The division of rights between the shareholder and the company in a company title unit is often a controversial issue.
As with many things in company title law, the terms of the constitution will determine whether or not a particular part of the building or parcel of land is owned by the company or whether it is able to be enjoyed exclusively by the shareholder.
Generally, more modern constitutions tend to be slightly different to older ones. Here are the basics:
Modern Constitutions
Many modern constitutions will adopt the division between lot property and common property that is used in the strata title legislation. If this definition is adopted, the shareholder will have exclusive use of:
- The cubic airspace which comprises his or her unit.
- The surface of the walls, ceilings and floors that form the external boundaries of the unit.
- Any internal walls.
- Any objects that are affixed to walls, such as air conditioners and smoke alarms.
The shareholder will not have exclusive use of:
- The internal fabric or structural material that is behind the surface of the walls, ceiling and floors.
- External windows and doors.
Older Constitutions
Older constitutions often fail to define explicitly what parts of the building are owned by the company and what parts of the building are part of a shareholder’s unit. This can create uncertainty and lead to disputes.
In practice, companies with older constitutions tend to apply the definition that is used in the strata title legislation.
Solving Uncertainty
Changing the constitution to specify a new division of property rights between shareholders and the company can be a complicated and tedious process.
A simple way to solve much of the uncertainty associated with older constitutions is to implement house rules which give shareholders permission to undertake certain minor works in their units, irrespective of whether or not they involve an interference with company property. These minor works could include painting, hanging pictures, installing recessed light fittings, changing floorboards and minor kitchen renovations.
To speak to one of our experienced lawyers about your Company Title Constitution, call us on (02) 9199 8597 or email us.
The information contained in this post is current at the date of editing – 11 April 2025.
