It is usual that when you purchase a house, you purchase the land (or at least the leasehold for the land) on which it is built. However, when purchasing a unit or apartment the definition of who owns what becomes less distinct. For example, do you have a share in common areas such as stairwells, hallways and gardens? In the case of multi-level constructions, who owns the land on which the building is situated?
Strata title
Strata title is a common form of property ownership that resolves these questions by allowing a number of persons to own separate areas within a medium density property. Under strata title each dwelling in the complex has its own certificate of title which may include external spaces such as a car park. The owner of an apartment therefore has title and ownership rights to those areas referred to in the certificate of title. The common areas (pool, lift, laundry room etc) are all jointly owned by each titleholder in the complex.
Body Corporate
A legal entity called a body corporate, manages issues and expenses relating to the common areas. All owners of units are members and a council is elected to take responsibility for the day-to-day running of the property complex. The body corporate collects levies from owners to cover local council and government fees, insurance premiums, and the expenses of maintaining and repairing the building and common areas.
By-laws
Strata title places certain responsibilities on owners and tenants which can be restrictive, for example, children may not be allowed to play on common property without adult supervision or you are not permitted to keep a pet on the premises. You should read the by-laws that govern residents’ conduct carefully before making a decision to purchase a property in a residential complex.
Get it checked out!
Units, apartments and flats must adhere to regulations and ordinances in existence at the time of construction. Older buildings may not have been built to the modern standards you would expect so it is vital to have a building inspection done to identify any possible dangers. Your solicitor will also be an important ally in helping to identify any potential or existing problems in connection with the physical, financial and legal condition of the premises. Before you enter into a strata title contract, your solicitor should inspect the books and records of the body corporate to review maintenance history and complaints about certain occupants as well as whether adequate funds have been kept for future expenses and whether the body corporate holds the necessary insurance policies.
Other forms of title
Two less common forms of title for medium density properties are stratum title and company title: Stratum title: This form of title gives absolute freehold ownership of their immediate apartment to the purchaser. It is similar to strata title however instead of sharing ownership of common property with the other title holders, the owner has shares in a company which holds the title to, and is responsible for maintenance, management and administration of the common property.
Company title: This form of title is less advantageous than strata title ownership because the land and building are held by a private company giving the purchaser only shareholder’s rights in the company. The company has the power to approve or disapprove the resale and lease of any property within the complex and tenants must seek company approval in order to resolve any disputes over the maintenance and usage of common areas.