What’s the Difference Between a Condo, Co-Op, and a Townhouse?

Understanding the Key Differences Between Condos, Townhouses, and Co-Ops in Real Estate Ownership and Financing

There are several differences between condos, townhouses, and co-ops, the largest being that co-ops are not considered “property”, whereas condos and townhouses are.

When you own a townhouse, you own the interior of your unit, the exterior walls outside your unit, and the land that your unit occupies, but not the common areas. When you own a condo, you own the interior (walls in) of your unit, but not the exterior walls, land, or common areas.

With a co-op, you own “shares” of the building equal to the value of the unit you occupy, but not the unit itself or any part of the building, structure, land, or common areas.

Another difference is that townhouses and condos are often part of a homeowner’s association that manages the common areas and may also manage the exterior maintenance of the structure, in exchange for HOA dues. HOAs are often run by property management companies, which are also paid for through the HOA.

Additionally, with townhouses and condos, you may sell your unit of your own accord, to whomever you choose, without approval from the HOA. In other words, you are not subject to any restrictions on who you sell to. Also, with townhouses and condos, you can often make interior improvements without approval from the HOA.

With co-ops, on the other hand, you usually pay a higher monthly “maintenance fee” to the co-op board (all of the share owners), that goes towards maintenance, repairs, and taxes. Additionally, co-ops are subject to many restrictive rules when selling your shares (all new owners or renters must be approved by the board), and you must get board approval before making any changes to your unit.

Another significant difference between townhouses and condos versus co-ops is that the latter do not qualify for traditional home mortgages. A co-op would require a loan to purchase shares, rather than a mortgage to purchase property (such as a condo or townhouse).

It’s important to know the difference between these three types of housing, so you know what your individual responsibilities are, as well as what type of loan you may qualify for to purchase.

Purchasing a co-op is often a more complicated process than purchasing a townhouse or condo, so it’s important to plan accordingly if you plan on going that route. Note, however, that co-ops are not very common in Portland, and are found most frequently in New York City.

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