I’m hunting for my first home, and have a general picture of what I want – a two-story recently built shingled structure, perhaps sharing a wall with others, and part of a community that will take care of gardening and other maintenance obligations. I see ads for townhouses, condos, and co-ops, and they all sort of look the part – but how do I know which one I’m really looking for?
Many prospective home buyers are similarly confused when it comes to differentiating between these three house types. It doesn’t help that the sellers themselves sometimes use the wrong names to describe the unit. Many people mistakenly believe that the differences are physical, as between a brick row house and an urban loft.
In reality, however, the main difference is how property ownership is legally structured.
In both townhouses and condos, any common areas — parking, planted areas, pool areas, and walkways — are partly yours, as you own them jointly with all your fellow owners.
The differences arise when you look at what part of your individual unit you own. In a townhouse, you own all of your own unit—both the inside and the outside, i.e. roof and exterior walls—plus you own the land upon which it sits. In a condominium development, by contrast, you own the inside of the unit, but not the exterior, and not the land upon which it sits.
As for co-ops, your ownership is defined not by physical portions of the property, but by the number of shares you own in the corporation that owns the property. You have usage rights to an individual unit and to common areas.
If you’re not getting clear answers about what you’re buying into from the seller, or if the ads don’t seem to match the legal documents, you might want to consult with a real estate attorney. And for more on what to expect when buying into a community, see the "Choosing a House or Property" section of Nolo's website.