be Hoodwinked! Important Real Estate Terminology You Must Know
Real estate is a complex and multifaceted industry with its own set of unique terminologies and jargon. Understanding the language of real estate is crucial for both buyers and sellers, as it can help to facilitate smoother transactions and prevent confusion or misunderstandings.
Whether you are a seasoned real estate investor or a first-time homebuyer, having a grasp of the common terminologies used in the industry can make all the difference in navigating the real estate market with ease.
In this article, we will take a closer look at some of the most important real estate terminologies that you need to know.
Agricultural vs Homestead
Agricultural land and homestead land are two different types of land use designations in Trinidad.
Agricultural land is designated for agricultural activities such as crop cultivation, livestock rearing, or forestry. It is often used for large-scale commercial farming operations, but can also include smaller family-run farms. Agricultural land in Trinidad and Tobago is governed by the Agricultural Small Holdings Tenure Act, which oversees the allocation and management of agricultural land.
On the other hand, homestead land is designated for residential use and is intended for individual families or households to build homes and settle on. Homestead land is often located in more rural areas of Trinidad and can range in size from a few thousand square feet to several acres.
In order to obtain homestead land, individuals must apply to the Land Settlement Agency, which is responsible for allocating and managing homestead land. Homestead land is often less expensive than other types of land, and is intended to provide affordable housing options for families and individuals.
It is important to note that agricultural and homestead land use designations are not mutually exclusive. In some cases, a property may be designated as agricultural land but may also have a residential component, such as a farmhouse or worker’s quarters.
Additionally, some homesteads may be used for small-scale agricultural activities such as gardening or livestock rearing.
Conveyancing
Conveyancing refers to the legal process of transferring ownership of a property from one person to another.
It typically involves drafting and reviewing legal documents, conducting title searches, and handling the financial aspects of the transaction such as calculating and paying taxes and other fees. The process is usually carried out by an attorney.
Deed vs Certificate of Title
A deed is a legal document that is used to transfer ownership of a property from one person to another. It typically includes the names of the parties involved, a description of the property, and any terms or conditions of the sale.
A certificate of title, on the other hand, is a document that serves as evidence of a person’s legal right to a piece of real estate. It typically includes information such as the property’s legal description, the names of the current and previous owners, and any liens or encumbrances on the property.
The Certificate of Title is a government-issued document and is the official record of property ownership. The Deed is a legal document that is used to transfer ownership, it is an instrument of conveyancing.
In short, a Deed is a legal instrument used to transfer ownership, while the certificate of title is a government-issued document that serves as evidence of the legal right to own a property.
Escrow
Escrow is a financial arrangement where a third party holds and regulates payment of the funds required for two parties involved in a given transaction. In real estate, escrow typically refers to the funds held by a neutral third party during a real estate transaction.
The escrow stakeholder, or escrow agent, is responsible for holding and disbursing funds according to the instructions of the buyer and seller, as well as ensuring that all conditions of the sale, such as title search and inspections, are met before the transaction is completed.
Escrow is important because it provides a secure way for buyers and sellers to exchange funds and ensures that all conditions of the sale are met before the transaction is completed.
By using escrow, buyers and sellers can have peace of mind that their funds will be handled safely and responsibly and that the transaction will be conducted according to the terms agreed upon.
Equity
Equity is a term used in real estate to describe the difference between the market value of a property and the outstanding balance of any liens or mortgages.
In other words, it is the portion of the property that the owner actually owns outright, without any debt or obligations attached to it.
Equity is an important concept for homeowners, as it represents the amount of value that they have built up in their property over time.
This value can be used in a number of ways, such as to secure a loan, refinance a mortgage, or even sell the property at a profit.
Freehold vs Leasehold
Freehold and Leasehold are two types of property ownership.
Freehold ownership means that the person owning the property has the right to use and occupy it indefinitely, as well as to pass it on to their heirs. The freeholder is the owner of both the property and the land it sits on and has full control over it.
Leasehold ownership, on the other hand, means that the person owns the property for a certain period of time, typically for a number of years, as specified in a lease agreement.
The leaseholder does not own the land the property sits on but rather has the right to use and occupy the property for the duration of the lease. The lease is usually granted by a freeholder. Once the lease is expired, the property reverts back to the freeholder or the lease may be renewed.
In summary, freehold property ownership means that the owner has the right to use and occupy the property indefinitely, and leasehold property ownership means that the owner has the right to use and occupy the property for a specified period of time.
RPA vs Old Law
These are both terms used in Trinidad and Tobago to describe different types of land tenure systems.
RPA stands for the Real Property (Amendment) Act, which was passed in Trinidad and Tobago in 2000. Under this act, landowners are required to register their land with the government and obtain a Certificate of Title to prove ownership.
RPA land is considered to be more secure and reliable because it is backed by the government’s guarantee of title. Land transactions involving RPA land must be registered with the government and can be easily traced and verified.
On the other hand, Old Law land refers to land that was acquired under the previous land tenure system, which was based on the common law.
Under this system, landowners could prove ownership through evidence such as deeds, wills, or oral testimony.
However, these types of evidence can be more difficult to verify and are not backed by the government’s guarantee of title. Land transactions involving Old Law land can also be more complicated and time-consuming.
In summary, RPA land is a newer and more secure type of land tenure system in Trinidad and Tobago, while Old Law land refers to land that was acquired under the previous common law system.
