Under a ‘company title’ arrangement the land and buildings are owned by a private company. The company's shareholding structure is organised so that ownership of a certain number of shares entitles the shareholder to exclusive possession of a part of the building (for example, a flat and perhaps a garage).
It is important to realise that the ‘flat owner’ does not own any separately identifiable land, only shares in the company. An owner's right to sell or transfer the shareholding, will be subject to company approval, which may in certain cases be withheld. Rules governing the occupation, and right to lease the flat, may be made by the company by a vote of the majority of the shareholders, and it may be difficult to borrow money for the purchase. If considering purchasing a property which is part of a company title it is recommended that you seek legal advice prior to entering into a contract.
Strata Title – Strata Titles Act 1998
The Strata Titles Act 1998 (Tas) governs creation of separate ‘stratum titles’ for units, flats and townhouses.
It is not within the scope of this handbook to provide detailed information regarding stratum titles. There are important matters of difference between a stand-alone title to a property and a ‘stratum title’ to a property. There is a link noted at the end of this chapter to a useful booklet available from Department Primary Industries Water and Environmental called ‘Strata Living in Tasmania’ which provides information and a general overview of stratum titles and the Act.
For example, a developer of property may construct several residential units on one block of land. In order to obtain separate titles to each of the units to be able to sell them individually the developer needs to either register a plan of subdivision or a stratum plan.
On registration of a stratum plan separate titles to each of the units will be issued. The plan should show what the boundaries of the lot and ‘common property’. Common property are usually features at the complex for the use of all unit owners such as a shared driveway or flower beds for example are not owned by any individual unit owner solely but owned by the ‘body corporate’.
On purchasing a stratum title unit you automatically become a member of the ‘body corporate’ of the strata complex. A body corporate exists at law on registration of a strata plan for a development. There are situations where particularly in small strata complexes such as only 2 units on the site, the body corporate is not considered to be ‘active’.
The role of the body corporate is important. The body corporate has responsibility for maintenance and management of ‘common property’ and other powers, functions and responsibilities as outlined in the Strata Titles Act 1998 (Tas) which includes rules about being able to keep pets in your unit or on the common property, contributions to maintenance of common property and fees payable and insurance policies for units and common property. You should ensure you understand these issues and how they affect you if you own or are considering purchasing a stratum titled unit.
There are ‘by laws’ that apply to strata complexes. There are Model By-Laws outlined in Schedule 1 of the Strata Titles Act 1998 (Tas) that will apply automatically registration of a strata plan but there is power for the original developer to lodge different First By Laws on registration of a strata plan. The members of the body corporate to modify or change the by laws subject to unit entitlements and the contents of the by laws.
Each member of the body corporate will also have ‘unit entitlements’ attaching to their particular title. It is important to know what unit entitlements you have if you own a strata titled property as they govern issues such as voting rights at meetings of the body corporate and levying responsibility for contribution to maintenance of common property areas for example.