When looking to purchase property it can sometimes feel like you have to start learning a new language and it’s not that far from the truth. There are a lot of terms that you need to learn about and start to understand what they mean. As frustrating as this can be, it’s crucial to make sure that you can speak at least some of the language of real estate to ensure that you have a good idea of what you’re getting in to and that you can avoid being bamboozled by agents talking the talk. One term that you will hear a lot, mainly when there are multiple dwellings in a group (units, apartments etc) is Strata Title. Another one that you may hear less often is Company Title. Let’s look at this fascinating unit recently for sale that highlights the difference between Strata and Company Title.
This one bedroom apartment recently listed (and already under offer) in Sydney’s beautiful Potts Point has been shut up for the last 20 years and has not been lived in for all of that time. 20 years ago similar units to this were selling for around $75,000, in 2013 however it’s priced at more than $436,000, not surprising at all when you can get views of the Opera House and Harbour Bridge from the common roof terrace! It’s certainly a unique offering which hit the news quickly and looks like it’s been snapped up just as quickly.
The interesting thing about this apartment though is that it’s listed as Company Title not the more common Strata Title. With strata title schemes they are divided into lots and common property. The feature of strata title is that each lot will come with it’s own title deed that can usually be bought, sold and mortgaged without any consent being needed from other lot owners or the building management. The owners also have an entitlement and relevant obligation for the use, maintenance and upkeep of the remaining common area outside of the individually owned lots (ie: driveways, paths, gardens, stairwells etc). Strata title was instigated by property developers in the 1960’s, prior to this, company title was a common method of ‘ownership’ in apartment and unit complexes.
A lot of company title complexes were set up in the 1920’s and 30’s and it’s not a surprise for the property above that was built in 1929. The difference with this title however is significant. Company title allows people to buy shares in the company that owns the building and the ownership of those shares allows the person to live in the unit. The large difference is that the purchaser will not receive any certificate of title for the property. There are also often restrictions on any subsequent leasing of the property and also the prospective owner may need to be approved by the company board of directors. Some lenders are also reluctant to lend as much for a company title property so it’s important to take this into consideration. If you hunt around there is a lot of useful information on the differences in property titles. This article gives a useful overview of the pros and cons related to company title. If you know of other useful resources, post them below!