Thinking of buying an apartment near your workplace, or a unit in a glamorous new high-rise development?
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, as a unit or apartment. These types of properties have a strong appeal with tenants and owner-occupiers alike – plus, they have their own set of rules that ensure equal rights and obligations to every homeowner.
But before you dive into an apartment purchase, you must familiarise yourself first with strata and community titles, which are the two kinds of titles you’re likely to encounter.
They are key differences between the two types of titles, such as the following:
When referring to strata titled properties, we are generally talking about townhouses, units and some commercial properties.
The common link in these dwelling types is the fact that they 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.
On the other hand, community titles are divided by land allotments referred to as lots rather than units. Instead of dividing the space based on building parameters, each lot owner is awarded 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.
Both strata and community titles have common property areas like shared driveways, swimming pools, and other amenities. These common areas are shared by the members of each strata or community and generally aren’t exclusive to any particular unit or land owner unless exclusive use of a particular common area is allocated by the developer or granted by the strata or community corporation (e.g. car spaces, lift foyers, rooftop access, etc).
This means that as an owner of a strata titled property or community title property, you may be buying into a property with access to other lifestyle amenities, such as bike tracks, outdoor entertaining areas, parks, playgrounds, communal relaxation areas and lakes.
If you’re confused about the boundary lines in regards to a property you’re considering buying, your conveyancer should be able to shed some light on the situation for you!
For strata titled properties, a legal entity called a strata corporation (or also known as an owners corporation or body corporate, depending on the type of scheme and which state or territory the property is situated at) administers and maintains the common properties on behalf of all unit owners. The unit owners themselves comprise the corporation.
The same goes for community titles, with a community title corporation that is responsible for administering the rules within the community, as well as maintaining and insuring common properties.
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.
A key difference between community and strata titles is insurance.
Strata corporations take care of the building and public liability insurances to cover the whole building and its common properties. However, it’s the unit owner’s responsibility to cover the contents insurance of his or her respective unit.
On the contrary, community title owners have no obligation in maintaining and insuring other lot owners’ buildings.
In a community title situation, the individual owner of each lot is responsible for the insurance of any building on their lot. The community corporation is only responsible for insuring any common area buildings or structures.
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?