If you own or are looking at buying a property that is a unit or flat in South Australia, it is good advice to beware of Moiety Titles.
As experienced conveyancers, we advise this based on two grounds:
- They are an archaic form of land title requiring increased administration
- Banks do not like lending against them, which means selling the property becomes harder
Read on to find out exactly what is a Moiety Title (as opposed to a Company Title or Community Title) and what to do if you’re faced with one.
Overview:
- What is a Moiety Title
- Moiety Title vs Company Title
- Company Title vs Community Title
- Dealing with a Moiety Title
What is a Moiety Title?
A Moiety Title, also known as a cross lease, is a type of land ownership where the unit owner holds a share of the land on which the entire group of units sits. In contrast to a Torrens Title, where an individual is the sole property owner, a Moiety Title gives the owner part-ownership, or a “moiety,” derived from the Old French word moitié, meaning “half.” This type of title is uncommon in South Australia, but it’s important for potential purchasers to understand how it works.
In a Moiety Title arrangement, the owner of a unit shares ownership of the land with other property owners, which can affect how the property is managed and sold. All owners must work together to make decisions about the land, and any changes typically require agreement from other shareholders.
If you’re considering buying a property with a Moiety Title, seeking good advice to understand the implications of shared land ownership and how it may impact your rights as a property owner is crucial.
Moiety Title vs Company Title
Up until 1967, the two most commonly used titles for flats (or units) in South Australia were the:
- Moiety Title (lease based)
- Company Title (share based)
As the owner of a flat or unit under a Moiety Title, you would be registered as the owner of a share of the land the unit block sits on, and would be effectively ‘leasing’ your right to occupy your flat(s) from the other owners, as well as leasing your right to use common areas.
As the owner of a flat or unit under a Company Title, your share certificate registers you as the sole owner of the land your flat sits on, also giving you the right to use common areas. When you sell, the ownership is transferred to your buyer.
Company Title vs Community Title
In a Community Title scheme, when you buy a lot, you become the registered owner of that specific property and share ownership and responsibility for the common areas with other lot owners. This type of title allows individual ownership of the lot while maintaining collective management of shared spaces.
On the other hand, in a Company Title, you buy ‘shares’ in a company that owns the entire property. These shares give you the right to occupy a specific unit within the building. Unlike Community Titles, Company Titles do not offer individual ownership of the lot but rather a share in the overall property.
Can a Moiety Title be Converted to Another Type of Title?
Yes, a Moiety Title can be converted to another type of title, such as a Community Title or Torrens Title, in South Australia. This process typically requires the involvement of a conveyancer and surveyor to handle the legal and technical aspects of the conversion. By converting a Moiety Title to a more commonly accepted title like a Torrens or Community Title, the property may become more marketable and easier to finance, as many financial institutions view Moiety Titles as less favourable due to their shared ownership structure.
However, it’s important to note that the conversion can be costly and time-consuming, often requiring approval from relevant authorities and the cooperation of other property owners. Engaging a professional conveyancer is essential to ensure a smooth process, as they can provide good advice on navigating the necessary steps to gain access to more favourable property ownership systems. Converting the title could also enhance the value of the property, especially for potential purchasers who prefer simpler ownership models.
What to do when dealing with a Moiety Title
If you ever consider buying a Moiety Title property, be very careful and be informed before signing a contract.
It is invaluable that you understand the differences between a Moiety Title and the more common Torrens, Strata or Community Titles.
It’s also important to note that many banks don’t like lending against Moiety Titles, or at least only lend a reduced percentage.
This is where an established relationship with a conveyancer can be priceless. Likewise, owners of Moiety Title property would do well to discuss their situation with their conveyancer about the possibility of converting to a Community Title.
While there is an approval process with costs that can be substantial, the payoff is a property that’s more saleable.
The important thing to take away from this article is that being fully aware of the pros and cons of your property title type, and having access to a trusted advisor such as your conveyancer, can save you from heartache and hidden costs with your flat or unit investments. If you have any questions about anything in this blog, don’t hesitate to contact the team at Eckermanns on 08 8366 7900.
