Life in a Development -- Which Costs More, a Condo, Townhome or Single-Family Home?

Weighing dues, assessments, individual maintenance costs, and more.

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If you have ever lived in, or are considering purchasing a home in a development (or a “planned community” or “planned unit development” (PUD)), you are likely aware that each homeowner must pay periodic dues as well as occasional special assessments to the homeowner’s association (HOA).

The amount of these dues and assessments vary. They depend, in part, on the type of property itself: That is, whether it’s a condominium, a townhome, or a single-family home within a development.

Ordinarily, assessments and dues in single-family home developments are lower than those in townhome developments, which, in turn, tend to be lower than in condominium developments.

But does this mean it’s going to be more economical to own a single family home in a development? Not necessarily -- more expenses might crop up elsewhere. This article compares the costs of living in each of these types of developments.

All Developments Charge Some Assessments and Dues

You can’t escape some level of dues and assessments if you’re going to live in a community run by a homeowners’ association (“HOA”). Periodic dues and special assessments are required regardless of the type of property within the development. Such fund collection is built into their basic legal and business structure. (Most developments are structured similarly.)

The key things to understand are that the development will be run by an HOA. Portions of the property (possibly including parts of the unit you live in, such as the roof or walls, but also including sidewalks, community landscaping and meeting rooms, and so on) will be designated as “common areas” or “common elements.” These areas are jointly owned by all HOA members (all owners in the development), and the HOA is responsible for their maintenance.

To cover the costs of the maintenance, the HOA must collect periodic dues and assessments from the owners.

Differing Maintenance Responsibilities Leads to Differing Costs

Depending on the type of development, the amount of required HOA maintenance and the cost of that maintenance may vary. For example, a condominium development with a common gated entrance, extensive landscaping, numerous common fitness rooms, and a luxurious common clubhouse will take more funds to maintain than a single family home development with minimal landscaping and only one basic common gathering area.

Because of this cost difference, dues and assessments in one type of community might be substantially higher than in another. What’s more, different types of developments sometimes use different methods for apportioning costs among all the owners.

Cost Differences Depend on Who Owns What

To understand why the maintenance costs, and therefore the amounts of dues and assessments in each type of development differ, you must understand what homeowners actually own within a development.

If you buy into a condominium complex, you will own a “unit” within a building. That unit will most likely include the space within the perimeter walls, the interior walls, and all permanent fixtures (such as any built-in appliances or permanent floor coverings).

Condominium owners do not typically own any exterior walls, roofs, or floors. Unlike with a single-family home, a condominium owner typically does not own any land, except for a shared interest in the common areas. (For a discussion of exactly what you own if you buy a condominium unit see Nolo’s article “Buying a Condo: What Will You Actually Own?”).

Ownership of a townhome typically includes more than with a condominium, but less than in a single family home. A townhome owner owns only a portion of the entire townhome (depending on how many units the townhome is divided into, such as one half a duplex, or one fourth of a quadraplex). Unlike a condominium unit, a townhome owner will probably also own the exterior walls of the unit. Additionally, a townhome owner typically owns a portion of the land the townhome sits on, such as the yard in front of and behind the unit.

An owner of a single-family home in a development normally owns the entire home, everything in it, the land the home sits on (to the lot lines shown on a plat of the property), and any other improvements on that land. (This is the same arrangement as enjoyed by single-family homeowners outside developments.) All property in the development not designated as a single family lots, such as sidewalks, roadways, and common parks, are most often common areas, owned jointly by all the owners and maintained by the HOA.

How HOA Maintenance Responsibilities Affect Amount of Dues and Assessments

The less you individually own, the higher the amounts you will likely be required to pay in periodic dues and fees to your HOA.

In a condominium development, for example, the HOA is ordinarily responsible for maintaining the exterior of the condominium building, the roof, the foundation, all interior common areas such as lobbies, hallways, and elevators, and all the land the building sits on. This is in addition to the HOA’s responsibility to maintain all other common areas in the development such as any common clubhouses, swimming pools, sidewalks, or parks. The maintenance costs therefore, are much higher for an HOA in a condo development than they are for an HOA in a single-family home development.

Similarly, with a townhome, the HOA might have to maintain the exteriors of the buildings and the land around them, increasing its costs of maintenance.

In a development of single-family homes, however, the HOA typically has no maintenance obligations for the individually owned homes and land. This means a smaller maintenance budget is needed. As a result, when compared to condominium or townhome developments, the amount of periodic dues and special assessments the owners must pay is generally lowest in a single-family home development.

Is a Single-Family Home Development Less Expensive Overall?

Even though periodic dues and fees might be lower in a single-family home development, this does not necessarily mean living in one is actually less expensive. Since such homeowners have more individual maintenance responsibilities, any money they save from lower dues is likely to be spent to pay for home and land maintenance.

And don’t think a home owner can get by with shoddy maintenance to save a buck -- developments typically have rules and regulations requiring a fairly high standard of maintenance, so that the maintenance expense is not something the home owner can avoid.

However, this works the other way around, as well. Even though townhome or condominium developments’ dues and assessments might be higher due to the greater HOA responsibilities, at least some of this expense will be saved because the owner needn’t do the ongoing maintenance required in a single-family home. Also, that old expression “time is money” comes into play. Unless you enjoy home repair work, it may be more efficient to leave time-consuming maintenance tasks to the HOA.

Other Factors Affecting Dues and Assessments

In addition to the differences between what individual owners actually own and must maintain types of developments, the amount of periodic dues and assessments the HOA must collect also depends on how “upscale” the development is (as defined by how many, and what kind of amenities the development offers). The more amenities, the larger the periodic dues.

Here again, condominium developments tend to lead in expense. A typical condominium complex will have more amenities than either a single family home or a townhome development. A luxury condominium complex might have fancy landscaping, fountains, luxury entrance gates, security personnel, elevators, and spas -- all of which cost the HOA, and ultimately the owners, more money to maintain.

Know the Relative Costs Before Buying

Knowing what costs to expect as an owner in the various types of developments is necessary to being an informed buyer. Comparing dues and assessment amounts might help you decide which type of development is best for you. If you need additional help understanding the different types of developments, and the costs to expect as an owner there, contact a real estate professional in your area for help.

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