What’s The Difference Between Strata And Community Title?
In South Australia, until 1996, shared-ownership residential properties such as unit blocks were regulated according to strata title. Then, the Community Titles Act 1996 came into effect, and while the properties previously subject to strata title continued to be governed by those rules, all new buildings became subject to community title. The main difference between Strata Title and Community title is the way in which the land boundaries are defined.
What is strata title?
A strata plan divides a building and land into separate, privately-owned units which each have a title, plus the remaining common property, which is owned collectively by the title holders and managed by the strata corporation (body corporate).
In a strata plan, the boundaries are defined by the various parts of the building such as ceilings, floors and walls, rather than by reference to the land.
Common property normally includes areas like driveways, stairs, elevators, lobbies, gardens and landscaping. Front and back yards and carport or garage spaces are considered to be ‘unit subsidiaries’, which are for each unit owner’s exclusive use.
Most strata corporations of 4 or more units are administered by a strata manager like Strata Data, who manages the upkeep of the common property and collects the quarterly fees for maintenance and insurance from the strata title holders. The strata corporation is also responsible for dealing with disputes between title holders, if and when they arise.
What is community title?
Community title is used for newer divisions.
There are two types of community titles:
- Community strata schemes – the boundaries of each title (known as ‘lots’) are defined by reference to parts of the building, much like strata title.
- Community land schemes – the title or lot boundaries are defined by surveyed land measurements and are unlimited in height and depth, unless otherwise specified on the plan.
Similar to strata plans, the common areas in both schemes are administered by a body corporate (also known as a community corporation), which maintains the common areas using contributions from each of the title holders.
Subject to the Community Titles Act of 1996, the community corporation must meet at least once a year to discuss matters such as finances, by-laws and insurance and each lot owner has one vote at this meeting (shared if the lot is owned by two people).
What are the key differences between strata and community title?
There are many similarities between strata and community titles, but also some key differences. The main areas where strata and community titles differ are:
1. Boundary definitions
While strata title boundaries are always defined by parts of the building, community title boundaries can either be defined in this way or by surveyed land measurements, depending on the scheme in place.
2. Insurance
Strata corporations and Community Strata corporations are obliged to have building and public liability insurance in place for the entire property, while Community Land corporations are only responsible for insuring common areas, with lot owners responsible for insuring their own lots.
3. Enforcement of by-laws
Unlike strata corporations, community corporations are usually set up from the start to have the legal power to impose penalties of up to $500 for breaches of by-laws, which can be imposed on both owners and visitors.
How will this impact you?
If you buy into a shared property scenario, you will be faced with certain obligations, regardless of whether it is a strata or community title scheme. These will include;
- Being subject to by-laws which may place restrictions on what you can do to your property (i.e. satellite dishes, tv antennas, exterior colour schemes etc) and how you can live there (i.e. rules regarding pets, noise, smoking, parking, tenants etc).
- Paying mandatory fees towards the maintenance, insurance and upkeep of common property plus being required to contribute to any unexpected expenses that might occur.
- Being responsible as an owner for the actions of the body corporate and thus potentially liable for any financial mismanagement.
As well as the general responsibilities that come with buying into a strata style property, community land title can also involve extra obligations of its own. For one thing, as mentioned previously, you will have to pay for your own insurance.
Shared housing
Community title subdivision was introduced partly to cater for the growing number of lifestyle property developments springing up in Australia that are based on America’s gated communities. Developments such as these can have large common areas devoted to shared facilities such as playgrounds, swimming pools, gyms, tennis courts, lakes, gardens, roads, parks and golf courses.
While access to these facilities as part of your strata ownership is obviously highly appealing, the drawback could be that because community title means you must contribute to their maintenance and upkeep, you could find yourself facing larger than average contributions to the community corporation.
So if you are considering buying a property that comes with a strata or community title, you would be wise to seek professional advice to make sure you understand this type of structure fully. Or, if you are a member of an owners corporation seeking management services for your existing strata or community scheme, contact Strata Data for a free proposal today.
