Strata vs Torrens Title: What does it mean for you?
Purchasing a property can be both exciting and somewhat daunting! Regardless of whether you are buying a home to live in or an investment property, there are a number of considerations and issues you need to think of before you sign on that dotted line...
With so many different property types out there, from free-standing homes to townhouses, apartments and duplexes, one of the key considerations is the type of 'title' that the property falls under. For instance, if a property you like is under Strata there are a number of issues you need to be aware of that could have on-going implications.
What is the difference between a Strata and Torrens Title property?
A Torrens Title property is one in which the purchaser owns both the house and the land on which it is built. This is the most traditional form of ownership and means that you become the sole owner of the property (aside from the bank or financial institution providing the mortgage!) and you are responsible for the property's upkeep - both inside the property and outside on the block of land.
A property such as a villa, townhouse or unit however is usually purchased under Strata. When you buy one of these properties, there are 'common areas' that are used by all of the people living in the complex or apartment block including driveways, gardens and so on . These common areas have to be maintained by all of the unit owners collectively, through an Owners Corporation, because they are shared. The individual owner is solely responsible for the upkeep of the inside of their property, but they must also share the expense of maintaining the common areas.
Whenever you buy a property there are certain fees and bills that are payable on a regular basis, including water and council rates. When you buy a Strata property there are also additional levies to factor in to your budget.
Strata levies, or payments, are required from every owner on an ongoing basis. The levies are used to cover the ongoing maintenance and upkeep of the common property within the Strata complex.
If you are looking to purchase a Strata property it is important that you find out as much as you can about the overall 'financial health' of the Owners Corporation in relation to the complex in which the property is located. Your solicitor can obtain a report from the Owners Corporation that shows the amount of levies paid by the individual owners within the group, as well as the amount of money that is available in the funds to maintain the common property. The report will also give you an idea of how well the funds are managed and a history of what the money has been spent on in the past.
Strata Rules and Regulations
Another important consideration when deciding to purchase a Strata property is whether or not the rules and regulations surrounding the complex, known as by-laws, will allow you to make any changes to the property that you would like to make or whether they will be compatible with your lifestyle.
For example, if an owner of a Strata property wants to make any changes or improvements to their property they will usually need to have the consent of the Owners Corporation first. In some Strata complexes, approval is required for something as simple as the installation of air conditioning. Likewise, in some complexes there are by-laws in place that include limitations on pet ownership, visitors' parking, and the hours in which music may be played.
If you are looking to purchase a property that is under a Strata title, the key to making the right decision is to be well-informed. Speak to your solicitor or conveyancer before signing any contracts and make sure you know what by-laws are in place, what the ongoing levies will be in the future and any other obligations you may have. For more information on Strata title contact Lamrocks' experienced property team for advice on ph: 02 4731 5688.