Company Title Conversion

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Conversion of Company Title Schemes to Strata Title


Why should we convert to strata title?

• Own a subdivision of airspace above the ground on separate title

• Can sell, mortgage, or lease the lot itself, without the cumbersome share/unit procedure

• Ready made dispute resolution procedure through legislation including mediation and the Tribunal

• Having strata title to land means a higher market value than company title


What are some disadvantages of conversion?

• Can not decide who will be permitted as an occupant

• Land Tax and Stamp Duty may apply

• Higher rate liability (water, electricity)

• May be capital gains liability on conversion


Power to Convert

• The company must have the power to convert

• If no power, the company must change the Constitution to provide the necessary power


Decision to Convert

• Canvass the opinion of shareholders

• Put forward a proposed motion to investigate conversion option:

“THAT this meeting approves conversion of the company home unit scheme to strata title and that it supports the directors of the company in their proposed investigation of such a course of action.”

• Unanimous approval is commonly required. This is specified in the Articles of Association and requires an Annual or Special General Meeting.


Matters Affecting Conversion

• Corporate Issues

• Local Government Requirements

• Survey Matters

• Mortgagees of shares


Steps to Conversion

Company Consent Requirements

• Altering the Memorandum of Association to allow conversion (commonly requires special resolution and notification must be provided to ASIC within 21 days of passing the special resolution)

• Formal Decision to Convert

• Consent of all shareholders in writing


Steps to Conversion continued…

Town Planning and Strata Plan Preparation

• Consult with a Town Planner at the pre-development application level

• Brief surveyor to prepare Strata Plan and measure the lots in compliance with Planning Instruments (LEP and DCP)

• Surveyor Plans and Report to be submitted to local council for Development Application (consent may be required for additional items as part of DA process)


Steps to Conversion continued…

• Registration at Land Titles Office

• Transfer of lots to shareholders in the company (Stamp duty payable on transfer)


Winding Up the Company

• Once lots are transferred, shareholders must commence a voluntary winding up of company.


323 Beaconsfield Pde – Case Study

• 18 lots converted to Strata Title;

• 12 mortgagees; 2 caveators and 1 dead owner;

• Re-alignment of boundaries of car parking spaces;

• Increase in value of $80,000 per unit*

Education

Company Title Conversion