There are many factors to consider when you're house hunting. A property's title may not be the most exciting of them, but it plays a foundational role in your ownership over any property you buy.

What is a property title?

A title is essentially a legal document that records information about a particular property, including who owns it. Land registries in Australia are administered by state and territory governments and a title search will be a routine part of any property you purchase.

See also: What is a Contract of Sale?

There are several types of property titles in Australia, but the main ones you'll likely encounter when looking at purchasing a home are Torrens (or freehold) titles and strata titles.

What is the difference between a Torrens and a strata title?

Essentially, if you have a Torrens (or freehold) title, you own both the home and the land it sits on. Torrens titles are the most common property title for Australian houses.

Conversely, many units, apartments, and townhouses have strata titles.

In simple terms, buying a home with a strata title means you take ownership of your individual unit, or 'lot', but you share ownership of the building that contains it and the land it sits on.

This shared ownership also applies to any communal spaces such as driveways, grounds, or shared facilities like pools, gymnasiums, or barbecue areas.

What does dual occupancy mean?

When there are two separate dwellings on the one land title, this is referred to as dual occupancy. Common examples of dual occupancy dwellings are duplexes and granny flats.

When it comes to dual occupancy, one owner can own both properties on the lot or two owners can each own a dwelling on the one land title.

The property in the former situation would likely have a Torrens title while those properties sharing the one title are likely strata titled (although not always).

Dual occupancy dwellings aren't permitted under all local government planning and zoning regulations, so you won't find them in some parts of Australia. But they're generally quite common in metropolitan areas and regional centres.

Councils that do allow dual occupancy dwellings can permit them under different title arrangements. This is where it's important to understand the title set-up of any property you're considering purchasing or perhaps thinking of developing at a later date.

Developing a dual occupancy

Let's start at the beginning. If someone decides to develop dual occupancy dwellings on a single Torrens title block, they firstly have to comply with local planning laws.

If they plan to live in one and rent the other out, they may choose to keep the original title and own both dwellings. (That may not mean they get out of paying two lots of council rates, however.)

If they're looking to sell one or both dwellings, either in the immediate or distant future, they may consider splitting the land into two separate freehold titles, called a Torrens title subdivision, or undertake what's called a 'strata subdivision' to make the land title subject to shared ownership.

Again, this will be up to local council regulations. Some councils won't permit a dual occupancy subdivision in the first place, and some will only permit them under certain circumstances.

Of course, there are fees involved if you wish to split a Torrens title block into two separate titles, and some councils may also apply infrastructure charges as they would with other property developments.

Some local authorities may allow two dwellings to be built on a site but not allow the block to be split into two separate titles if the blocks fail to meet minimum lot size requirements.

If the two dwellings share any facilities, such as a driveway, a single Torrens title can leave its use and maintenance subject to debate. Some councils won't be too keen on leaving a door open to such conflicts and may require the lot to be strata titled.

In some cases, the owner may choose to apply for a strata subdivision, with each lot having a 50% share of the title and both owners assuming shared responsibilities for common grounds and facilities.

Buying a dual occupancy dwelling

If you purchase a dual occupancy dwelling, it's important to understand exactly what title it comes with and any implications for your ownership of the property.

If the property has a Torrens title, it means you're buying the dwelling and the land that it sits on. That means you're entirely responsible for your dwelling and a defined portion of the land under it or surrounding it.

Importantly, you're not responsible or won't have any control over the other dwelling, even if the two are physically joined. (Note: some jurisdictions may not allow joined properties to have separate Torrens titles.)

If the dual occupancy dwelling is under a strata title (sometimes called a small or two-lot strata scheme), you will own the dwelling and have a share (generally 50%, but not always) in the land and any common facilities.

In many jurisdictions, small or two-lot strata set-ups don't come with the same comprehensive rules and regulations that govern larger strata titled properties, such as multi-unit apartment blocks.

How do two-lot strata arrangements work?

