Land ownership - what do you own?
When purchasing or subdividing real estate, the land or the building will be registered under a specific title. The type of title may affect your intended purpose or use of the land. It is important that you are aware of the type of title you own or intend to purchase so to be aware of any limitations to that title, whether you intend to purchase a home, an investment property and specifically if you intend to subdivide the land. Below we outline the common types of land title in New South Wales (NSW).
Freehold Fee Simple Title
The most common form of ownership which entails the absolute ownership of the land and the dwelling(s) built on the land for an unlimited period of time and allows the registered owner to freely transfer, sell or lease the land. This form of title is commonly known as Torrens Title and each landholding is registered with a single title document, guaranteed by the NSW government.
Limited Title
Limited Titles are common in the older suburban areas of NSW. This means the boundaries to the property have not been surveyed precisely so it is unclear whether there are any encroachments to the property.
The limitation may be removed by the lodgement of a plan of survey, which will define the boundaries of the parcel of land. This would require a survey completed by a registered surveyor who would submit a ‘plan of redefinition’. This process is time-consuming and may be costly depending on the land being surveyed.
Leasehold Title
Commonly in NSW, the Crown owns the Land for Leasehold Titles. You lease the land from the Crown for an extended period of time and have exclusive possession of the land and the buildings on the land. Typically, you will pay a set-up fee plus annual rent on the land.
If the lease is a perpetual one, the leaseholder may apply to the Department of Planning, Industry & Environment – Crown Lands to purchase the leased land and obtain freehold title. The determination of the purchase application is based on the appropriateness of the application.
Strata Title
Owners of Strata Title own a specific unit or lot within a multi-story building as well as shared ownership over ‘common property’ such as a driveway, foyer or gardens. The common property is collectively owned by all the individual owners of the lots within the building who form a body corporate or homeowners association to manage the common property and shared facilities. The body corporate is the legal entity responsible for running the strata scheme which has a series of by-laws that set out the responsibilities and rights of the owners and the obligations of the owners in relation to common areas.
Strata Title is common for apartments, units, townhouses, serviced apartments, retirement villages, commercial, retail, and mixed-use premises. Owners of Strata Title land usually own the inside of the apartment, sharing an interest in the common areas.
Company Title
Instead of purchasing the title in real estate, you are purchasing shares in a company. The company owns the unit and the proprietor is allocated a specific number of shares for the unit, building, car park, shared common area and facilities. This means the proprietors, also known as the shareholders, are not the owners of the land but they have exclusive occupation of the unit.
Company title may be converted into strata title if all the shareholders in the company agree to the conversion.
Stratum Title (Unit Title)
Stratum Title is a combination of Strata Title and Company Title. The owners will hold Strata Title for a specific unit or lot within a multi-story building and Company Title will cover the common property.
Stratum Title properties are commonly used to cater mixed-use development such as underground parking, retail shops on ground floor and residential units above.
Key takeaways
Land titles define the legal and financial requirements affecting land and set out the model of ownership. The type of title for land with common ownership will dictate any changes you can make to the land and approvals necessary. It is therefore important to know the type of title that land is registered under.
If you are planning on purchasing or subdividing your property, please contact one of our team members to discuss.
Ron Zucker 0410 590 111
Eollyn Cortes 0478 727 395
Sagang Chung 0431 435 333
Julia Zou 0426 670 202
