Before buying a property, one of the key things you need to understand is what kind of title you are buying. A strata title and a community title are similar but there are differences between the two that you should know about before committing to your purchase.
What is a Community Title?
A community title scheme is similar to a strata scheme in that when you buy a lot, you own that lot and share ownership and responsibility for common areas on the property. This is different to a company title, whereby you effectively purchase ‘shares’ in a company which in turn allows you the right to occupy the unit.
A community title in NSW relates to properties with at least two lots that share a common area, such as a driveway or recreational land. It usually refers to large estates which could include several residential lots as well as commercial and retail outlets.
A community title scheme is created by the registration of a Community, Neighbourhood or Precinct plan and (much like a strata scheme) is managed by a body corporate consisting of all lot owners known as the Community Association. All common areas (including all roads, promenades and parklands) are referred to as Association property. Unit entitlement is based on site values which determines unit owners’ voting rights and contributions to maintenance and insurance levies.
The management of a community title scheme can be complex and multi-tiered. Usually found in big developments and complexes, they can often span large areas of land and consist of a mix of commercial, residential and retail lots with conflicting interests. Much like in strata titles, everything is managed via tabled meetings. The community scheme committee deals with day-to-day issues and general meetings are held for larger issues which each individual lot owner may attend.
A community scheme can also include strata titled buildings which means that sometimes the by-laws of both the strata scheme and community scheme apply. All by-laws in a community title scheme are detailed in Management Statement, which differs with each plan. As every community scheme varies in nature, the by-laws are therefore far less standardised than strata scheme by-laws.
What is the difference between a strata and community title?
The main difference between strata and community titles is the way in which the boundaries are defined. Strata titles apply to structures like apartment blocks, townhouses and duplexes and the units are therefore defined by structural aspects of the building (such as height and depth of walls and ceilings). A community title can incorporate several buildings and a great deal of land and therefore lot entitlement and boundaries relate to surveyed land measurements.
Lots & Units
Strata schemes also refer to units whereas community titles (which are mostly used for gated estates, and large development that contain shared infrastructure and services) refer to individual lots based on land measurements.
Maintenance & Developments
When it comes to maintenance, owners rights and decision making, strata and community titles are very similar. All owners are required to pay levies for maintenance depending on the size of their unit or lot and all owners have voting rights about any changes and developments in general meetings.
One of the major differences between the two titles is insurance. Strata insurance is compulsory and covers building and public liability insurances, including all common property areas managed by the body corporate. The entire building structure is therefore covered by strata insurance and each unit owner is then only responsible for the contents insurance of their own unit.
In community titles however, there is no obligation on the owners to maintain and insure other lot owners’ buildings. Instead, the owner of each individual lot is responsible for the insurance of any building on that lot. The community corporation is then only responsible for insuring any common areas or buildings such as driveways and service infrastructure.
Benefits of a Community Title
A community title gives you shared ownership of common areas. Some benefits of this include:
- Use of facilities like swimming pools, gardens and recreational areas
- Greater input into the management of common facilities
- Standardised building and landscaping which add value to your property
- Community lots and facilities are covered by insurance
Depending on the estate in which you purchase your property, you may also be able to access and benefit from perks like:
- Country club membership including gyms, tennis courts or swimming pools
- Security patrols
- Walking trails and bike paths
- Community activities and events
Disadvantages of a Community Title
Despite many positive benefits, there are some disadvantages to a community title you should be aware of before making a purchase. These include:
- Community levies can be high (though the benefits may out-weigh the negatives)
- Standardised landscaping and buildings can mean restrictive rules and regulations for your lot
- Regulations can be complex because of the varying lots (commercial, residential etc.) of the estate
- No part of your lot is covered by the Association’s insurance
When choosing between a strata title or community title scheme, there are pros and cons to both. Your decision will ultimately depend on your personal preference, your financial situation and of course the unit or lot itself. Rules and regulations may also vary from state to state, so for up to date information on legislation in NSW, check out the NSW Department of Fair Trading’s website.