Know the legalities

Before starting or joining a collaborative housing project, make sure you understand the legal implications. A key consideration is how you set up property ownership rights. The property ownership structure, or housing title, refers to the legal right that enables possession or use of a property, and the legal structure that describes the rights and responsibilities related that possession.

There are many types of legal structures which can and have been used for collaborative housing communities. However, different structures have different implications for the community, so it important to choose a structure that works best with the goals of you collaborative housing community.

 

This can be a complex area, with legal structures varying in the different states of Australia, and specific legal advice tailored to your circumstances (whether creating or joining a collaborative housing community) should always be obtained. Below are some factors to consider when thinking about title options, and the most common options. Further details of each title option are provided in the fact sheet.

 

What should I be thinking about? 

Some of the most important issues to think about when deciding the appropriate legal structure for your community are:
 

  • Personal vs communal space - How do you want to allocate areas for individual and communal living, and what protections are you comfortable with for private and communal assets?

  • Buying, selling and rental - How do you want to deal with rental or sale of dwellings in the community?

  • Unforeseen circumstances - What will happen to assets if a member dies or if the community dissolves,

  • Inheritance -  Can I pass on my asset as an inheritance and how would that work, and

  • Resolving conflicts and decision making - How do you want to handle decision-making and discipline within the community (for more on this section see Agree on Governance)
     

The answers to these questions will makes some legal structures more suitable than others, though there will still be multiple types that are suitable.

Strata and Community Title

Strata and Community title both allow a combination of private ownership of a private residence area and shared ownership of communal spaces. These are commonly used in Australia, with strata generally used for apartments and community title for housing estates. Collaborative housing projects which already use strata title include the Nightingale developments.

Company and Co-operative Title

With co-operative and company title, a separate legal entity (the co-operative or corporation) is the owner of the property, with co-operative members or company shareholders either owning shares or holding membership and occupancy rights which entitle them to use a dwelling in the development.

A key different from strata/community title is that the members of the collaborative housing group can write the constitution (company) or rules of association (cooperative) in ways that are specifically suited to the needs of the community. This can be used to place restrictions on any sale, lease or mortgage of dwellings, or require permission from other shareholders. This can be seen as a positive or a negative aspect of these forms of title, depending on the aims of the housing group.

Many collaborative projects in Australia use cooperative title, such as Murundaka (Rental Cooperative), Pinakarri (shared equity), Stucco (rental cooperative).There are many examples of apartment blocks still structured as company title in parts of Sydney and Melbourne.

 

Collaborative Retirement living

There are a variety of different contractual arrangements that residents can use when entering into a retirement village. These can vary depending on the village type, and there are generally multiple options when entering into a village. Collaborative retirement living could continue to function using these existing arrangements.

 

A resident group working with a retirement living provider should consider all tenure options and determine which works best with the aims of the group.

 

A pilot example of this type of development is being led by IRT in Kanahooka.

 

Other ownership structures

There are other title options that could possibly be used for large-scale collaborative housing, but are less common or suited for specialised circumstances. These include:
 

  • Tenants in Common – better suited for smaller scales and discussed further in that section

  • Unit trust structures – sometimes used as the structure only for the development stage of a project and changed for the occupation stage, for example in projects by Property Collective 

  • Mutual Home Ownership Society  – an equity based leaseholder approach to co-operatively owned housing being pioneered in the UK

  • Joint Tenancy,

  • Trust structures,

  • Incorporated Associations and

  • Extended Family structures.

 

Inheritance

What happens to your ‘share’ if you pass on is important to consider also. If you own your dwelling it will become part of your estate as normal. If you own a share in a co-operative, it will also become part of your estate, although the co-operative may have rules about how this share can then be sold, to whom, and at what price. If you’re considering a collaborative retirement village, check your contract so that you understand all the exit costs and obligations (such as the need for your estate to pay fees until the unit is sold) and be sure to seek tailored legal advice. Here is some useful guidance on retirement living costs from the Australian Competition and Consumer Commission and Choice.

Next>> Manage development approval

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