What is the significance of a company share title?

Company share title is a form of property ownership represented by owning shares in a company that owns a property, but not represented by direct ownership of the land and building itself.

Company share title is most common with multi-unit properties like apartments.  Title to the land and buildings is owned by a company.

The owner of a company share apartment will not own (i.e. have any title to) the apartment, but will own an equity share in the company that owns the land and buildings.  The owner's occupation of the apartment is normally represented by a licence to occupy.

A lender cannot register a mortgage over a company share title in the same way it can over freehold or leasehold title.  Therefore, the lender cannot exercise the same rights as mortgagee.  Some lenders will not accept company share as collateral for a loan.

For lenders that will accept company share title, the collateral normally required is an unregistered mortgage over the licence to occupy, a signed blank share transfer form plus a deed of covenant from the company.  This gives the lender some rights to take possession and sell the apartment to recover its loan if the borrower defaults on his or her commitments.

A registered valuation is almost always required when purchasing a company share apartment. Legal fees related to buying the apartment are usually also higher than for more common forms of tenure.

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