When it comes to buying a home in Australia, it’s essential to understand the different types of property titles available. Two common types of property titles in Australia are company title and strata title.
While they may seem similar, there are significant differences between Company title vs strata that buyers need to be aware of before making a purchase.
Company title is a type of property title where the buyer purchases shares in a company that owns the property, rather than buying the property itself.
This means that the buyer does not receive a title deed for the property, but instead becomes a shareholder in the company that owns it. Strata title, on the other hand, is a type of property title where the buyer purchases a unit within a larger building or complex and receives a title deed for that unit.
Understanding the differences between company title and strata title is crucial for buyers, as they have different legal and financial implications.
For example, company title properties may have restrictions on who can own shares in the company, and buyers may need to be approved by the existing shareholders before purchasing.
Additionally, company title properties may have different rules and regulations around maintenance and repairs, as the responsibility for these tasks falls on the company rather than individual owners.
For a more comprehensive understanding of how businesses are stratified, our company strata article is a great resource.
Understanding Company Title
When it comes to purchasing a property, buyers may come across two types of titles: strata title and company title. While strata title is more common, company title is still prevalent in Australia, and it’s important to understand the differences between the two.
In a company title property, the building is owned by a company, and the buyer purchases shares in that company rather than a physical property, a common practice in buying property through a company. The company might also have a company strata.
The shareholder then has the right to occupy a specific unit within the building.
This means that the buyer doesn’t technically own the property, but rather owns a share in the company that owns the property.
The directors of the company are responsible for managing the building and ensuring that it is maintained and run effectively, a system known as company strata. As a shareholder, a company title owner would have a say in the management of the building, but the directors ultimately make the decisions.
It’s important to check the company’s constitution before purchasing a company title property. The constitution outlines the rules and regulations that govern the company, and it’s important to understand them before buying. Failure to comply with the constitution may have potentially serious consequences, including the forfeiture of shares in the company.
One advantage of company title is that it can limit who can buy into the building. The directors of the company can approve or deny potential shareholders, which can help maintain the quality of the building and its occupants.
Renting is permitted in company title buildings, but it must be approved by the directors of the company. A tenant will more likely be approved if they comply with the constitution and are deemed suitable by the directors.
Shared ownership and responsibility is another aspect of company title. As a shareholder, the owner is responsible for their share of the building’s maintenance and upkeep costs, but the company as a whole is responsible for the building’s major repairs and renovations.
In summary, company title can be a viable option for those looking to purchase a property, but it’s important to understand the unique aspects of this type of ownership. Checking the constitution and complying with its rules and regulations is crucial, as failure to do so may result in the forfeiture of shares in the company.
Understanding Strata Title
Strata title refers to a type of ownership structure that is commonly used in Australia for multi-unit properties. It allows for separate ownership of apartments or units within a building, while also granting the right to occupy a defined portion of the building as a whole, including gardens, driveways, and recreational facilities.
The concept of strata title was introduced in legislation in 1961 and has since become a popular way of managing commercial and residential properties. Under a strata title, each owner of a strata unit is responsible for the maintenance and repair of their unit, while the responsibility for the building as a whole, including common areas, is shared among all owners.
A strata plan is created when a property is subdivided into individual units, and each unit is given a separate title. The strata plan outlines the boundaries of each unit and the common property shared by all owners. Strata title managers, who are appointed by the owners corporation, are responsible for ensuring that the strata plan is adhered to and that the building is properly maintained.
When purchasing a unit under a strata title, it is important to understand the financial obligations that come with it. Owners must pay regular levies for maintenance and repair of common areas, as well as any special levies that may be imposed for unexpected expenses. This information is usually detailed in a strata inspection report.
They must also adhere to bylaws set out by the owners corporation, which may include restrictions on pets, noise levels, and alterations to the unit.
Overall, strata title provides a convenient way of owning and managing multi-unit properties, but it is important to understand the responsibilities and financial obligations that come with it.
Differences Between Company and Strata Titles
When it comes to owning a property in Australia, there are two types of titles that are commonly used: strata title and company title. Each of these titles has its own unique features and benefits, and it is important to understand the differences between them before deciding which one to buy into.
Strata Title vs Company Title
The main difference between strata title and company title is the way in which ownership is structured. With strata title, each owner has title to a specific unit or suite within the property’s building or buildings, as well as a share in the common areas. In contrast, with company title, the owner known as a shareholder does not have title to any real estate, but has the right to occupy a defined area in the building by virtue of owning a number of shares in the company.
Pros and Cons of Buying
There are pros and cons to both types of ownership. One advantage of strata title is that it allows owners to have more control over their property and to make decisions about the common areas. On the other hand, company title can be less common and may restrict the size of the area that the owner can occupy.
Buying into the Property
When buying into a strata title property, the owner is buying a portion of the property as well as a share of the common areas. This means that the owner has a say in how the property is managed and maintained. In contrast, with company title, the owner is buying shares in the company that owns the property, but does not have any control over how the property is managed.
