Community Title Schemes: What Buyers Need to Know

If you are looking to enter into the property market, you may have heard the terms “Community Title Scheme” and “Unit Title Scheme”. Whilst these forms of tenure may seem similar, as both involve rights to use communal spaces and amenities, there are differences that you should be aware of before purchasing. Read on to explore some of the specifics of Community Title Schemes, as well as the potential advantages and disadvantages of such schemes.

Community Title Schemes in the ACT are established under the Community Title Act 2001, and occur where separately owned lots share communal spaces or amenities that are maintained by the owners through a body corporate. An example of community title includes where a group of townhouses are each owned separately, however there is joint use of common spaces such as a swimming pool and BBQ area, or the use of common roads.

There are a number of factors that differentiate Community Title Schemes and Unit Title schemes, including the following:

Title and Boundaries

Units Title Schemes are divided into units, with the boundaries of each unit defined by set out in the Units Plan:

• for Class A units (usually apartments) – the boundary of the unit is defined by floors, walls and ceilings of the unit; and
• for Class B units (such as townhouses) – the boundary is defined by a surveyed line around the land the unit sits on.

On the other hand, Community Title Schemes are divided into lots (which must also include common property lots), with the boundaries of the lots delineated in a site plan, which is part of the Community Title Master Plan.

In contrast to a Units Plan, Community Title Schemes are often developed in stages, and lots may be added or removed from the scheme on approval by the Planning and Land Authority.

It is important to note that in some circumstances, a Units Plan may also sit within a Community Title Scheme, creating an extra level of governance which owners will have to deal with.

Insurance

Insurance is compulsory within a Units Plan, is arranged by the owners corporation, and ordinarily covers all buildings, in addition to public liability over common property areas. In contrast, the body corporate of a Community Title Scheme is only obliged arrange building and public liability insurance for common property areas. It is then the responsibility of individual owners to insure the buildings within their own lot, should they wish to do so.

Rules and By-laws

Legislation prescribes fairly detailed default rules for Units Plans within the ACT. This is less so the case for Community Title Schemes. Whilst there are some default by-laws for Community Title Schemes, those only apply in circumstances where the body corporate for the scheme has not dealt with a particular matter. Generally, however, a Community Title Scheme provides lot owners more flexibility in determining the rules that govern the scheme, allowing them to be specifically tailored to that particular development.  

So, having examined some of the differences between Community Title and Unit Title schemes, what are potential pros and cons to consider before buying a lot within a Community Title Scheme?

Pros

• shared ownership of common areas, which could include attractive facilities such as swimming pools, or recreational areas.
• all communal areas and facilities are covered by body corporate insurance.
• body corporate meetings, allowing for owner input into the management of common areas and amenities.
• by-laws within a Community Title Scheme can be more specific to the function of the properties and facilities, and overall objectives for the scheme.

Cons

• the cost of levies can be high, in order to fund the communal facilities.
• standardised landscaping and building objectives for a scheme can mean restrictive by-laws in relation to your lot.
• owners are required to obtain their own insurance for their lot, as only the communal areas are covered by the body corporate insurance.

If you are interested in purchasing a property within a Community Title Scheme, or have any questions in relation to this article, please do not hesitate to contact the BAL Lawyers Property team on 02 6274 0999.