“Company Title” ownership was used long before Strata Title came into
existence as a way to allow apartments in flat buildings to be separately owned.
This type of title still exists for many older buildings primarily in the
Eastern Suburbs of Sydney and McMahons Point/Kirribilli with other examples in
various suburbs such as Turramurra. It is still possible to use this method of
ownership in new developments or conversions of existing blocks of flats held
under a single title. Company Title has the limitation that the owner does not have a separate
title to real estate but simply the ownership of shares (usually in a Propriety
Limited or private Company) plus a right to occupy a certain defined area in a
building eg. “Flat 1”. As a consequence of this and other commercial
factors, Company Title apartments are generally priced at a discount in
comparison to similar strata title units in any given locality. Benefits of Company Title Allows some older buildings to be sold as separate apartments where for
whatever reason Strata Title is not available (very unusual these days). Allows the existing owners of units in a building to restrict ownership
though the requirement that, before shares can be transferred, new owners must
first be approved by the Directors. Although this is seen as a major limitation
on title (another reason why banks and lending institutions are often reluctant
to lend) it has the advantage of allowing for harmony in a building. Example 1: if the Directors and most of the existing owners are
elderly they can (without having to give a reason) exclude perhaps the “young
party going” prospective purchaser. Example 2: there is one building in Sydney where almost all the owners
are widows or widowers who have lived in the same general area most of their
adult life. Apparently they have regular afternoon teas and similar social
activities. However, great case needs to be taken to ensure that anti-discrimination laws
are not breached in the Directors’ decision-making process and policies. Downside of Company Title Lower values. Greater difficulties to borrow funds. Restrictions on transfer of shares at discretion of Directors which can
restrict the size of the market when you go to sell. (This can be overcome where
a limited or non-listed public company structure is used so that the Directors
cannot refuse to register share transfers). Need to familiarise yourself with the Company’s articles of association or
constitution documents and to ensure that they are strictly complied with. The
consequences of failing to comply with a particular article might have
potentially drastic consequences, such as forfeiture of your shares (and
therefore your entire ownership interest in the unit, including your right to
occupy it!). Find-a-Lawyer experienced in
Property Law. DISCLAIMER This Information Outline is available courtesy of AussieLegal’s
online legal information and law firm referral service. The information is provided by participating law firms. Accordingly, neither
AussieLegal Pty Limited nor eBroadcast accepts any responsibility for loss,
damage, cost or expense arising from using the information provided. As the information provided by participating law firms is of a general
nature, the law firms accept no liability for any loss, damage, cost or expense
that arises from relying on the information provided by them. The information is
provided solely on the basis that readers will be responsible for making their
own assessment of it. This recognises that despite the participating law firm’s
best endeavours to provide up to date accurate legal information and documents,
you may misunderstand or misinterpret instructions or advice.