When it comes to small or two-lot strata arrangements, the two owners will typically make up the strata committee and no elections are required to vote for committee members.

Unlike larger strata corporations, financial accounts for two-lot strata schemes generally don't need to be audited unless the budget is over a certain threshold.

In many jurisdictions, if the two dwellings are detached from one another, the owners won't need to take out compulsory building insurance and each can arrange their own building insurances. There may be different requirements if the dwellings are joined.

It's important to note that each state and territory has its own laws governing small strata arrangements. It's strongly advised to research the regulations in the jurisdiction you are buying in.

A solicitor may also be able to advise what the requirements are and ensure you are fully informed on implications of buying into a dual occupancy strata arrangement.

See also: What you should know when buying a strata property

Benefits of a Torrens title for dual occupancy dwellings

The main benefit of a Torrens title is that it gives you complete independence over your own home and land.

Dual occupancy dwellings with freehold titles also tend to be more sought after and will likely hold their value and appreciate at a higher rate over the longer term.

Of course, this can make them more expensive to purchase too.

Disadvantages of a Torrens title for dual occupancy dwellings

Generally, the disadvantages of a dual occupancy under a Torrens title are borne by the original developer of the lot, rather than a purchaser.

Torrens title subdivisions can come with the challenge of configuring the block to make both dwellings independent of each other, down to the utilities and services connecting to them.

It can cost significantly more to have two connection points to two dwellings that don't impinge on the other. This can mean the developer may sometimes pay double the cost of having just one connection point that splits to service two homes, which may have been possible with a strata subdivision.

If you're buying a Torrens title dual occupancy home, it's likely these expenses have already been picked up by the developer. You'll simply pay the usual rates and utility charges for a single dwelling.

Benefits of a strata title for dual occupancy dwellings

Again, the monetary benefits of a strata title were most likely reaped by the original developer who could ultimately sell two dwellings instead of one.

It may also have been cheaper for them to build two dwellings under a strata title rather than pay the extra costs associated with splitting the original Torrens title and configuring the lot so as the two dwellings were completely independent of each other.

For property buyers, strata properties are generally less expensive than those with Torrens titles. Thus, they can offer a more affordable option for those getting into the housing market or looking to buy in a desirable area.

They can also be a good choice for homeowners wanting to downsize to a more easily maintained property.

Some people might feel more secure living in a strata property where there is someone close by. They might also feel more comfortable knowing there's another owner to help share the load of maintenance costs and other expenses.

Dual occupancy strata rules and regulations tend to be far less formal and onerous than they might be for larger owners' corporations.

The success of a dual occupancy strata arrangement ultimately depends on the co-owners and can be highly workable when personalities align.

Disadvantages of a strata title for dual occupancy dwellings.

The main disadvantage of a strata title, even in a dual occupancy situation, is that you ultimately share ownership of the lot with someone else.

This means you'll likely need to meet regularly, contribute funds to maintain shared areas, make joint decisions, and make concessions and allowances for living in close quarters with someone you may not have too much in common with.

There may be less privacy, and some people may feel constrained in what they can do in their own home.

While strata titled properties tend to be less costly to get into, they also may not appreciate in value at the same rate as a home with its own Torrens title.

And the winner is….

As with most things in the property market, the best title for a dual occupancy home depends on your own wants and needs.

People looking to purchase a duplex or other dual occupancy dwelling can expect many to come with a strata title.

If the home ticks a lot of your boxes, you shouldn't let its title put you off. Strata titles tend to be relatively easy to manage and administer under a dual occupancy or two-lot strata scheme, and some Torrens titles may have their own downsides too.

As for property owners looking to add another dwelling to their block, they will need to comply with the rules and regulations of their local council and the state or territory they live in.

In some places, it is possible to split a Torrens title into two separate Torrens titles, but there'll be certain conditions that must be met.

It's always advisable to seek expert advice to best understand your options and the title implications of any property you intend to purchase or develop.

Image by Tom Rumble on Unsplash

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