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Ownership ..... Understanding Title Ownership

Property Valuations There are basically 7 systems of Land Title Ownership applicable in Victoria and detailed hereunder is a brief overview of each. The first and earliest type of title was the 'General Law' or 'Common Law' Title and is the earliest system for transferring land. It consists of a complex chain of deeds listing details of all dealings in the land and you need at least the past thirty years unbroken chain of deeds to ensure continuous Title Ownership. Under the General Law system, land registration was not compulsory so it was possible for an unknown person to have a legal but unregistered claim to land. Although becoming more uncommon this old system is still in operation.

Torrens Title

This Certificate of Title replaced the General Law deeds and is guaranteed by the State of Victoria. The original Certificate of Title is then retained by the registrar of Titles at the Titles Office and each time the land changes hands, the new proprietor is registered on the Title. A duplicate of the Certificate of Title is then issued to the new owner. Only transfers and dealings registered on the Title have legal standing.

There are then five methods of multiple ownership of land:

Company Share

This type of ownership, generally found with older style unit developments, is where a company is formed and an individual owner only owns shares in the company and the ownership of these shares entitles exclusive occupation of a part of the building and the land. The shareholders may decide on rules such as the right to sell or lease or transfer a particular share holding or right to occupation.

Financial and lending institutions are less likely to lend on this type of property as they are lending on shares rather than Real Estate .

Stratum Title

This type of Title was introduced by the Government to overcome some of the short comings with company share ownership. A Stratum Title specifies that any owner is an absolute owner of the freehold of a particular property however the owner will also be a shareholder in a service company which manages, administers and maintains the common property or surroundings space of any particular development.

Strata Title

With a Strata Tile it is possible to subdivide the air space above an area of land for example a flat or unit on a second, third or fourth floor in a block of flats. This Title gives the sole right to a particular unit as well as the space enclosed by it. Therefore the owner may lease, sell or legally dispose of their unit in the same way as other freehold property owners. Each owner also has an undivided share of the land which is common to all the units.

All owners are automatically members of the Body Corporate which formulates the by-laws and administers the maintenance of the common property on behalf of all owners. Owners generally make regular payments to meet the expenses of the Body Corporate and prospective buyers of a Strata Title property should carefully read a copy of the Body Corporate by laws.

Cluster Title

This Title is similar to a Strata Title except it does not include an air space subdivision. Owners have a Certificate of Title defining the boundaries of an area they own and for which they are responsible for; as well as defining the common property. Cluster Titles were developed by the Government to address what, at the time was perceived to be the short comings of Strata Titles however they were not that popular and not many developments were subdivided along these lines.

Land in Subdivision

Land in Subdivision is a recent amalgamation of Strata Titles and Cluster Titles subdivision and was an attempt by the Government to simplify the subdivision process by just creating lots on subdivision similar to the Torrens Title system of subdivision. It once again enables owners of lots on a subdivision to share communal land and facilities and these communal facilities are managed by a committee made up of individual lot owners similar to a Body Corporate. All subdivision in Victoria now takes place under the Subdivision of Land Act 1988 (as amended) and are freely sold and disposed of, or leased, and provide excellent security for banks for mortgage lending purposes.

What to look for on a Title?

In general terms there is some very important information recorded on most Certificates of Title including the names of the registered owners and the type of interest each registered owner enjoys, either as joint tenants or tenants in common. Any encumbrances are also generally listed on the Title and these may take some form of restriction or registration of an interest, for example a mortgage to a bank. Also any easements, party walls, caveats, covenants or rights of way will generally also be detailed on the Certificate of Title and these indicate interests or rights of third parties to enjoy or control parts of the property for various reasons. For example, easements are generally secured by local authorities for water, sewerage or drainage purposes, party walls relate to the sharing of common walls of adjoining properties, a caveat is lodged by a person who has an interest in the property and that property can not be sold without notification to that person who registered the caveat, whilst covenants are restrictions on the way land can be developed or a property can be used, for example any house to be erected may be only of brick veneer or brick construction, a right of way generally provides access to a particular parcel of land or gives other people a right to access part of the Title that is owned.

As you can see a Certificate of Title to a property is an important document and provides a substantial amount of information in respect to a particular property. It is paramount that intending lenders, borrowers and any people involved in the lending or sale process, be it an Estate Agent, Property Valuer or Solicitor be fully aware and check all information on a particular property prior to any sale, purchase, lease or mortgage.

Beware the Body Corporate - help or a hindrance?

Many unit owners are unsure of their basic rights and duties or how to seek remedies for infringements of their rights, however the laws and regulations concerning Body Corporates have been with us for over thirty years with the most recent changes made in late 1989.

Each owner of a Strata Title unit is a member of a separate legal entity called the Body Corporate. The Body Corporate manages the day to day running of the Strata development and if comprising of more than 12 owners, must elect a committee at each annual general meeting. Where the number of units is between 7 and 12, a committee may still be elected at the annual general meeting although this is not a requirement by law. The Body Corporate itself would be aware through its secretary or managing agent of its obligations and rights but what are the rights of the individual owner?

Owners should be aware of their basic rights some of which are :

  • The power of the Body Corporate to enforce the rights of the majority of owners.
  • The protection of the Body Corporate rules.
  • The proper care of the common property
  • Management of the buildings by the Body Corporate including insurances, repairs and maintenance.
  • The right to require payment by individual owners for expenses relating mainly to one unit.
  • The right to attend all general meetings of the Body Corporate.
  • The right to a say and a proportionate vote on Body Corporate matters.

With rights come responsibilities and while these are mainly the duties of the Body Corporate itself, individual owners have certain responsibilities which include the requirement to accept majority decisions of the Body Corporate, to comply with all relevant laws and regulations and to give their tenants a copy of the Body Corporate rules.

It follows that owners should become familiar with these laws and make an effort to attend meetings and cooperate with other owners and the Body Corporate. An unfortunate aspect of Body Corporate law however is that the Magistrates Court is the only legal remedy available to solve disputes or enforce the rights of the Body Corporate or individual owners. Unfortunately this course of action can often be complicated and time consuming and there are no control's over Body Corporate Managers including Real Estate Agents in relation to Body Corporate Management work.

There is quite probably a case for government control of Body Corporate Managers similar to legislation in place in New South Wales which requires all Body Corporate Managers to hold a Strata Managing Agents Licence. Often the best option is to have an independent competent Body Corporate Manager who has a knowledge of the law and regulations and carries out and manages issues of voting rights, attendance at meetings, quorums, proper apportionment of expenses and protecting the rights of owners for everybody's benefit.