Property rights of houses refer to the owner’s title to the dwelling and the right to use the land on which it sits. This might sound simple: person A purchases a property in their own name and lives in it without renting it out to anyone else. In that situation, you could say they hold both the property right (ownership) and the right to occupy. But does owning the title to a property always mean you also hold the right to occupy it? This article looks at the distinction.
Definition and Classification of Property Titles in Australia
Australia has many different types of properties, including detached houses, townhouses, apartments, serviced apartments, and student accommodation.
Australian real estate comes with several different types of title, the most common of which include:
1. Freehold / Torrens Title
This title is generally used for detached houses, meaning you have the legal right to inherit that parcel of land from generation to generation. With government approval, you can also build on, renovate, or demolish the house, and subdivide the land.
2. Strata Title
This type of title typically applies to townhouses, apartments, and units. It means a single parcel of land is divided into many lots: the purchaser legally owns the dwelling, while the land itself is held in common, and the purchaser does not have the right to unilaterally alter the dwelling or further subdivide the land. Under the strata arrangement, a management company handles the common facilities and spaces, and owners share the strata management fees.
3. Community Title
This usually applies to large, integrated estates. Its attributes are similar to strata title above, but a community-title estate has much larger common areas, such as parks, roads, and natural landscape features, which are also managed by a corresponding management company. Owners on community title therefore also need to pay quarterly community management fees.
Community title combines some features of strata title and freehold title. The estates on which community-title properties sit are generally quite large and consist mainly of detached houses.
4. Company Title
Company title refers to property that a company owns and then allocates to individuals who hold a specified number of shares. This includes leasehold rights, though the shares can be relatively difficult to resell.
5. Leasehold
Land leased out in parcels by the government to farmers for agricultural use, with very long terms. Over time, as development progresses, the government may convert agricultural land into residential land. This generally occurs in outer suburban areas.
Ownership Under Property Law
When multiple people purchase property together in Australia, there are usually two scenarios: the first is buying as Joint Tenants, and the second is buying as Tenants in Common.
Joint Tenants means buying in joint names, with each buyer taking an equal share of the property. For example, a married couple, s and r, buy a property as Joint Tenants. Their respective shares are 1:1 equal, with each holding half of the ownership. Importantly, if either s or r passes away, the deceased party’s share automatically passes to the other.
Tenants in Common, on the other hand, allows each buyer to hold different share proportions. For example, a mother e and her child q buy a property together, with the mother holding 60% and the child holding 40%. Their ownership ratio is 6:4. If one party passes away first, the deceased’s share does not automatically pass to the other owner; instead, it forms part of that person’s estate and is dealt with accordingly.
Ownership Under Family Law
In Australia, one of the most common case types involving property ownership is the division of property after divorce or the breakdown of a de facto relationship. NS Legal has received a great many enquiries on this topic. In Australia, the right to occupy the matrimonial home and the title to the matrimonial home are two different things.
For example, Lele and Beibei are a divorced couple. They purchased their matrimonial home in 2010, and the property is registered in Lele’s sole name. They divorced in 2020 due to incompatibility. In principle, even though Lele holds sole title to the property, until the property-division order comes down, both Lele and Beibei are entitled to continue living in their matrimonial home. In other words, even though the two have separated, they can still live under the same roof. Sometimes, one party can compel the other to move out of the matrimonial home, provided they have obtained a sole occupancy order granting them exclusive right to occupy. The court can, by court order, grant one party sole possession of the property; in deciding whether to grant sole occupancy of the matrimonial home, the court considers many factors, including each party’s needs and living conditions. For example, whether moving out of the matrimonial home would cause that party real accommodation hardship or financial hardship. Generally speaking, unless there are special circumstances, the court will not readily make a sole occupancy order.
This means that even after separation or divorce, regardless of who holds title to the property, both parties usually retain the right to occupy until they reach a separate agreement through negotiation or the court makes a different order. In our example, Lele cannot compel Beibei to move out of their love nest.
Situations Where You Hold Title but Not the Right to Occupy
Holding title to a property does not mean you have an absolute right to occupy it. The most common situation where this arises is leasing.
Example: A buys a property in Australia, with the title in their sole name. However, from 1 January 2019 to 1 January 2020, the whole property is leased to a student, B, under a legally valid lease. During that period, although A holds title to the property, A cannot live in it.
In another scenario, suppose C owns 100% of a villa with four bedrooms. C rents out two of them to D and E. C still enjoys some right to occupy the property, but, bound by the valid lease, C also has to comply with the landlord’s obligations to D and E.
Closing Thoughts
The right to occupy a property and the title to a property are not the same thing. For instance, even if a matrimonial home is in one spouse’s sole name after a divorce or separation, that spouse generally cannot force the other to move out. If you have further questions about property rights, titles, or the right to occupy in Australia, or would like to consult on related issues, please reach out to our professional legal team.
We have written a series of related articles on Australian real estate, property-related taxes, and Australian property law to answer various questions about Australian property. You are welcome to continue reading:
Even with PR you may still have to pay this surcharge — make sure you understand it before buying!
Legal issues to watch out for before buying property in NSW
Buy a home with as little as a 2% deposit? Who’s eligible? Make sure to watch these points!
Caveats — an effective tool for protecting your property interests
When buying property in Australia, should you engage a lawyer or a conveyancer?
