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16 January 2015

Strata title and company title: What’s the difference?

What’s the title?

Different types of properties can be sold under different titles. Your solicitor or conveyancer can guide you on these legalities.

Strata title was introduced to Australia in 1961, it’s a system for handling the legal ownership of a portion of a building or structure, and can be applied to residential or commercial property. Individual “lots” (apartments, villas or townhouses ) are owned privately and there is shared common property.

Row of trendy townhouses

Emma Sorensen –

Before 1961 buyers used company title to effectively purchase shares in a building, which provided them with exclusive use and occupation of a unit, and shared use of common property. Some older buildings remain under company title, but it’s increasingly rare.

Strata and company title are not the same thing: It’s important to do some research first to make sure you’re familiar with how life under strata or company title works – and what limitations there might be – before making a decision to buy.

Strata title

If you’re buying an apartment, villa or townhouse in a strata scheme, it’s important to conduct a strata search as part of your research to make sure you’re familiar with how the owners’ corporation operates and that the strata plan is being managed properly.

You’ll need to adhere to bylaws, pay regular levies for maintenance and other expenses, and attend annual general meetings run by the strata management company.

Strata title pros:

  • It is widely considered a fair, transparent and equitable system.
  • A surveyed structural diagram clearly shows which parts of the property are common and which are owned by individuals.
  • Owners get to vote on bigger decisions.
  • Typically strata title adds value to a property when compared to company title.

Strata title cons:

  • Owners are required to pay levies, adhere to bylaws and vote at meetings.
  • As an owner in a strata title building you also have a share of the liability for anything that goes wrong. However, strata insurance is compulsory.

Company title

Company title is less common than strata title, as most buildings have chosen to change to strata title. But in some areas, like the art deco apartment blocks of Sydney’s Elizabeth Bay, company title remains the norm.

Company title pros:

  • Properties can represent good value for money.
  • Investors can make easy money by buying into a company title block that is later changed to strata title, as this change will often add instant value to the property.

Company title cons:

  • Owners don’t own the title, but simply a “share” in a company that owns the title.
  • Historically some banks have been reluctant to lend money for company title units. Some lenders will only loan on a case-by-case basis, or require a particular loan-to-value ratio.
  • Because of this, company title properties often sell more slowly than strata title properties.
  • Company directors don’t have to consult shareholders, even on big issues.
  • A company’s constitution can sometimes be onerous and even arbitrary. For example, it might limit who can buy into the property, whether the property can be rented, what changes can be made to the property, or even how much buyers can borrow.cropped-cropped-url-3.pngFAVOURITE PICS OF THE WEEK
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I am a mother of 2 living in the Eastern Suburbs of Sydney. My two passions are Interior Design and Real Estate. I have been fortunate to have had the opportunity to work in both industries. I started off working in Interior Design assisting Interior Designer Darren Palmer which was amazing and a great experience. What I loved most was working with such a creative sole as Darren and having the opportunity to source and work with gorgeous products. From there I continued with my other passion in Real Estate. I am now a licenced Real Estate Agent with Raine and Horne Double Bay/Bondi Beach working within the Goldman team (Mark and Barry Goldman). As the saying goes:- "It's a beautiful thing when a career and a passion come together" So very true for me and I feel very fortunate to be doing something that I love everyday around my kids and that's also rewarding.

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