It is difficult to imagine that almost 55 years ago strata title was a non-existent concept. Before the introduction of the NSW strata title legislation in 1961, the most prevalent way of regulating the ownership of ‘common property’ in NSW was the concept of company title.

What is Company Title?

Company title involves a company acquiring the legal ownership of the building, including the residential units within it, and the residents acquire their right to live in the building by purchasing shares in that company. The acquisition of company shares grants the shareholders a contractual right to exclusively use and occupy a specific part of the building, for example a home unit and car space, as well as the right to use common property.

This means that a shareholder does not actually own the unit that he/she lives in, but rather has acquired a licence or right to occupy part of the residential building that is owned by the company. The shareholder’s share certificate is evidence of his/her exclusive use.

In contrast, a strata title owner has a legal interest in the property that he/she lives in and has a Certificate of Title as evidence of his/her ownership.

Another essential feature of company title is the company’s constitution. This document contains information about the company’s governing body, for example its directors and chairperson, it also sets out the restrictions on the shareholders’ abilities to transfer the shares and lease the unit, as well as other rules regarding voting rights, etc.

The Pros and Cons of Company Title in Comparison to Strata Title

Pros

Cons

To sum up

Notwithstanding there are more than 270,000 strata schemes across Australia today, company title buildings have not completely disappeared. Many are found in the older established areas of Sydney’s eastern suburbs such as Elizabeth Bay. When buying a company title property, bear in mind the pros and cons and don’t forget to make a proper assessment of the company’s constitution.

2 Responses

  1. Very interesting
    We have a pty Ltd company now block of units and shops and we like to turn it into strata title for the existing owners how do we go about doing this

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