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Understanding Property Titles

A property title is a legal document that indicates the owner’s right to possession or ownership of the property. Whether you are new to property investing or an experienced investor, it never hurts to gain more tips on investments you are making and likewise, know more about the type of property that you are purchasing.

Property titles disclose the current ownership of a property, and are a must know for any property buyer since it serves as a helpful backup for research on properties. Here’s an explanation and comparison of the different types of property titles, so you know which is appropriate for your latest property investment.

1. Freehold: Also called Torrens Titles, the majority of properties, residential and commercial, in Australia, are of this type. It gives information about who owns the property, mortgages and other encumbrances on the property, easements like a shared driveway or areas marked for water pipes, sewerage or electricity lines and such. The owners of the property are solely responsible for its maintenance. Freehold titles generally apply to individually built units like villa, duplex, semi-detached houses and bungalows.

2. Leasehold: On the other spectrum of freehold are leasehold titles. Unlike freehold where you own and are responsible for the property, leasehold properties are essentially what you lease from the freeholder to use the property for a number of years. Such leases may be long term e.g. 99 years, 999 years, or even short term e.g. 50 years. Properties on leasehold mean that there is a set and agreed upon set of responsibilities to be shared between leaseholder and freeholder. In Canberra, Australia’s capital operates on a leasehold land system meaning that the federal government owns the land and the people lease it. If you’re thinking of owning a property in Canberra, consider the years left as well as the terms on the leasehold before making your decision.

3. Group/Strata titles: As the name suggests, group titles are assigned to properties that are owned as a group, for example, houses built in a single property as in the case of town houses, condominiums and flats. Such houses may be individually standing or may share walls. Residents also share common areas like lobbies, elevators, roads, and recreation centres within the property. When you buy such a house, you are the sole owner for the area limited by your house but you need to share ownership for common areas outside your house. Commercial complexes also come under this category. Such titles require that a corporate body be formed consisting of owners who are responsible for upkeep of the property.

4. Company titles: These are generally associated with old properties and are not very common today. Company titles belong to properties owned by a company and these include the land as well as any infrastructure built on it, like buildings and roads. If a company issues shares to the public, the shareholders share ownership of the property. Resale of such properties may be difficult as it requires the consent of all the shareholders. Converting such titles to a Community or Torrens title can make the administration and resale process simpler.

5. Moiety titles: Another type of shared ownership title, moiety titles are where the title holder has ownership of a piece of the property. The owner leases the right to use their property and the common areas from other owners. Moiety titles have mostly been replaced by Strata titles but older properties may still have them. A typical example of such a title is a large piece of land that is jointly acquired by a group of people for dwelling or agricultural purposes.

6. Community titles: Similar to strata titles in concept, community titles are where each owner retains sole ownership of his or her unit within a property that houses many such units. The difference between community and strata titles is in the way ownership is defined. In strata titles, ownership is defined in terms of parts of building and common areas, and every owner shares responsibility for maintaining the common areas. Community titles define ownership by surveyed land measurements, as well as through reference to parts of the building. The owners are responsible for the area owned by them and not for the common areas. Such areas are maintained by a separate corporate.

If you are thinking about buying residential or commercial property, Clever Finance Solutions can give you a helping hand in sorting your finances at each step. Get in touch with us for assistance.

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