When buying a unit, you may have come across Company Title and Strata Title. There are thousands of Company Title buildings in Australia, so it is worth understanding the rights and obligations associated with Company Title Ownership. Likewise, you should understand how those rights affect asset values and your capacity to borrow from lenders. This article will explore the pros and cons of buying and selling company title property.
If you are a company director, complying with directors’ duties are core to adhering to corporate governance laws.
This guide will help you understand the directors’ duties that apply to you within the Australian corporate law framework.
Company Title and Strata Title
Company Title is a different way of owning real property compared to Strata Title. Most people have had some engagement with a Strata Title scheme. This is where you receive title to a singular unit within a greater complex (a building, resort or estate). Likewise, you share the common areas with other owners, including gardens, sporting facilities or bbq areas. In Strata Titled properties, it is common for the owners to band together and form a Body Corporate, usually headed by an elected committee. Each unit owner buys a freehold interest in real estate by purchasing their respective unit.
Company Title ownership is, as the name suggests, where a prospective purchaser acquires shares in a company. The classes of shares correlate to real property assets with exclusive rights, such as units and car parks. You will also receive non-exclusive rights, such as shared use of communal facilities. Rather than buying a particular unit as a freehold interest, the purchaser will become a shareholder. Consequently, they receive a share certificate corresponding to their proportionate ownership in the company.
How is My Building Regulated?
Company title buildings are regulated by the company constitution, under the leadership of the board of directors. Directors will be appointed and removed according to the terms of the constitution and carry out the daily matters of business.
Typically, the constitution will provide:
- a maximum number of directors;
- rules and procedures for voting; and
- critical decisions of the board.
This is in contrast to Strata Title units. These are all subject to the applicable state-based legislation, and provide uniformity and consistency for prospective buyers and sellers.
Continue reading this article below the formKey Advantages and Disadvantages of Company Title
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Key Takeaways
Company Title is a different way of owning real property compared to Strata Title. Company Title ownership is where a prospective purchaser acquires shares in a company. The classes of shares correlate to real property assets with exclusive and non-exclusive rights. Rather than buying a particular unit as a freehold interest, the purchaser will become a shareholder. Consequently, they receive a share certificate corresponding to their proportionate ownership in the company.
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Frequently Asked Questions
Pet entitlements will depend on the applicable company constitution, as the strata legislation does not apply to Company Title buildings. Unlike Strata Apartments in some states in Australia (such as NSW), you do not have an automatic right to keep a pet with you. This decision was made clear in the landmark decision of Cooper v The Owners – Strata Plan No 58068 (2020) NSWCA 250.
Yes, but the process may be more burdensome than selling a freehold property like a Strata Unit or a Freehold House. Company Title constitutions often confer powers on a board of directors to approve or even block a sale if the directors believe it is adverse to the company’s interests. It is worth clarifying your right to dispose of shares before purchasing them in the first place.
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