Buying property as a company share - advise needed

[zayne]

Hi all,

I was looking at purchasing an apartment in Melbourne which has 10 on the block. The apartment block was built in the 60's-70's. When looking at the section 32 I realized that it is owned by a company and not strata titled like many other apartments so basically I would be buying into a 10% share of the company for this IP. Ive never come across this before but from what my conveyancer has said is that this is how they used to do some of the inner city apartment blocks many many years ago. Just wondering if anyone can advise what the difference is between this and a normal strata titled apartment block? Any advantages/disadvantages?

Thanks in advance for your input.

 

[JoannaK]

It's called Company Title and has since been replaced by Strata Title.

The main difference between company title and strata title is that strata title is a form of what's called Fee Simple ownership, which really means that it is pure ownership. Company title is not. As you correctly stated, you are buying a share in the company and you are "allocated" your unit.

Some company title properties have quite strict rules such as being unable to rent your unit out and things like that. For the rules I suggest that may be found in the Constitution of the company, but I could be wrong.

Generally banks LVR's on company title are lower than on strata title as Strata Title is considered a more secure ownership.

hope this helps.

 

[zayne]

Thanks for that. I had a good read through the company title conditions and everything looks ok, eg. can rent out to tenants etc. Nothing out of the ordinary stood out that I could see but I will get my conveyancers to have a good read over it as well.

As for financing, what is the max LVR for these? 80%?

Any other disadvantages I should look out for?

 

[callum.newton]

Joanna - cheers for that description. How does the company title effect blocks of units of 4 or less? In what way is a strata title more secure for the owner then a company setup?

C

 

[JoannaK]

Thanks for that. I had a good read through the company title conditions and everything looks ok, eg. can rent out to tenants etc. Nothing out of the ordinary stood out that I could see but I will get my conveyancers to have a good read over it as well.

As for financing, what is the max LVR for these? 80%?

Any other disadvantages I should look out for?

don't quote me, but i've heard of lvr's on Company title 10 to 20% below lvr's on strata title. it's all got to do with the banks security of title, and in their mind company title ownership is less secure than strata title ownership.

there is a slight chance, and again, don't quote me, that company title has less CG increases than strata, but i've never verified this myself.

 

[JoannaK]

Joanna - cheers for that description. How does the company title effect blocks of units of 4 or less? In what way is a strata title more secure for the owner then a company setup?

C

company title operates the same whether it's 2 units or 20 units. it all comes down the rules and regulations that the owners/company directors put in place either at inception of the company or from time to time (if that is allowed, of course).

i can't remember all the intricacies of strata title ownership being more secure...it's just always something that stuck in my head in from my real estate days.

i think it has something to do with company title you're "allocated" your unit, you don't own anything at all but for a share in the company, whereas strata title, you're actually purchasing the airspace and paint within your unit.

 

[zayne]

Thanks for that info.

 

[callum.newton]

Yes thanks Joanna
C

 

[The Y-man]

See:
http://www.somersoft.com/forums/showthread.php?t=45154&

http://www.somersoft.com/forums/showthread.php?t=41836&

Cheers,

The Y-man

 

[zayne]

Thanks mate.