Company Share vs Unit Title
Company share is an older ownership structure where you buy shares in a company that owns the building, giving you the right to occupy a unit. Unit title is the modern replacement under the Unit Titles Act 2010, where you hold individual title to your unit. Company share is being phased out and can cause lending and insurance difficulties.
Side-by-Side Comparison
| Attribute | Company Share | Unit Title |
|---|---|---|
| What you own | Shares in a company + licence to occupy a unit | Individual title to your unit + share of common property |
| Governing legislation | Companies Act 1993 (general company law) | Unit Titles Act 2010 (purpose-built for property) |
| Your legal interest | Personal property (shares) — not real property | Real property (land) — registered at LINZ |
| Bank lending | Very difficult — most banks decline or limit lending | Standard lending — well understood by banks |
| Insurance | Complex — insuring shares vs property | Standard body corporate insurance for common property |
| Governance | Company directors and shareholders' meetings | Body corporate with AGMs, rules, and committee |
| Conversion | Can convert to unit title (requires shareholder agreement) | Already the modern standard |
| Market perception | Viewed as outdated — smaller buyer pool | Well understood — standard market acceptance |
Company Share Explained
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 Explained
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.
Do You Need Both?
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.
Which Should You Get First?
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.
Frequently Asked Questions
Why are company share properties being phased out?
Company share was a workaround before purpose-built legislation existed. The Unit Titles Act 2010 provides a far better framework for multi-unit ownership, with proper governance, disclosure, and dispute resolution. Banks strongly prefer unit title, making it much easier to buy and sell. Most remaining company share buildings are gradually converting.
How much does it cost to convert company share to unit title?
Conversion costs vary depending on the building size and complexity but typically range from $5,000-$15,000 per unit. The process requires a shareholders' resolution (usually 75% agreement), a unit plan survey, legal work, and registration. The increase in property value usually exceeds the conversion cost.
Related Terms
Company Share
GlossaryA form of property ownership where you buy shares in a company that owns the building, with the shares entitling you to occupy a specific unit or apartment.
Unit Title
GlossaryA form of property ownership for apartments, townhouses, and other multi-unit developments where each owner holds title to their individual unit and shares ownership of common property.
Body Corporate
GlossaryThe legal entity made up of all unit title owners in a multi-unit development, responsible for managing common property and shared affairs.
Cross-Lease vs Freehold
CompareFreehold gives you full ownership of land and buildings with no co-owner dependencies. Cross-lease means shared land ownership with restrictions on changes — typically 5-15% cheaper but less flexible.
Unit Title vs Freehold
CompareUnit title is for multi-unit developments (apartments, townhouses) with shared common property and a body corporate. Freehold is standalone ownership with full control. Different products for different needs.
Cross-Lease vs Unit Title
CompareBoth are multi-unit ownership structures, but they work very differently. Cross-lease involves shared land ownership with a flats plan, while unit title has a formal body corporate with a unit plan under the Unit Titles Act 2010. Unit title is the modern standard; cross-lease is a legacy NZ structure being gradually phased out.
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