Company Title home units are found in buildings owned by companies registered under the Corporations Act. “Company Title” ownership developed as a way of allowing apartments in flat buildings to be separately owned before the introduction of Strata Titles legislation in the 1960’s.
Company Title differs from strata title for unit ownership in that a Company Title owner does not have a title in any real estate. The Company Title owner has a right to occupy a defined area in a property by owning a set number of shares in the company which owns the building. The company’s constitution allocates the holder the exclusive right to use the part of the building to which the shares relate (usually a specific apartment).
PROS
- Company Title apartments are less expensive than similar apartments held under strata title.
- The residency of the Company Title building is controlled because the prospective owner must first be approved by the Directors of the company before shares are transferred. These Directors are often residents of the building.
- There is often a high percentage of owner-residents in Company Title buildings (traditionally Company Title units was for residents only).
- It can be easier to address issues with the management of the Company Title building than with a strata title manager.
- Where renting is allowed the tenant will more likely than not also have to be approved by the Company’s Board.
CONS
- Borrowing may be more difficult as some lending institutions are not prepared to advance as much for a Company Title purchase as a purchase for real estate held under Torrens Title or Strata Title.
- The value of the unit “owned” through shares will not increase at the same rate as units owned under strata title.
- When you decide to sell, the Directors must approve your purchaser which can reduce the size of your market.
- The law does not look upon a Company Title unit “owner” in the same way as a Strata Title unit owner, which may limit the remedies you could if there is a problem.
- Failure to comply with the home unit company’s articles of association could have serious consequences, including the forfeiture of your right to occupy the building.
Click Conveyancing has acted for hundreds of company title transactions for company title dual occupancies and company title apartments. Click Conveyancing can also assist in setting up company title structures when developers purchase properties. If you have any questions or would like any assistance fell free to contact us.