Recently we published a post on the pros and cons of living in a condominium, townhouse, or other small space for the purposes of getting more for your dollar or downsizing your life. That brought up the question of what IS the difference between a condo and a townhouse? Don’t worry, you’re not the only one who is confused. Many sellers are not sure themselves, and even the listing may show both condo AND townhouse in the description. So which is it?
Typically we think of this as being a condominium:
and this as a townhouse:
What most people don’t know is that a condo, in addition to looking like apartment homes, can also seem like a townhouse.
The difference between them is not necessarily physical. It all comes down to the FORM of ownership. Here’s a quick overview of each type of property and how that affects your rights and your pocketbook:
A condominium is a multiple-unit dwelling in which there is separate and distinct ownership of individual units and joint ownership of common areas. As an owner, you have a title to a unit of real property, which is ownership in the airspace the property occupies. You also own a common tenancy with the other unit owners of shared areas such as driveways, recreation and landscape areas, parking, sidewalks, roofs, hallways, and elevators. These common areas are managed by an association. The association is a conduit for all the homeowners to pay for various expenses of operating the property. The owners of the units are jointly responsible for the costs of maintaining the building and common areas but are individually responsible for the expenses of their particular unit.
The benefits of owning a condominium can be lower insurance rates, extra amenities, and access to land that otherwise would be either out of reach or at a much higher expense.
When you purchase a condominium, there are three basic instruments involved: A deed to the unit; a declaration of condominium; and the bylaws of the association. It is important to carefully read the entirety of the declaration and bylaws before making a purchase. As a joint owner in common areas, you will be responsible for your portion of expenses should there be an unusual situation such as legal fees, settlements, expenses outside of insurance coverage, etc. Make sure you are fully aware of all the possibilities. Since you share the responsibility in the case of any such expenses, it will be split between all other owners but, under Colorado law, you will never owe more than your share, in the case of non-payment by other tenant-owners.
A townhouse is an attached, privately-owned single-family unit which is part of, and adjacent to, other individually owned single-family units. The units are separate, yet connected to one another, through a common party wall having no doors or windows to prevent passage or visibility.
When you purchase a townhouse, you own the entire single-family unit: the inside, exterior walls, roof, and the land it sits on. (A Condo owner does NOT own the land that it sits on.) A townhouse owner is responsible for payment of all real estate taxes, maintenance, and repairs of the property.
There may or may not be common areas with joint ownership. Townhomes can also be party to an owner’s association depending on if it is a maintenance-free community or offers other amenities. Generally, the HOA fees are lower for a townhouse.
It’s The Legal Structure, Not the Physical Structure
Determining if you are purchasing a condo or a townhouse comes down to what is on paper. If you are looking to purchase a condo or townhouse, these differences can seem insignificant, yet when you are faced with an issue such as hail or water damage, for example, you will need to understand the structure of your ownership and responsibilities. We suggest finding communities you like and then take a look at their legal structure and the “fine print” in the declarations. Another good resource, for the state of Colorado, is here: Colorado Homeowners Association Law. Before you offer on a condo make sure to talk to your real estate professional to learn how differently Condos appreciate from townhomes and connect with your loan officer to explore financing limitations of a condo.
Want to know where the best townhomes and condos are in Colorado Springs? I’d love to show you around. Contact me at firstname.lastname@example.org
If you are looking at purchasing a condo, then read our blog post on the Pros & Cons of condo living.