Thinking of buying an apartment near your workplace, or a unit in a glamorous new high-rise development? Before you start browsing through the property ads, you will need to become familiar with strata and community titles – two kinds of titles you’re likely to encounter as the owner of an apartment.
If you’re not yet ready to purchase your dream home with a sprawling garden in the suburbs, you may be considering a more economical choice, such as a unit or apartment. These types of properties have a strong ongoing appeal with tenants and owner-occupiers alike, with many considerable benefits.
Not only are they generally much cheaper than houses and are therefore more affordable, they usually require less overall maintenance, resulting in lower bills and ongoing costs. When you’re property shopping in high profile, desirable locations, apartments can be half the price of a house in the same neighbourhood, sometimes even lower.
Furthermore, apartment complexes are designed around structures and guidelines that are highly regulated, meaning they have their own set of rules that ensure equal rights and obligations to every homeowner.
These rules fall under either
Strata titles can apply to properties like apartments, units, townhouses, commercial offices, factory units, retirement villages and even caravan parks.
Community titles can apply to properties that have at least two lots and that share a common area, such as a driveway.
While strata and community titles might sound similar, there are a number of key differences between the two types of titles, including the following:
One of the main differences between strata and community titles is the way the land boundaries are defined. Strata titles are defined by the boundaries of the building rather than the land, with an area of common property for all residents, while community titles are defined by the lot boundaries and surveyed measurements.
Because strata titles apply to structures like apartment blocks, townhouses and duplexes, boundaries are divided into units, rather than land allotments. Unit divisions are determined through structural divisions of a building, not by reference to the land.
For instance, the inside lining of the wall, the bottom of the ceiling, the top of the floor – all of these can be used as references of where a particular unit begins and ends.
Common property areas in a strata plan can consist of areas like shared driveways, elevators, stairways, lobbies, landscapes and gardens.
On the other hand, community titles are usually divided by land allotments referred to as lots rather than units. Instead of dividing the space based on building parameters, each lot owner is entitled their respective parcels of land with its own title, defined by surveyed land measurements, often without limitations on height and depth (unless specified in the community scheme).
Community titles are most commonly used for gated estates, large development lots and other similarly structured properties that contain shared infrastructure and services.
To complicate matters a little further, there is another type of community title known as a community strata scheme, by which the boundaries of each lot can be defined by parts of the buildings in the same way as strata titles.
Both strata and community titles have common property areas like communal swimming pools and other amenities. These common areas are shared by the members of each
This means that when you become an owner of either
If you’re thinking about purchasing property that falls under a community or strata title and you’re confused about the boundary lines, your conveyancer should be able to shed some light on the situation for you by going over the plans and explaining where the boundaries of your potential purchase begins and ends, including any common property areas.
The strata corporation also manages any issues that might arise between owners such as noise complaints, car parking conflictions and any other potentially conflicting behaviour. They are responsible for managing the compliance, financial and insurance aspects of ownership, though ultimately, the final responsibility for all decisions rests with each individual apartment owner.
The same goes for community titles: the building’s community title corporation is responsible for administering the rules within the community, as well as maintaining and
To be considered as a community title scheme, the area must consist of at least two lots, common property (such as reticulation, cables, pipes, sewers, drains and plant and equipment), a community management statement and a body corporate.
To maintain the common areas, owners in either type of title have to raise funds and contribute based on their unit or lot entitlement – the capital value of their unit or lot compared to the value of all units or lots (as the case may be). In other words, the bigger your unit or lot is, the higher your contribution to the corporation will be.
If you own a two-bedroom unit, your unit allowance might be 10 units. Your neighbour owns a three-bedroom unit in the same complex, and due to the increases size of their property, their unit allowance is 14 units. The total number of unit allowances in the whole complex is 180. The larger property attracts a higher unit
When raising administration and sinking funds, you as the owner of a two-bedroom apartment will have lower fees based on 10 units out of 180, versus your neighbour, who will pay fees equivalent to 14 units out of 180.
Regardless of whether the property is attached to a strata titled scheme or a community titled scheme, any decisions made within the body corporate must be done so at committee meetings, which allows all of the owners to have fair input.
A general meeting is held annually, known as the AGM (annual general meeting), which covers allocation of the budget for the next financial year, collecting owners’ contributions and completing any other necessary conveyancing works.
A key difference between community and strata titles is insurance.
Residential strata insurance applies to the general insurance that encompasses the common property areas and common content that is managed by the body corporate. Strata corporations take care of the building and public liability insurances to cover the whole building and its common properties, typically by sharing the premium insurance costs.
Strata insurance is compulsory, as is the necessary public liability
On the contrary, community title owners have no obligation in maintaining and
This is one of the biggest differences between community title and strata title, and it could potentially expose you as a property owner to some risky outcomes.
For instance, can you imagine the potential for financial loss if a complex of 8 apartments catches fire and burns to the ground – and only 5 of those individual property owners have building insurance?
If you are considering buying a property with a community or strata title, we suggest you seek out personalised legal advice to ensure that you’re aware of the risks and have a full understanding of how these structures work.