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What is the Difference Between a Company and a Body Corporate?

Strata communities are a hot trend, and the new thing in the market brings about so many terminologies that we would like to understand better. Thus, you might be wondering what is the difference between a company and a body of corporate management, and what else should I know? Don’t worry. We have you covered; we have tried to simplify the two and share the necessary information we feel will be of use.

A better understanding of a company

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A company and body corporate have a few differences that we will get to understand better. Let us begin by understanding what a company is. A company has a board of directors and shareholders who help run and manage the company, where the company owns all the assets. In turn, the shareholders own a proportionate of the company’s assets. Therefore, if you are a shareholder of a company, you own a proportionate share, depending on the number of shares you bought, of the company’s asset. It is from coal, copper, buildings, or offices that the company could have acquired over time.

And what is a body corporate?

When we talk of a body corporate management like ebcm.com.au, it is a little similar to a company but a much smaller scale. A body corporate owns several individual lots and properties. The lots that the corporates have under them could be apartment units that actual owners own. And the owners could either be living in those units or rented them out. But for the body corporates, they own everything else that surrounds these units, which we tend to refer to as common property. It is from the pools, the roads surrounding the units, the beautiful garden, lifts, and any other amenities. The lot owners also own a proportionate share of the common property within their unit.

It does not stop here with the lot owners; since they own a proportionate of the common property, they are also members of the body corporates. If they would like to leave the corporate body, this can only happen if they sold their lot, just as you would if you are interested in leaving a company. You would need to sell your shares, and from there, you are no longer part of the said company.

The body corporates have been established as a separate legal entity; this means that it can enter into its own contracts and manage their own legal proceedings as a body. All this is done through the committee.

Some of the services a body corporate carries out

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There is a list of services that a body corporate carries out; we have just listed a few to understand better what they offer.

  • The body corporate handles any disputes that might arise within the community.
  • They advise on statutory obligations.
  • They handle the planning and environmental matters that would affect the community.
  • They handle the by-laws, and building defects, defamation, any lot entitlement adjustments, litigation, to name a few.

They are the body that makes sure the strata community is run smoothly, making your stay within the lots much more comfortable.

Main Differences between Company and Corporate

In the further text, we will list some of the most important differences between the company and body corporate, so you can have a clear insight of what their features are and what each of these organizations represents.

The first difference is that a company is more suitable for the smaller form of businesses and corporates for larger business form. Also, they are different by the ownership type. In the company, members are owners, and in the corporate the owners are shareholders. Also, in the company, the number of owners is limited, while in the corporate organizations the number is of shareholders and funders is not limited. Despite this, companies have managements that are in charge of the organization processes, yet corporates have a board of directors. Companies do not have regular meetings while shareholders in companies meet regularly, and they are not allowed to miss the meeting.

One more difference is the fact that companies are known for different names in different countries. Despite that, companies have fewer legal requirements and paperwork than corporates which are full of paperwork and legal procedures.

When it comes to legal agreements, a company has less of them, while corporate has a lot of agreements and legal obligations. Another difference is the taxation status between these two institutions. In a company, pass-through taxation is allowed which means that both profits and losses are passed down to the owners, while there is no such an option in corporations. Besides those things, the company has less transparency because of the flexible requirements, while there is a big level of transparency in corporate’s case because there are rigorous regulatory requirements.

The last difference is surely the public trust. While companies do not enjoy public trust, corporates enjoy it on a big level. As you see, there are truly many things that will help you distinguish these two legal organization forms.

Key Similarities between Company and Corporate

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After we mentioned some of the crucial differences between these two institutions, it is time to see whether they have some similarities. In the further text, you will see that despite so many differences, there are even some common things that companies and corporates share. Let’s see them.

The first similarity, that you probably already know, is that they are both business organization forms. In general, they have legal entity status, and their existence is based on legal work and legal procedures. Despite that, both institutions have physical assets and property in their name. Also, both of the organizations can exist even after demising or switching their original owners and founders. More precisely, even when people in those organizations are changing, the name and the essence of those two legal organizations can stay the same for a long period. One more similarity is the fact that they have the right to sue and be sued by other persons, companies, entities, and governments. As the last similarity, you should know that both companies and corporates have limited liability.

