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Everyone has heard of strata title because it is the property title used for apartments and townhouses.
But this was not
always the case. Before strata title there was company title.
Company title is found in many blocks of apartments in places in Sydney like Darling Point, Double Bay, Kirribilli and even the Blues Point Tower. Almost all were built before 1961 when strata title took over as the favourite title for apartment buildings.
Company title is experiencing a revival. It is used in duplexes, in cases where the Local Council allows a duplex to be built but does not allow it to be strata titled.
This is how company title works: the property is purchased in the name of a limited liability company. The duplex is built. Then, instead of selling each dwelling in the duplex with a strata title, the owners of the company (the shareholders) sell their shares. The shares are not ordinary shares, they are special shares because some shares give the right to occupy one duplex, while other shares give the right to occupy the other duplex.
Lenders will lend against company title shares, but not as much as they lend on strata title. Valuers value company title properties at 10% to 15% less than comparable strata title apartments. This makes company title apartments good value for buyers who pay cash or have good cash deposits.
What are the downsides to company title? The main downside is that if there is a dispute between the owners, a liquidator and administrator need to be appointed to handle the dispute. By way of contrast, a strata title dispute is handled by the Tribunal – NCAT, making it much cheaper and more efficient.
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