From Old System to leasehold, Harvey Grennan examines the various forms of property titles available under Australian law and what they mean for owners.

When you buy a property you obtain the legal 'title' to it, an official-looking piece of paper you should store in a bank vault or other safe place. There are at least six forms of property ownership. The most common forms of freehold title are Torrens and strata, which include any 'encumbrances' (mortgages and easements, for example) held over the property by other parties such as the bank or a neighbour.

Torrens title is the government-guaranteed ownership of land, recorded in the land titles office of the state or territory where the property is located. This record is amended each time a property changes hands.

Strata title is similar but covers only the internal space of an apartment, villa, townhouse, shop or office. Common areas, such as lobbies, lifts and grounds are shared with other owners. You pay a levy for their maintenance and they are controlled by a committee of residents.

Old System, the form of ownership that preceded Torrens title, is not guaranteed by the government. Under this title, your solicitor must plough through the chain of ownership changes since the original grant, making sure each transaction was sound. There aren't many such properties left and it is possible, indeed advisable, to convert them to Torrens title.

Company title was developed as the way to own an apartment before strata title. With this title you do not own real estate; instead, you own shares in a company that owns the building and gives you the right to occupy a specific apartment. With this form of ownership, you typically need the agreement of the other owners or shareholders to sell or lease the unit, and it is more difficult to borrow money on a company-title unit.

A leasehold title confers the usual rights of property ownership but only for a finite term, up to 99 years. If you sell the property, you pass on the remainder of the term to the new owner. This is the standard form of ownership in Canberra and also applies to many apartment buildings around Sydney Harbour, where land is owned by government agencies. Some retirement home developers also dictate leasehold as the form of tenure.

The newest form of property ownership is community title, which is similar to strata but usually applies to larger properties, perhaps a whole new suburb, gated village or a rural development. You have Torrens or strata title to your own dwelling but shared ownership of roads and other common areas.

Title tracks

Buyers of some very expensive real estate are accepting less conventional forms of ownership. In the Sydney CBD, properties in the Macquarie Apartments command multi-million-dollar prices but sit on leasehold land. Down the block, buyers pay $1 million-plus for apartments with no parking in The Astor, a fashionable company-title relic built in the 1920s. And the NSW suburb of Newington, site of the Athletes Village at the 2000 Sydney Olympics, is all under community title.

Company business

Buyers of company-title flats should check for any restrictions on selling and leasing, what fees are payable, provisions for repairs and maintenance, any financial liabilities, whether buyers must be approved by the board, and the extent of the directors' powers.

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