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‘Torrens Title’ is, technically, a system of ‘indefeasible’ land title registration. However, for landowners, perhaps the most important aspect is that a Torrens Title owner own all of the house and the land on which it is built. That may sound trite but this is vastly different to ownership of strata apartments where there is common property extending essentially to ‘under the layer of paint in your flat!’ Thus, on Torrens Title properties, pest and building inspections tend to be more crucial, as does any easements/rights of way, title insurance and issues relating to the Council’s zoning of the property – you own the land so its important to know what you can do (or can’t do) with it!
Strata Title Property
A property such as an apartment, unit or townhouse 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 including receptions, gardens, lifts and driveways etc. Because they are shared, these common areas have to be maintained by all of the unit owners collectively, through an Owners Corporation. This is funded by quarterly levies, usually designated as being either for ‘administrative’ or ‘capital works’ purposes. While these amounts are usually agreed and budgeted for, occasionally expenses overshoot and owners need to ‘top up’ the accounts with ‘special levies’. This is a key risk in strata properties and needs to be major due diligence point.
Rural land is any land that is more than 2.5 hectares (6.2 acres) or land that is used wholly for non-residential purposes. This has implications for how the property is marketed e.g. there is no need to have a contract for sale draft prior to marketing a rural property, and there is no ‘cool-off’ period available. But if the property is ‘truly rural’ (e.g. grazing of livestock, for the growing of crops etc.) there are probably more serious issues for a purchaser to consider such as obtaining a noxious weeds report, native title and crown title issues, water access rights and access generally, wind-farming and telecommunication licences and existing agistment or farm-sharing arrangements.
Off the Plan
‘Off-the-plan’ property transactions are inherently more risky transactions than buying pre-existing properties. This is because, quite simply, you are buying something that does not exist and the final product, when built, may differ from your expectations (often with surprisingly little recourse to the developer). This has implications for your finance too since banks will not fully commit to fund the transaction until the property is built and sometimes they value the property less than forecast. Contingency plans are important, like being able to on-sell the property if you cannot settle it yourself. Delays in building schedules are also a key risk in ‘off the plan’ as developers rarely commit to hard-and-fast deadlines and buyers can be left stranded.
If vacant land is being purchased for the purposes of erecting a dwelling place, it is crucial that the zoning certificate is studied closely to understand what type of structure(s) can be built, where, and how. If the Council determines a bush fire, flood or other risk with the land, that will weigh into their development approvals. Often a buyer’s due diligence should go beyond the minimum disclosures in the contract and there should be a meeting with Council and/or a consultation with a town planner or builder. It is also important to consider how utilities like water, electricity and telecommunications will be connected to the property as well as your own access (i.e. that you are not ‘landlocked’). For a vendor, the sale of vacant land will often attract GST and that should be factored into price negotiations.
Company title is very similar to strata title – its was the predecessor to strata prior to 1961. Company title means that a proprietary limited company owns the building of units and land it occupies. The owner of a particular shareholding has the right to exclusive occupancy of an apartment corresponding to the shareholding. But there are major differences between strata and company title. For example, the Company’s directors usually have the ultimate right of say when it comes to transferring your shares in the company (i.e. selling your apartment) and if the purchaser is deemed undesirable, the sale may not happen. Similarly, you often require their consent is needed to rent your apartment – or worse, sometimes you are denied the opportunity to rent full stop. The key legal risks in Company Title lay in what the constitution of the company says as well as the culture of the company’s management.