Usually, when buying apartments, single-story townhouses or townhouses, buyers need to know in advance whether the property purchased is a sub-ownership (strata title) or a company-owned (company title). So what does the two ownership mean and what is the difference?
What is ownership?
Different types of property will also have different ownership, and these will vary slightly in the legal sense, depending on the state or territory in which the property is located. Usually, a lawyer or a property trader will tell the buyer specific differences.
Sub-ownership was introduced into Australia in 1961 and then spread to other countries. Sub-ownership means that the owner acquires partial ownership of a building, which usually applies to residential or commercial properties. Individual "areas" (such as apartments, single-storey townhouses or townhouses) are privately owned, and all owners share the common areas of the property.
Sub-ownership means that the owner acquires partial ownership of a building.
Prior to 1961, buyers bought shares in the ownership of a building in the form of company ownership to acquire residency rights and share the public area of the entire property. Some of the old buildings still retain ownership of the company, but this type of property is becoming less and less.
Sub-contract ownership and company ownership are not the same, they have strict distinction in the legal sense and have advantages and disadvantages. Before deciding to buy a house, buyers should understand the different effects of the two ownership rights on future life and their respective limitations.
Sub-ownership
When buying sub-ownership apartments, single-story townhouses or townhouses, Australian property buyers should conduct a thorough investigation of such ownership to ensure that they understand how owners' committees work and how they manage them effectively. Owners must comply with the relevant regulations, pay daily maintenance and other expenses, and participate in the property management company's annual general meeting of all owners.
Owners must comply with the relevant provisions, pay the relevant fees and participate in all owners' annual general meeting.
Benefits of sub-ownership:
- A reasonable, open and fair system.
- The measured structure chart clearly shows the public area of the real estate and the area owned by the individual.
- The owner has the right to vote in major decisions.
- In general, compared to the ownership of the company, sub-ownership can increase the value of the property.
Demerits of sub-ownership:
- The owner must pay for the daily expenses, comply with the relevant regulations and vote at the annual meeting.
- Owners of sub-title ownership are also responsible for various housing problems. However, property insurance is mandatory.
Learn more: < Guide to getting started with Sub-ownership
Company ownership
Company ownership is less common than deed ownership, as most buildings have now been converted to contract ownership. But in some places, such as Sydney's Elizabeth Bay, many art-decor-style apartment buildings remain corporate ownership.
Before buying a property owned by a company, Australian property buyers should be aware of all the provisions of the articles of association and seek independent advice on possible legal and financial issues.
Most of the buildings have been converted to deed ownership.
Benefits of corporate ownership:
- This kind of property is worth the money.
- Investors can easily benefit from buying a property owned by a company and then changing to sub-ownership, as such a change usually increases the value of the property rapidly.
Disadvantages of corporate ownership:
- The owner does not own the property directly, but owns the "shares" in the name of the company's shareholders, and the ownership of the property belongs to the company.
- In general, some banks are reluctant to lend to corporate-owned property. Some banks lend only in individual cases, or specifically require a proportion of loans.
- Because of this, company-owned property is often more difficult to sell than contract-owned property.
- Even for major decisions, directors don't have to ask shareholders for advice.
The company's articles of association can sometimes be cumbersome and even arbitrary. For example, it may limit the identity of the buyer, whether the property can be rented, what changes can be made to the property, and even limit the buyer's loan limit.
The owner only holds the "shares" in the name of the shareholders of the company, and the ownership of the property is owned by the company.
Do you know?
There are a very small number of real estate for hierarchical ownership. Hierarchical ownership combines the characteristics of corporate ownership and sub-ownership, that is, the owner owns the property, while the company owns the public area of the property.
