Summary
- Company title property means you buy shares in a company that owns the building, rather than owning the property directly.
- Your shares give you a right to occupy a specific unit and use common areas, governed by the company’s constitution.
- The board of directors controls key decisions, including rules and sometimes approval of sales, which can affect flexibility and value.
- This guide explains company title property for business owners and investors in Australia, outlining ownership structure and risks, prepared by LegalVision, a commercial law firm that specialises in advising clients on property and corporate matters.
- It provides a practical explanation of advantages, limitations and key considerations when buying or selling company title property.
Tips for Businesses
Before purchasing, review the company constitution carefully and understand board powers. Consider resale restrictions and financing limitations. Compare company title with strata ownership to assess risk and value. Seek legal advice to understand your rights and obligations before committing.
A company can hold legal title to property, meaning the company is the registered owner rather than the individual shareholders or directors. This structure separates ownership from personal assets and affects how control, liability and transfers of interest operate. This article explains how company title property ownership works and what you should consider when using a company to hold 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.
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Key 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.
Financing can be harder because lenders may view company title properties as higher risk. As a result, banks may restrict lending or require stricter conditions for borrowers.
Company title properties are often less expensive than strata properties. This is because of lending restrictions, resale limitations and the less common ownership structure
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