If you are new to the real estate world and are thinking about your first purchase, you will want to understand the rules and regulations and the varying terminology. In particular, you may need to know the difference between a strata title and a community title and how these may affect your obligations going forward. What are the primary differences?
Community Scheme
While the principal may remain the same, there are significant differences between community and strata titles.
Community titles refer to a much larger development with individual lots. In this case, a community title scheme could refer to a subdivision or other residential community, where the lot owners share responsibility for the common areas. These large lots could include retail or commercial outlets as well as residential units. So, for example, there could be a "town centre" with a bank, supermarket and other stores. You may also find a leisure centre or other community building for the common use of the residents.
If you buy a lot in such a development, you will participate in the community title scheme. The scheme will be managed by a body corporate or community association responsible for primary utilities, drains, roads and landscaping around the town centre development. If you buy here, the value of your site will determine how many voting rights you have when it comes to managing the overall community. This will also determine how much you need to contribute towards common insurance and maintenance levies.
Strata Scheme
On the other hand, a strata title scheme typically refers to an enclosed development, such as a condo block. This self-contained project will typically be divided into individual units that may all be enclosed within the same structure. Again, a management entity will be appointed to make decisions, with each individual owner having a certain amount of voting rights. If you buy here, you will need to pay levies for the maintenance and insurance of common areas, which will also determine your level of participation in management meetings.
Insurance
There is a significant difference between the two schemes when it comes to insurance. In the strata scheme, insurance payments are mandatory as each lot owner needs to pay towards insuring the structure and common areas. They will also need to ensure their own contents within a purchased unit. If you were to buy into a community title scheme, there are no such insurance obligations as you are simply responsible for your own unit. The community management corporation will be responsible for insuring the common areas and will typically pay for the premiums from management levies.
Other Questions
If you have any other questions about your upcoming purchase and want to know more about a strata or community title scheme, reach out to a real estate expert for their help. Reach out to a professional for more information about strata development.