Conclusion

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With the new terminologies, it can get a little confusing. But in a nutshell, a company is made of shareholders and a board of directors. While a body corporate management is an entity in itself, and unit owners are part of this body. Like any company you would like to opt-out of, as a shareholder, you would need to sell your shares in a body corporate as a lot owner; you just need to sell your lot.

What Is a Title Commitment & Why Is Important To Your Closing

Yes, buying the first property is an exciting period in everyone’s life. However, at the same time, it can be nerve-racking simply because there is too much paperwork a person has to go over, and most importantly, they have to understand every single paragraph they read.

Well, a title commitment is one of the most important documents that you will have to go over. It is crucial that you fully understand each section, which is why we will discuss them in this article in great detail.

What is title commitment?

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A title commitment is a document that states that the property will have a title insurance policy upon closing the deal. According to another definition, it guarantees your title rights as a new owner, but this can greatly differ between the states. This document contains all the information that will be listed in the title insurance policy, but it isn’t ratified, meaning that it is not legally binding. This is the main difference, so make sure not to mistake one for another.

Is it required by law?

No, you are not required by law to have this document, but this still doesn’t mean that you should ignore it. First of all, when applying for a loan and going through the entire process of getting it, the lender will probably require you to provide them with this document before signing the final paperwork.

Furthermore, this document lists everything that is not covered by the title insurance policy. It is crucial to be familiar with this if you want to close the deal successfully. Plus, this list will enable you to be fully aware of the conditions, so you will have the opportunity to rethink whether you should make the purchase or not.

What does it include?

A title commitment is divided into multiple sections. The content of these can vary between the states, but the main information is the same.

Schedule A

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This section includes some basic data such as personal data of the buyer, the type of insurance policy that will be issued (Owner’s and/or Lender’s Title Policy), the description of the property, seller’s personal info, the price, and so on.

It is crucial that the representatives of both the buyer and seller closely inspect this section. For example, other people may be listed on the owner list, and if they didn’t sign the document, it is not legally binding. You would be surprised to learn how often this occurs in case of a divorce or death. If any of the data doesn’t match the information in the contract, everything has to be investigated one more time to resolve the issues.

Schedule B

This is the part of the document that you must focus on because it includes exceptions and requirements.

Firstly, here you will find a list of exceptions, that is, the list of things that are not covered by the title insurance policy. Most of these are standard exceptions, but there may be some that are specific to that property. It is vital that you as a buyer fully understand every single point. If you don’t agree with some, a title company may be able to remove them, insure over them, or discard them. Nevertheless, there are many factors that can affect the outcome, which is why you have to consult with professionals such as sunnysidetitle.com. Contact them and ask them to explain a certain point if you do not understand it. This is something that you have to do to prevent any potential issues in the future.

Furthermore, when it comes to the other part, here you will find all the requirements that must be met in order to get the title insurance. This list may include things such as recording the new deed and loan documents, the release of liens, tax payments, proof of identity, and so on. Once again, if you notice anything that shouldn’t be there or something you weren’t aware of, you have to notify your escrow so that they could investigate it.

Things to consider

Now that we have explained the sections of the title settlement, here are some things you have to consider before signing the document.

First things first, you have to know what is included in this document, that is, you have to know what you are looking for. We have already mentioned this, but here it is again. Look for personal info of both parties, then the details regarding the amount of insurance, and the details regarding the property that is being insured. Most importantly, look for the list of requirements that have to be met in order to get the insurance, as well as the list of things that are not covered by it. All of this information is listed in the above-discussed two sections. Naturally, Section B deserves all your attention since you have to be certain that you are purchasing the right property. When it comes to Section A, professionals will go over it and correct any mistakes. However, this doesn’t mean that you shouldn’t do the same inspection.

Why does it matter?

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We assume that the answer to this question is pretty obvious by now. We understand that you may feel overwhelmed by the paperwork you have to go over and sign, but, as already stated, this document is, without a doubt, one of the most important that will cross your desk.

Buying a property is always a large investment, which is why it is crucial to be familiar with every single point in this document. It is the only way to rest assured you are making the right choice. You have to learn about the exceptions, that is, the things that are not covered by the insurance. If you don’t agree with it, consult your representative and see if they can be changed or discarded. If this is not the option, you should ask yourself whether you should proceed with the investment. The same thing goes for requirements and conditions that may be listed if you are buying a property in a subdivision.