Strata title vs company title – do you know the difference?

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In 1961 – a full six decades ago now – strata title was introduced to Australia, beginning in New South Wales. Today, strata title is by far the most common type of property title covering apartment blocks and unit properties.

This may lead some buyers to think that strata title is the only type of title covering apartments and units. However, that’s not the case.

Do you know the title of your property?

Similar types of property can have different types of title.    Image source: Envato Elements

When it comes to real estate containing shared, or ‘common’, areas, there’s the possibility that the property is still covered by company title.

Prior to 1961, company title was the norm for apartment blocks and for commercial buildings owned by private companies. Essentially, company title involves owning a certain number of shares within the company that owns the property.

As the Real Estate Institute of Australia (REIA) explains in it’s definition of ‘company title’, “the company’s shareholding structure is organised so that ownership of a certain number of shares entitles the shareholder to exclusive possession of a part of the building” (REIA Consumer Fact Sheet – Glossary of Terms).

It’s vital that buyers check the title of any property that they might eventually make an offer on. 

Due diligence when buying an apartment includes checking the property title

Due diligence when buying a home includes checking the title that covers the property.    Image source: Envato Elements

In her excellent breakdown of the differences between strata title and company title, Emma Sorenson compares some of the pros and cons of each type of title. As the comparison indicates, the advantages of strata title generally outweigh those of company title.

However, like with any unique and major purchase, expert advice is recommended, especially if you’re considering investing in a property that remains under company title.

As Sorenson points out, company title properties can deliver investors “easy money by buying into a […] block that is later changed to strata title, as this change will often add instant value to the property”. So the fact that a property is covered by company title shouldn’t be an immediate drawback.

There is another category of title called stratum title, whereby “the property is subdivided into lots. Each unit owner is the registered proprietor of their lot and also holds shares in a service company established under the Corporations Act 2001 (Consumer Affairs Victoria). Stratum title is rather uncommon but it still exists, so it’s important to know about it. Further details about company title and stratum title can be found on this page of the Consumer Affairs Victoria website.

Of course, besides checking the specific title of a property you’re looking into, there’s a range of other tasks that should be completed as part of your due diligence as a buyer. This checklist by the REIV is a great place to start.

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Wendy Chamberlain from Chamberlain Property Advocates

By Wendy Chamberlain
Copyright 2021 | All Rights Reserved

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With a passion for all things real estate spanning 20 years, Wendy loves that her role as a Buyers and Sellers Advocate gives her buying and selling clients an experienced voice they can trust when it comes to negotiating to buy or sell something as important as their home or investment. Wendy considers it a privilege to be asked to help others realise such an important goal as home ownership and to be trusted with that honour. Get in touch today via www.wendychamberlain.com.au for a no obligation chat about how Wendy can work with you and help you save time and money to secure your new home sooner.