Explained: Company Title & Strata Title

April 25, 2022
Company Titles & Strata Title

When you try to buy a villa, an apartment, or even a townhouse, you will discover something. The property is part of a strata title or a company title. These titles can be confusing for individuals without experience or industry knowledge. 

Each strata and company title comes with its legal responsibilities, which can differ. The state or region determines the legal implication, depending on the location.

In most cases, potential property owners hire a solicitor or conveyancer. Their expertise helps in deciphering the legal jargon. 

To help you on your property journey, we have compiled some vital information that will be of good use. 

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What is a Company Title?

When buyers buy a company title home unit in a complex, they do not own the unit. In this system, a company owns the building. The new owners purchase shares in the corporation. The buy allows them the right to occupy their company title unit in exchange for a shares certificate. This is what a company title entails.

Verify the corporation’s constitution before purchasing a company title building. There might be restrictions in place. Also, seek independent legal and financial advice on any potential legal ramifications.

Advantages of a company title

  • Company title properties are less expensive than those with a strata title.
  • The company title units’ residency is controlled. Company directors first approve of a potential owner before the transfer of shares. 
  • The same applies to renting a company title unit. The company’s board must approve of the potential tenants. This guarantees that only quality tenants occupy the building. 
  • Addressing difficulties with Company Title buildings’ administration is more effortless. With a strata title manager, this can take longer. 

Disadvantages of a company title

Difference between a company title and stratum title.
  • You do not claim ownership of company title units but rather the company’s shares.
  • On any building-related decisions, company directors are not required to consult shareholders.
  • Banks are less willing to provide money for a company title home unit. And if they do, they charge higher interest rates.
  • It’s possible that renting out your company title apartments won’t be possible. As mentioned earlier, read the company’s policy to identify any possible restrictions
  • The constitution of each business can be somewhat different. Inquire about the company’s rental, renovation, and maintenance policies upfront.
  • The appreciation in a company title property is slower compared to a unit under a strata management company.
  • Lending institutions have more stringent lending conditions for a company title home unit.
  • Failure to follow the company’s constitution could result in severe penalties. This includes losing the right to occupy the property for a company title owner.

What is a Strata Title?

For strata title properties, you share ownership and responsibility. This includes gardens, driveways, and recreational amenities.

An Owner’s Corporation controls the goings-on of the building. It is also known as a Body Corporate, Strata Company, or Community Association. The corporation handles maintenance and owner conflicts. Due to the rigorous nature, a body corporate may choose to outsource. Corporations use Strata Management firms in such a scenario. 

A strata management company oversees the daily operations of a joint-ownership property. They will also maintain the common areas and shared services.

Affordability and location are important factors to consider when purchasing a property under the strata scheme. First-time homebuyers have the chance to buy a strata title property in a desirable location. This might have been out of reach if they were buying a house.

Advantages of buying a strata title

Consider your duties as a lot owner when deciding whether a strata title building is good for you. Here are some of the most significant benefits of owning a stratum title property.

  • The owner’s corporation is in charge of the common area’s maintenance, and you are liable for your lot. You pay a strata levy every quarter, used to oversee the common area maintenance. You may go on vacation knowing that the strata manager will take care of any issues while you’re gone.
  • Owners become active members of a strata building’s community. They can take part in its management and have annual general meetings. Owners have a say on important decisions.
  • A strata title comes with a surveyed structural diagram. It illustrates which people own property elements and which are common.
  • A Strata titled property appreciates in value faster than a company title property.

What are the disadvantages of purchasing a strata title?

Owners pay strata charges or strata levies on units owned. Most consider the fees paid to be the #1 drawback. These fees go toward the upkeep of the building, its facilities, and its surroundings. 

Consider a development or commercial property with several amenities. This could be in the form of gyms, pools, and expansive gardens. Management will need higher strata charges to maintain them every quarter. 

Also, there is the issue of council rates. The authorities impose them per unit under the strata schemes management act instead of per building. The property owner must pay them, adding to any strata levies.

The owner’s corporation handles the significant renovations or modifications. If they are ineffectual, expect a frustrating experience for any unit owner, especially when considering the high strata fees. 

The cons of a strata title

Other disadvantages include:

  • The building imposes strata by-laws. These laws limit where you can park, the type of pets, and improvements made to your unit. Restrictions might also govern how you use the common areas—for example, the gym and sauna.
  • Owners’ corporations can take a long time to make judgments in some situations. All property owners must air their views on the matter before it passes. 
  • The value of your property relies on the worth of others in the complex. With restrictions on home improvements, most property owners shy away from such measures. 

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