Company Share vs Unit Title

Company share (also called flat-owning company or FOC) is an older ownership structure commonly used in New Zealand apartments and blocks of flats built before the Unit Titles Act. Instead of owning a unit directly, you purchase shares in a company that owns the entire building. Your shares come with a licence to occupy a specific unit.

The key problem with company share is that you do not own real property — you own shares in a company. This distinction creates significant practical issues. Most banks are reluctant to lend against company shares because they cannot take a standard mortgage over real property. Insurance is also more complex, and the governance structure (company law) was not designed for managing residential buildings. Many company share buildings are now converting to unit title to resolve these issues.

Unit title is the modern standard for multi-unit property ownership in New Zealand, governed by the Unit Titles Act 2010. Each owner holds a separate certificate of title for their unit registered at LINZ, plus an ownership interest in common property managed by the body corporate.

The Unit Titles Act provides a comprehensive framework specifically designed for multi-unit living. It covers body corporate governance, long-term maintenance planning, financial management, disclosure requirements for buyers, and dispute resolution through the Tenancy Tribunal. Banks, insurers, and lawyers all understand unit title well, making transactions straightforward.

This is an either/or situation. If you are considering a company share property, carefully weigh the lending and insurance challenges against the lower purchase price. Many buyers find that the difficulties of company share ownership (limited bank lending, complex insurance, uncertain governance) outweigh the price advantage. If the building is planning a conversion to unit title, that may significantly increase its value and ease of ownership.

If you encounter a company share property, your first step is to engage a property lawyer experienced with company share structures. Review the company constitution, financial accounts, any planned conversion to unit title, and the specific terms of your licence to occupy. Check bank lending availability before committing — many buyers discover too late that they cannot get a mortgage on company share properties.