When you purchase property it will likely be Torrens or Strata
title. It is important to understand the differences between the
two and how they will impact your ownership and use of the
A Torrens Title property is the most common form of ownership
for free-standing houses and some townhouses. The title includes
the house and the land on which it sits as defined by the lot. The
owner is solely responsible for the maintenance of the whole lot
including the payment of Council and Water Rates. The only
restriction on your use of the lot is Council zoning and approval,
therefore you have more freedom to use the property as you
Properties sold under Strata Title are usually units or villas.
The lot you purchase only includes the unit itself, however as an
owner you also have an interest in the common property. Therefore,
the contract of sale will have two title searches; the lot and the
Common property is areas such as hall ways, drive ways and court
yards which are used by all the units. All the owners collectively
form the Owners Corporation which is responsible for the
maintenance of the common property. The cost of doing so is divided
between the owners on a unit entitlement basis, meaning larger
units pay higher strata rates.
Strata titles contain By-Laws which control the actions of the
owners and occupiers of the lots. These include rules such as those
governing parking on the common property, noise restrictions,
keeping of animals, carrying out works and many others. There are
standard By-Laws set out in legislation which are commonly used,
however the Owners Corporation can adopt their own form of By-Laws
or approve Special By-Laws which amend the standard form for
example allowing the keeping of an animal or the installation of an
external air-conditioning unit. It is important to be aware of
whether any By-Laws or Special By-Laws directly impact or benefit
The work you can carry out on a Strata Title property may be
limited by the by-laws and as such may impact your intended use of
the property. Renovations or extensions must be approved by the
Owners Corporation and will likely involve having Special By-Laws
drafted and added to the common property title.
Quite often the common property title has a large number of
dealings such as rights of way and easements. For example, there
may be easements for drainage going under the building or leases
for an electricity sub-station if the building is large enough.
While these may not directly impact your lot, you still need to be
aware of them.
Strata Title properties must still abide by the council zoning.
Some Strata titles are zoned so that they can only be used for
residential purposes and not short term accommodation, whereas
others may be zoned only for serviced apartments. The zoning may
differ within the building for example the lower floors may be
commercial, middle floors serviced apartments and top floors
residential. It is crucial you are aware of the zoning of your unit
before exchanging to ensure you are allowed to use the property as
Prior to exchange we recommend purchasers of Torrens Title
obtain a building and pest inspection to determine whether there
are any structural or pest issues with the building or land.
However, purchasers of Strata Tile should obtain a Strata Report
and in some instances also a building and pest inspection. Strata
Reports are very important as they disclose any issues with the
building the owners corporation are aware of and have been
documented (such as issues related to the structure of the
building, pest infestation, unruly occupants, non compliant works
or legal action) as well as the financial health of the Owners
Corporation. If there is not enough money in the Administrative and
Sinking funds, special levies may be raised in the future to fund
required works. This could mean owners have to pay thousands of
dollars on top of their usual rates, the risk of which should be
taken into account before purchasing.
It is important to understand the differences between Torrens
and Strata Title properties before purchasing so you are aware of
your obligations under both.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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The High Court of Australia has granted special leave to appeal a decision of the NSWCA that upheld an adjudication determination under the NSW 1999.
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