Have you ever been confused about the differences between strata, stratum and company share title? Have you been told that company share and stratum title may not be as good as strata title but you are not sure why? This article explains the main differences of each so that you can make a more informed purchasing decision when buying an apartment or unit.

Strata Title
With a Strata Tile it is possible to subdivide the air space above an area of land for example a flat or unit on a second, third or fourth floor in a block of flats. This Title gives the sole right to a particular unit as well as the space enclosed by it. Therefore, the owner may lease, sell or legally dispose of their unit in the same way as other freehold property owners. Each owner also has an undivided share of the land which is common to all the units.

All owners are automatically members of the Body Corporate which formulates the by-laws and administers the maintenance of the common property on behalf of all owners. Owners generally make regular payments to meet the expenses of the Body Corporate and prospective buyers of a Strata Title property should carefully read a copy of the Body Corporate by-laws.

Stratum Title
This type of Title was introduced by the Government to overcome some of the short comings with company share ownership. A Stratum Title specifies that any owner is an absolute owner of the freehold of a particular property however the owner will also be a shareholder in a service company which manages, administers and maintains the common property or surroundings space of any particular development.

The service company holds the Title to the common property. The Title holder is free to dispose of their freehold as they wish but has responsibility to the service company in which they have shares.

Company Share
This type of ownership, generally found with older style unit developments, is where a company is formed and an individual owner only owns shares in the company and the ownership of these shares entitles exclusive occupation of a part of the building and the land. The shareholders may decide on rules such as the right to sell or lease or transfer a particular shareholding or right to occupation. Financial and lending institutions will generally only lend about 70-80% of the value of the property which can make it quite challenging for the potential buyer!

Happy house hunting and buying this winter 😊😊😊

For a confidential discussion of where to buy in Melbourne and expert property advice , contact Zac Newbold directly on 0418 144 644 or via his website by clicking on this link.

× WhatsApp chat! How can we help you?