The Difference Between a Townhouse and a Condo

When it comes to looking for a home to buy, there are many things to consider beyond size and curb appeal. The type of housing itself is important and sometimes confusing: take a townhouse vs condo. When you live in a condo, you own everything from the walls in. When you own a townhouse, you own not only the structure but also the land it sits on. Townhouses are usually smaller and more affordable than single-family homes and are typically part of a homeowners association. 

Usually Townhouses and Condos come with an extra fee for maintenance called HOA Fees.  What are HOA Fees?

In your search for a home, you might have considered whether you want to live in a community with a homeowners' association (HOA). Making that decision comes down to fully understanding what differentiates a mandatory HOA from a voluntary HOA, and what kinds of rules an HOA can make and enforce. 

“HOAs serve an excellent purpose in helping all homeowners have a fair understanding of what they need to do to protect property values for the good of all members,” says Murray Davis, a realtor with Better Homes and Gardens Real Estate Kansas City Homes. “They will vary to some extent by HOA or subdivision, but they are typically very reasonable and fair.”

Structure of an HOA

Chris Gooch, an attorney with Fennemore Law, explains that HOAs are legal entities, usually created by the developer of a subdivision to “monitor and enforce certain covenants, conditions, and restrictions [CC&Rs] that apply to real property.”

“HOAs must adhere to all federal, state, and local laws, and cannot create rules that contradict them,” says Mark Buskuhl, founder and CEO at Ninebird Properties. “For example, an HOA cannot prohibit a resident from installing solar panels on their property if it is allowed by state law. Additionally, there may be legal limitations to the scope of rules an HOA can enforce, such as regulating indoor noise levels or restricting political speech on private property.” 

HOAs are specific to each neighborhood or subdivision they oversee, and the rules only apply to those living in the community. They also don’t rise to the level of laws or local government ordinances. Still, living in an HOA community typically means that joining the HOA is mandatory. 

The purpose of an HOA is to create a set of CC&Rs that enhance the quality of life of its residents. Some HOAs also work to improve this standard of living by offering shared amenities that those living outside the community might not otherwise be able to enjoy. 

“Some common rules on maintenance and appearance include approved roofing and exterior siding colors/materials, fencing guidelines, landscaping guidelines, not parking vehicles on the street overnight or in yards, and limiting how long recreational vehicles may occupy a driveway,” Davis says.

HOAs are run by a board with members who live in the community. They are typically chosen through a type of election process. Each HOA member pays fees to live in the community. In exchange, those fees are used to improve and maintain the community.  

How an HOA Rule Is Created

Establishing a CC&R in an HOA community follows a specific order, like many other governing bodies. 

“Homeowners association rules are established by the HOA board. When written correctly, they are drafted and revised over time, reviewed internally among the board members, circulated to the entire HOA membership for input, and then ultimately voted upon by the HOA board as required in the HOA’s bylaws,” says Christa Kenin, a real estate agent at Douglas Elliman. 

These rules usually pass with a majority or two-thirds vote, which Kenin says is standard.

There are multiple opportunities for members of an HOA community to learn about the rules and voice opinions about them. In addition to creating new rules, the board is likely to tweak existing ones. Kenin says these rules are typically revised either because they’re considered antiquated or because members of an HOA have raised issues that need to be addressed through a change. 

To do so, the HOA follows the process outlined for rule creation and revision outlined in its community bylaws, Kenin says. 

“There are no federal, state, or local legal standards that govern this process,” she says. “However, HOA rules must be consistent with and cannot run contrary to existing federal, state, or local laws.”  

THE DIFFERENCE BETWEEN A TOWNHOUSE AND CONDO OWNERSHIP -

When it comes to looking for a home to buy, there are many things to consider beyond size and curb appeal. The type of housing itself is 

important and sometimes confusing: take a townhouse vs condo. When you live in a condo, you own everything from the walls in.

When you own a townhouse, you own not only the structure but also the land it sits on. Townhouses are usually smaller and more affordable than single-family homes and are typically part of a homeowners association. 

Townhouses and condos are different for several reasons, but the biggest is the ownership structure. 

“Homebuyers are often confused by the term condo,” Benach says. “Condominium is actually a form of ownership or deed rather than a building type.”  

A townhome can operate under two types of ownership, he explains. It can have a condominium ownership arrangement or fee-simple ownership, like a single-family home. In the first type, you own just the unit itself from the walls in. In the latter, you own both the townhome and the land it’s on. "Fee simple" refers to a complete type of ownership, where you pay to purchase a property outright and don’t share common areas or portions of the property with other owners.

“It’s for this reason that in any multi-unit building, whether it is two stories tall or a 75-floor high-rise, it has to be deeded as a condominium if the units are owned by different people or entities,” Benach explains. When multiple units are built vertically, you have to share the land and rights with other individuals.  

TIP:  When you live in a townhouse, you own the building and the land; maintenance of both is your responsibility. 

Townhouses are homes built in rows or clusters, often with shared walls. “Townhouses share walls with neighboring properties unless situated on a corner lot. Corner lots are  as they offer more windows and sometimes side yards,” Fabbri says.

“For a townhouse, if something goes wrong, the maintenance cost falls squarely on the shoulders of the owner of that townhouse,” says agent David Harris of Coldwell Banker Warburg. “So, when the roof goes or a pipe bursts in the basement, it’s solely the owner’s responsibility. If the roof of a condo building needs repair, it’s a shared cost among all of the owners of units within the building.”

“Townhouses provide more privacy and space than apartments and are generally easier to maintain than detached single-family homes,” Fabbri adds. 

Townhouses are typically part of a homeowners association, much like condos. Single-family homes can be part of an HOA, but it’s not a requirement for that type of property. 

TIP:  Townhouses tend to be more expensive than condos but less expensive than single-family homes due to their size.   

What Is a Condo?

Condos are individual units that often have shared walls in part of a larger building. They can be large and encompass entire floors or grouped tightly, like apartments.

“A condominium, or condo, is a unit within a building or a community owned by an individual or an entity,” Fabbri says. “This ownership structure is more common in cities and urban areas but can also be found in the suburbs. Amenities and all common areas, such as lobbies, elevators, fitness centers, and hallways, are owned collectively by the condo owners and are governed by the association, which enforces rules and regulations.”   

When you live in a condo, you own the property from the walls in. The property the condo sits on is owned by the HOA, which oversees landscaping and maintenance of shared amenities.

“Monthly or annual fees are paid to the association for the maintenance of the common areas and building exterior,” Fabbri adds. “Association rules vary widely and must be carefully reviewed before purchasing as they impact your activities and mandate certain upkeep.”  

TIP:  Condos tend to be less expensive than townhomes, given they are a bit smaller in general, but fees for associated HOAs can vary greatly.

“In addition to the purchase cost and monthly payments, there are special assessments that can come up at any given time—and cost a pretty penny depending on the project that needs the funds,” Patchen says. “From special exterior renovations to interior upgrades, condo owners need funds available in order to be prepared for assessments.”  

Condos are usually part of an HOA or managed by a condo board or property management company, much like townhomes, meaning there are rules you must follow.  

TIP:  “HOA rules and restrictions can be a major disadvantage because they govern lifestyle choices, including pet ownership, entertaining abilities, and noise restrictions.”  

Living in a condo lets you enjoy the best of both single-family living and apartment living in that you have a more stable living arrangement in terms of your monthly payments, but you still benefit from shared amenities such as a pool or gym but at a reduced cost. There are also tons of service-related perks you might not think of in condo settings. 

If you’re looking for more control over your property or want a little more privacy, a condo might not be the best choice for you.