NSW
In NSW, strata title is the most common type of ownership for apartments and units, while company title is less common. However, there are still some properties that are owned under company title, particularly older buildings.
Cons of Buying and Selling
One of the cons of buying a property under company title is that it can be more difficult to obtain finance, as the security for the loan is not the property itself, but the shares in the company. Additionally, when selling a property under company title, the process can be more complicated, as there may be restrictions on who can buy the shares in the company.
Entire Property
Another difference between strata title and company title is that with strata title, the owner has title to a specific unit or suite within the property’s building or buildings, while with company title, the owner has the right to occupy a defined area in the building. This means that with strata title, the owner has a greater degree of control over their property and can make decisions about the entire property.
Conclusion
In summary, there are several differences between strata title and company title, including the way ownership is structured, the level of control that owners have over the property, and the ease of buying and selling. When deciding which type of ownership to buy into, it is important to consider these factors and to seek professional advice if necessary.
Buying and Selling Company Title Properties
Buying and selling company title properties can be a complex process. When buying into a company title, a prospective purchaser is essentially buying shares in a company that owns the property rather than the property itself. As such, the legal and financial implications of buying a company title property can be quite different from those of buying a strata title property.
One of the key differences is that lending institutions can be more reluctant to lend for the purchase of a company title home. This is because the shares in the company can be difficult to obtain and there may be restrictions on their sale. In addition, institutions have more restrictive lending policies when it comes to company title properties, which can make it harder for buyers to secure financing.
When selling a company title property, the process can also be more complicated. Unlike with a strata title property, the sale of shares in a company must be approved by the company’s board. This can make it difficult to find a buyer, particularly if the board is reluctant to approve the sale.
In the event that a shareholder defaults on their payments or breaches the company’s rules, the company may have the power to forfeit their shares. This can result in the shareholder losing their investment in the property.
Overall, buying and selling a company title property requires a thorough understanding of the legal and financial implications involved. This guide will help prospective buyers and sellers navigate the complexities of buying and selling company title properties.
Types of Property Titles
When it comes to owning a property, there are several types of property titles that one can hold. The most common types of property titles are Torrens title, strata title, stratum title, and company title. Each of these titles comes with its own set of advantages and disadvantages.
Torrens Title
Torrens title is the most common type of property title in Australia. It is a system of land registration where the government guarantees the title to the property. The certificate of title is issued by the state or territory government, and it shows the name of the registered owner, the property’s dimensions, and any encumbrances or restrictions on the property.
Strata Title
Strata title is a type of property title that is used for multi-level apartment buildings, townhouses, and other types of strata-titled properties. Each owner of a strata-titled property owns a portion of the building or structure, and they share ownership of common areas such as hallways, gardens, and swimming pools. Strata title is a fair and transparent system that allows owners to vote on bigger decisions.
Stratum Title
Stratum title is a less common type of property title that is similar to strata title. The main difference is that with stratum title, the entire property is owned by a company, and the owners of the individual units or apartments hold shares in the company. This type of title can be more complex than strata title, and it may not add as much value to a property.
Company Title
Company title is another less common type of property title that is used for apartment buildings and other types of multi-unit properties. Under this system, the building is owned by a company, and the owners of the individual units hold shares in the company. This type of title can be more restrictive than strata title, and it may not add as much value to a property.
In conclusion, it is important to understand the different types of property titles when buying or selling a property. Each type of title comes with its own set of advantages and disadvantages, and it is important to choose the right type of title for your needs.
Frequently Asked Questions
What is company title property and how does it differ from strata title?
Company title property is a type of ownership where the property is owned by a company, and the residents own shares in the company, rather than owning the property directly. In contrast, strata title property is where the property is divided into individual units, and each unit owner has a direct ownership interest in their unit.
What are the disadvantages of owning a company title property?
One of the main disadvantages of owning a company title property is that it can be more difficult to obtain financing for these properties, as they are not as common as strata title properties. Additionally, company title properties may have more restrictions on what residents can do with their units, as the company may have more control over the property.
Can banks provide financing for company title properties?
Yes, banks can provide financing for company title properties, but it may be more difficult to obtain financing for these properties compared to strata title properties. This is because company title properties are less common and may have more restrictions on what residents can do with their units.
Are pets allowed in company title properties?
The rules regarding pets in company title properties can vary depending on the specific property and the rules set by the company. Some company title properties may allow pets, while others may not. It is important for potential buyers to check the rules regarding pets before purchasing a company title property.
What is the meaning of company share title?
Company share title refers to the ownership of shares in a company that owns a property, rather than direct ownership of the property itself. In a company title property, residents own shares in the company that owns the property, rather than owning their unit directly.
What is the difference between stratum and strata title?
Stratum title is a type of ownership where the property is owned by a company, and the residents own shares in the company, but the property itself is not divided into individual units. In contrast, strata title is where the property is divided into individual units, and each unit owner has a direct ownership interest in their unit.
