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?
Sometimes referred to as a cross lease, in a Moiety Title the unit owner owns a share of the land that the entire group of units sits on.
The word “moiety” derives from the Old French moitié, which means “half”, demonstrating the owner’s part-ownership of the property. In contrast, a Torrens Title is when you are the sole owner of the property.
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
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. This is different to a Company Title, whereby you effectively purchase ‘shares’ in a ‘company’, which gives you the right to occupy the unit.
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.
