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Complexities of Community Title

Thursday, 13th October 2011

One of the fastest growing housing sectors in recent years is the community title scheme. While these may provide visions of gated communities and exclusivity the reality is they are becoming a way of life for singles, couples, families and retirees because of the amenities they provide.

Community title will be structured as property which has been divided into individual lots, which may include Strata Schemes and/or Torrens Titled lots, with common areas and shared services. In some States, additional sub-classes of Communities may also be included, for example in NSW, Neighbourhood Associations & Precinct Associations can also exist within a Community Association. If you live in NSW an example is the Breakfast Point development along the Parramatta River. In Victoria one of the newest examples is Alamanda at Point Cook and in Queensland one of the best well-known community title schemes is Sanctuary Cove on the Gold Coast. The complexity of these developments incorporates not only the common property, but the common services and additional responsibilities in relation to the community common areas and non-common property. According to a study by the Faculty of the Built Environment at the University of NSW in 2006, developers are more and more often opting to use community title as a means of establishing market differentiation and consumer appeal. Part of this means creating designer lifestyles that include tennis courts, swimming pools, country clubs and parks. All these extras can bring about a new level of complexity when it comes to insurance for community living that is different to that designed for strata living. CHU’s National Marketing Manager, Gordon Bell said that as an owner of a home in a community title environment you still have an “unlimited liability” similar to that of conventional strata living. “Unlike strata though, community living means your liability is not just associated with the common property but also extended to contractual exposures within the community.” Gordon explains, “It these extended range of, and potentially unknown, other bodies such as Local Governments, Utility Providers, Private Entities and other parties that have to be catered for . All types of contractual exposures that attach to the community now belong to you as a member of that community; without limitation.” “Often the local council relinquishes responsibility for providing services and maintenance to the community and this bring with it, a set of complications that most home owners could not begin to fathom. Indeed, it’s not an easy concept to work with. Many other insurers are only now realising that separate obligations and legislation may apply to the Community Title sector.” Unlimited Liability is not an issue for Local Governments, whom have some protection under legislation when it comes to certain risks. The same protection does not automatically extend to community title and owners so you have to fill the gap. Insurance is the primary method of filling these gaps. This is where owners and executive committees really have to be smart about their decision making. The insurance they secure needs to not only meet the legislative obligations, but pick up the risks and responsibilities that are not always self-evident. They need to make sure they meet their exposures beyond statutory obligations by taking out coverage appropriate to the new risks. “Strata insurance is not adequate for community title properties and only a specifically tailored Community Title insurance is likely to meet your requirements.” Gordon advised. It’s poignant to highlight South Australia where the majority of all new developments are Community Titled, and Western Australia where virtually half of all new Strata type developments are now Community Title. Whilst this may be a relatively new concept for many managers, clearly Community Title is on the rise and fast becoming the preferred development option for many Governments and lot owners alike. General Advice Disclaimer: The information provided in this article should be considered as general advice only as it does not take into consideration the specific needs and or requirements of the reader or the terms, conditions and exclusions of individual policies held.

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