The Law Handbook 2024

542 Section 6: Houses, communities and the road Company share apartments Company share apartments are the earliest ‘group’ titles and were popular in the 1950s. In these schemes, a company is the registered owner of the land and buildings. Unlike standard apartment purchases, the title to a company share apartment is not transferred from the company to the buyer. Instead, each buyer is issued with a parcel of the company’s shares that entitles them to live in a particular apartment. The company reviews each sale and must consent to the transfer of shares. It is usually the buyer’s responsibility to obtain the company’s consent for the sale. These titles are not popular with lenders as the loan is secured by shares, not land. ASIC has strict requirements about what must be in the contract to exempt the vendor from the usual disclosure requirements when selling shares. The transfer of a company share apartment is complicated and you should engage a property lawyer or licensed conveyancer who is familiar with this area of law to assist you in buying or selling your property. Company share apartments can be converted to individual titled properties under the Subdivision Act 1988 (Vic) (‘ Subdivision Act ’) but this requires the agreement of all shareholders and mortgagees, and may require the building to be brought up to current building standards. This can be an expensive and lengthy process. Stratum titles With stratum titles, each owner receives a registered title to an apartment in the development as well as shares in the service company. The company holds the title to the common property and manages the property on behalf of all the owners. Some lenders are hesitant to lend against stratum titles because the service company has the first call on the land for debts owed by the owner. Sales of stratum title properties are complicated; a contract of sale for a stratum title property should only be signed after you have obtained independent legal advice. As with company share schemes, stratum titles can be converted to be governed by an owners corporation, which significantly improves the value of the apartments. However, conversion requires the agreement of all the owners and mortgagees, and can be an expensive and drawn-out process. Strata titles Strata titles were introduced in 1967 to reduce the complications of multi-storey developments. Strata titles were also used for many single-storey and villa- unit developments. Each owner in a strata subdivision receivesaregisteredtitle.Astatutoryownerscorporation (not a company) manages the properties. (Note that before 31 December 2007, owners corporations were called the ‘body corporate’.) Each unit owner is a member of the owners corporation and contributes to the management and running costs – often with the assistance of a management company appointed by the owners. Owners corporation rules govern the way the properties are managed. An owners corporation is responsible for the repair and maintenance of the common property areas and is liable for what happens on common property. Cluster titles Cluster titles are rare; they are similar to strata titles. Cluster titles were introduced in 1974 to facilitate flexible development of vacant land. Each lot in a plan of subdivision was registered as it was transferred to the new owners. Modern subdivisions The Subdivision Act replaced previous legislative schemes with a single subdivision procedure under which owners have registered titles to their lots. The procedure is more flexible and allows an owners corporation to be created, regardless of whether or not there is common property (sometimes there is no common property on a plan, such as if an owners corporation is created to manage shared services like water and electricity). The plan includes details of easements and restrictions (if any) and indicates the separately titled lots. The plan also sets out each owner’s contribution to the owners corporation’s funds and their voting rights as a member of the owners corporation. The owners corporation rules that come with the plan define owners’ rights to use common property, as well as their obligations in respect of the common property and use of their lots. Owners corporations The Owners Corporations Act 2006 (Vic) started operating on 31 December 2007. This Act controls