Has anyone lived in a company share title property before? (Victoria)

ryan1jz on 03/02/2022 - 20:44

Apologies if this isn't the correct forum for this discussion.

I'm wanting out of suburbia, I've sold up, settlement is late March. Until I find my next property, I'm lucky enough to have the chance to live rent free with family until something pops up.

I'm wanting to move bayside, St Kilda/Elwood, a renovated art deco style place. Walking distance to everything, beach, shops, cafes, close to the city and all that.

I've looked at a few properties and nothing has grabbed me, but this weekend I'll be looking at a couple that meet my criteria. However, one of them, absolutely gorgeous, turns out isn't a strata title, but a company share title.

I've done a bit of googling, and the websites I've come across, give a pro and cons list of strata Vs company share. No two companies have the same rules and regulations when it comes to company share title, so it's pretty much impossible to get a general idea of what living in such a property would be like.

I see things like blanket bans on pets (sad), no choice of say in upgrades or renovations, it really seems like you don't have much of a say in anything, and what the company board says, goes.

My gut is telling me not to go with that property no matter if i fall for it, but wouldn't mind hearing others experiences with such a scheme.
Do you pay into the company like you would a body corp? Or do they just hit you up for money when work needs to be done? Like building repairs and maintenance? I haven't been able to find an answer for that one online. How would I get an idea of the overall condition of the building? Would there be details in the contract? Are there "meeting minutes" like you'd find in a strata title? The agent doesn't even have a contract yet and can't answer any questions.

I've lived in a brand new strata property before, and never had any troubles, but I guess not long enough to know how bad that could also be.

Any stories or experiences or advice regarding such a property would be appreciated!

Home & Garden

Comments

  • robbyjones on 03/02/2022 - 21:09
    +2

    There is no one answer for property title, each one is lightly different. You are effectively buying shares in the building and you have the right to use the space inside the nominated part of the building. You will need to read the by-laws of the property to get an indication if what you can and can't do and you are quite literally at the mercy of the committee. See if you can research the property online, it could be that the building is still managed by strata managers and the bylaws may be available, It is most likely you will have to pay fees monthly like strata. I would consider a purchase in a property title building but it would have to be well managed and significantly cheaper than similar strata buildings. Also note that obtaining finance will also more much more difficult.

    • ryan1jz on 03/02/2022 - 21:53

      Thanks for that, that's the general gist I got.

      The only thing I can find when I search the property online is just sales websites, I'll have to wait until the inspection and hope the agent has a contract and some answers.

      I can't even seem to find any first hand horror stories, just some articles here and there. No one I know has had any personal experience, or knows anyone who has.

  • djkelly69 on 03/02/2022 - 22:01
    +2

    Main issue for me would be whether banks lend against it (easily)?

    The fact that it is unusual as well as (I think) not something a bank would really want to touch will limit your potential buyers/sale price down the track.

    • Presence on 03/02/2022 - 22:04

      I looked into it 2 years ago. Banks will lend less as the property will sell for less.

    • ryan1jz on 03/02/2022 - 22:10

      Yep, a concern also. I've emailed the lending manager at bank of melbourne who I've been dealing with to see what the banks general stance is on these types of properties but haven't heard back yet.

      I've seen one or two for sale in the past 6 months sell for less than half of what they were originally advertised for. This one though is in a great location though, beautiful building, freshly renovated, so who knows.

      With the current price guide I'd have over a 60% deposit, but I expect the sale price to be less. If and when it does actually sell!

      • stirlo on 04/02/2022 - 14:11

        My sister owns one. ANZ had no issues lending to her (through a broker).

  • Presence on 03/02/2022 - 22:09
    +2

    I did some research and spoke to some lawyer friends and they all said to avoid it. Strata properties have clear dispute resolution rules whereas company title dont, any issue could turn into a legal mess. They sell for less and banks less against them.

    It's frustrating as so many older art deco properties are set up like this.

    Im not a lawyer or anything, just a former first home buyer.

    • ryan1jz on 03/02/2022 - 22:20

      Thanks mate. I have been reading that in relatively recent times, the system has changed to make it easier for share holders to take legal action, but it sounds like a rich persons game. In both time and money.

      Most things I've found, and from comments just here, are negative. The only real positive so far is that you get to live in a beautiful building in a great location.

      I'll still go have a look on the weekend and annoy the agent with questions though I think.

      • Presence on 03/02/2022 - 22:26

        It is a shame because the company title apartments are all old with big rooms, tall ceilings and nice views :(

        • ryan1jz on 03/02/2022 - 22:31

          Yep, this one has all those, AND two working open fire places :(

  • miwahni on 03/02/2022 - 23:33
    +1

    These can be fraught. The company has the right to approve the purchaser and if the board doesn't like you, they may not agree to the purchase. Likewise when you want to sell. As mentioned above banks don't like them. Once upon a time St.George would lend against them, and as Bank of Melbourne is just the Victorian St.George branches rebranded they would have the same policy - but it's over eight years since I was with the dragon so that could have changed by now. The hardest part, from a lender perspective, was finding a valuer who was able to value the place, as valuers are trained to value property and not shares in a company, which is what you're buying with company title. Apparently their indemnity insurance wouldn't cover them either. Again,though, that was eight years ago.

  • shaybisc on 04/02/2022 - 08:23

    "Do you pay into the company like you would a body corp? Or do they just hit you up for money when work needs to be done?"

    You want to closely examine the articles of association of the company.

    Hmm, this is more useful than anything I could find on company title when I searched maybe ten years ago, when I found nothing. I even looked in Butt's 1454 page Land Law and there was from memory a page or two.

    https://jfmlaw.com.au/wp-content/uploads/2017/06/Company-Tit…

  • stirlo on 04/02/2022 - 14:06

    My sister owns one. It’s not that uncommon and she hasn’t had any issues. She pays similar fees to strata fees and there’s a management company hired to run the meetings. No weird rules like approval required for sale or new owners or anything like that. ANZ had no problem giving her a mortgage for it either (in 2020).

  • shaybisc on 04/02/2022 - 14:58

    I've got a friend who owns one. Prospective buyers are interviewed and approved if suitable.

  • Sweet3st on 04/02/2022 - 16:58

    I’ve lived in one in Sydney for years and no problems, in fact I prefer it. Look at the Articles of Association, and minutes of the AGM. In many ways they operate in a similar way to strata with Board of Directors managing agent and levies. Individual owners (shareholders) need to get approval from the Board for more things but that can be a positive, you can’t do ugly renovations that are out of keeping with the building. I feel it’s more a case of the building community coming together to decide on things rather than renegade owners doing their own thing, although there are restrictions with strata as well. I had no problem borrowing against mine.

  • ShannonN on 05/02/2022 - 09:58

    I had to look that one up as I've never heard of it
    Company title is a scheme of land ownership through which a company owns the title to land. Shareholders who have purchased shares in the company are entitled to exclusive occupation of a flat in a building on that land. In this regard, shareholders in a company title buildings do not technically 'own' the land."

    when I read you are a shareholder who never owns anything I said why would anyone do that?

    Good luck making a wise decision on that one

Login or Join to leave a comment
Login Join