Strata vs Stratum
Strata and stratum are special titles introduced by the government of Australia and later adopted by several other countries when it comes to ownership in apartments or flats. There is much overlapping in these two special types of titles that causes confusion in the minds for the people. This article attempts to explain these differences by highlighting the features of the strata and stratum ownership types.
Both strata and stratum are forms of titles that are based on the concept of ownership, which divides land into strata or spaces with buyers acquiring rights to ownership on spaces or units along with joint rights over areas that are used commonly. This title came into existence for the first time in NSW in 1961. This type of ownership, known as strata title, has become a standard in the rest of the states and some other countries, as well. Strata title is commonly used in cases of vertical subdivision, a practical example of which is the ownership rights of the buyer in an apartment. It is similar to the rights of the buyer in a condominium, in US and Canada.
Another important scheme introduced to explain ownership rights of buyers in flats or apartments is stratum title. Here, the spaces are divided into lots, with common space such as stairs, driveway etc are also referred to as a lot and included in the lots. Now it is known the driveway, gardens, terrace at the top etc are owned by the service company and to include this property as an additional lot in the subdivision creates difficulties when it comes to Corporation Law. This policy to refer to common property as a unit in the subdivision is also not liked by lenders, as they do not treat this property as a security.
In stratum title ownership scheme, every buyer of the flat holds the title of the unit he has bought, along with shares in the company holding rights on the common property. These buyers agree on issues that explain responsibilities and contributions of buyers in terms of common property.
What is the difference between Strata and Stratum?
• It is clear from the above description that the titles are different from the point of view of lender that has to accept the share of the buyer in the common property, which is more of responsibility and contribution so that common property can be easily maintained. It is this difference in treating the common property as security that makes lenders offer a different rate of interest on stratum title, which is a bit higher.
• It is thus better for a buyer in a stratum scheme to check with the lender that it is willing to accept the shares of the buyer in servicing the common property as a security.