If you want to own your own home, but the thought of mowing the lawn and cleaning the gutters is a turnoff, you might be in the market to buy a condo, townhome or co-op. Here’s a quick comparison.
What’s the appeal? Perhaps the biggest appeal to a condominium, townhome, or co-op is the freedom from outside maintenance. Empty nesters and singles are the typical target audience. Each owner pays monthly dues, a portion of which goes toward the common area maintenance. The remainder of the dues goes to a reserve account to finance future repairs and improvements.
Which is which? Condos, townhomes, and co-ops may look similar but they are different if you compare them by the legal documents of ownership.
Townhouses and condominiums. Townhomes and condominiums look the most alike. With condominiums, you own the inside of the home, from “paint to paint.” In other words, you share walls with next-door neighbors. The homeowners association is responsible for the maintenance of the exterior and owners are responsible for their living areas. The exception to this would be free-standing condos that look very much like houses, in which case you are most likely responsible for the exterior, too.
The outside areas, such as landscaping, sidewalks, and amenities, are typically owned jointly with all the other owners. Individual owners have no control over the exterior paint color and other outdoor fixtures.
Townhome ownership may include the outside structure and yard or the units may be treated like a condo. Always check with your real estate agent and read the homeowners association covenants before purchasing. You may have the ability to make exterior paint color and landscaping choices, although homeowners association covenants will set boundaries on those choices. Some of your association dues will go toward common area maintenance needs.
Co-ops. A cooperative or co-op is legally different from townhomes and condos. Co-op buildings generally resemble an apartment structures. They do not issue deeds upon purchase of specific units. Instead, a corporation holds the title to the land and building. The tenant of each unit purchases shares of stock in the corporation. Instead of legally owning real estate, the tenants’ shares give the owners control in the management of the property and a proprietary lease for the life of the corporation. The corporate bylaws generally require that the board must approve each prospective buyer of directors of the corporation who carefully review each application. This means that upon resale, the new buyer must be vetted in the same way.