Company Title Versus Strata Title

If you’ve owned or looked to purchase an apartment you would have come across at least one of these two types of systems for legal ownership of a property in your life.

Strata Title is now far more common than Company Title however Company Title does still appear and it is important to understand the distinction before you dive into a property purchase.

You should always seek independent advice from your conveyancer to help you understand theses forms of title and how thy impact your individual situation - legalities can differ per state and territory.

Company Title

Company Title came into popularity in Australia the 1920s and 1930s and therefore in Sydney we see many art deco and heritage apartment buildings that are still governed by this form of ownership; especially around Potts Point, Darling Point and some in the CBD.

The distinction between Company and Strata Title is that with Company Title the owner does not have a title in the property itself but rather owns a share in a company. These shares entitle the owner to occupy a specific area or have exclusive use of the property. In Company Title properties the owner does not receive a certificate of title but rather a share certificate.

A constitution for the company is usually defined and this sets out the rules for transfer of ownership of the shares as well as other constraints or restrictions which can impact buying, selling and occupying the property. The Company Director or Directors usually govern the constitution and generally have say over who occupies a unit in the building, you may have to seek approval to purchase the residence or to rent out your apartment.

The constitution will typically govern items such as whether or not units can be leased, repairs and maintenance of the property, pet approval, rules around transfers of the property, the process of approval for occupation (such as interviews) and shareholders’ obligations including for common areas.

Strata Title

Developed in the 1960s, Strata Title allows the purchaser to have a legal interest in the property as well as a certificate of title. In Strata Title, a strata plan is registered, and new owners are purchasing a lot in the strata plan which gives them legal entitlement to that lot.

Strata Title is governed by an Owner’s Corporation, also known as a body corporate. In contrast to company title, the permission of the body corporate is not required to purchase in a strata title building. Ownership of common areas such as lobbies and building facilities are shared and maintenance and repairs are paid for with owners’ strata levies. Strata levies are fees payable by all owners in the building for daily maintenance and can include items such as insurance, cleaning, gardening, repair work, remediation work, building management and administration. This is usually a quarterly contribution, and the amount is dictated by the size of the lot, height, views, aspect, original sale price, parking and storage + other factors and is set by the buildings surveyor prior to the strata plan lodgement.

Rather than a constitution, strata title is ruled by standard state strata by laws, however each strata plan can also have special by laws which are specific to their building. When purchasing in a strata title building you will automatically become part of the Owner’s Corporation and will be required to attend annual general meetings, if you like you can also nominate to be part of the strata committee who are responsible for the daily running of the building. Typically, a strata building is run and administered by a strata management firm who liaise with the committee to govern the building and make decisions about any items that can arise. Company Title buildings will also usually have owners’ fees payable for maintenance however due to the legal structure these buildings are not ruled by typical strata by laws which means that the company Directors have the right to choose how the building is maintained and managed.

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