Buying a Share in a Company Title Building

Not every apartment in Australia is bought and sold under a Torrens title or a strata title. In parts of Sydney, Melbourne and a handful of other inner-city pockets, a number of older apartment blocks are still held under company title, an ownership structure that predates strata legislation entirely. Buying into one of these buildings means buying a parcel of shares in a private company, not a registered piece of land, and that single difference changes almost every step of a residential purchase. Finance, insurance, board approval and even how you eventually resell all work differently to a standard strata purchase, so it pays to understand what you are getting into before you sign anything.

What Company Title Actually Means

Under a strata scheme, your unit has its own lot on the title register and you own it outright, subject to the by-laws of the owners corporation. Company title works on a completely different legal foundation. The company owns the entire building as a single asset, and what you buy is a specific number of shares in that company, together with an entitlement recorded in the company's constitution or articles of association that gives you exclusive occupancy of one particular apartment. There is no separate certificate of title for your unit. Anyone weighing up a company title purchase against a comparable strata option should read our checklist on buying a strata title unit, since the day-to-day experience of living in the building can look similar even though the legal ownership underneath it is not.

Why These Buildings Still Exist

Most company title buildings date from before strata legislation was introduced across Australian states, generally the 1950s and 1960s, and were simply never converted afterwards. Conversion to strata is possible in many cases but often requires unanimous or near-unanimous agreement among shareholders, plus survey and legal costs that a group of long-term owners may see little reason to pursue. As a result, company title stock is concentrated in specific, well-established low-rise buildings, particularly in older parts of Sydney, and buyers researching a residential purchase there should expect to encounter at least a few company title options.

Board and Shareholder Approval

This is the change that catches most buyers off guard. In a strata sale, once contracts are exchanged and settlement occurs, the new owner is registered and that is the end of it. In a company title building, the transfer of shares typically needs approval from the company's board of directors or, in some constitutions, the existing shareholders as a group. The articles of association usually give the company a right to review an incoming buyer's application, and in some older buildings that review has real teeth, including a capacity to decline a transfer in limited circumstances. Your conveyancer needs to identify this requirement early and build the lead time into the contract, because board approval can easily take longer than a standard cooling-off period.

Finance and Insurance Are More Complicated

Lenders assess a share in a company far more cautiously than a registered strata lot, because the security they are taking is a mortgage over shares rather than a conventional mortgage over land. Many mainstream lenders will not fund a company title purchase at all, and the panel of lenders who will are considerably narrower, often with tighter loan-to-value limits than an equivalent strata unit. This matters just as much down the track, since anyone refinancing a company title property later faces the same restricted lender pool. Building insurance is typically held by the company over the whole structure, so your conveyancer will also confirm what that policy covers and where your own responsibility for contents and fit-out begins.

What Your Conveyancer Checks Differently

Because there is no individual title to search in the usual sense, due diligence shifts toward company records. Your conveyancer will review the constitution or articles of association, the share certificate attached to the unit, the register of members, recent financial statements showing the building's financial position, and any by-laws governing renovations, pets or short-term letting. They will also check whether the shares are subject to any existing mortgage or caveat, and confirm the current directors, since it is the board that will ultimately approve you as the incoming shareholder.

Tax Treatment and the Main Residence Exemption

Because ownership is technically a shareholding rather than registered real property, some buyers assume the usual capital gains tax rules for a home do not apply. In practice, the Australian Taxation Office's guidance on the main residence exemption specifically addresses company title arrangements, and a share in a company title building can still qualify for the exemption where certain ownership and occupancy conditions are met. This is general information rather than tax advice, and given how fact-specific the eligibility criteria are, it is worth confirming your own position with an accountant, particularly if you already own other property.

Selling a Company Title Share Later

Reselling a company title share largely mirrors the process of buying one. You will still need company approval for whoever buys from you, and you will provide the same constitution, financial statements and share register extracts that you were given when you purchased. Because the pool of buyers comfortable with company title, and able to secure finance for it, is smaller than the pool for a standard residential sale, these properties can sometimes take longer to sell and may attract a narrower range of offers. It is worth asking the managing agent or existing shareholders how long recent sales in the specific building have taken, since this varies from one company title block to the next. If the shares are ever passed within a family rather than sold on the open market, for example after a parent's death, the process still runs through the company's transfer mechanism rather than a standard property transfer, so it pays to flag this to your conveyancer early.

Weighing Up the Trade-Offs

Company title apartments are sometimes priced a little below comparable strata units in the same area, partly reflecting the smaller buyer pool and the financing hurdles described above. For buyers planning to hold the property for years, or able to use a lender already comfortable with company title, that trade-off can be worthwhile. For those who may need to sell quickly or refinance soon, the extra friction is a real cost. A conveyancer who has handled company title transactions before can talk you through the constitution and flag anything unusual in the board approval process.