Condominium Unit vs Townhouse: What is the Difference?

Jun 17, 2024
Practice Area:  Real Estate  |  Residential Properties

In New York City, residential buyers can often get confused as to what types of properties are out there. Whether they are looking to buy a condominium unit or a townhouse, it can be hard for a purchaser to come to a decision. People tend to think that condominium units are always high-rise apartments part of larger buildings and townhouses are homes horizontally connected to each other. Although this is generally true, it is not always the case. In order for buyers to make a well-reasoned decision, let us go through the key differences between the two types of ownership that most often get confused in the NYC real estate market.

Ownership

A key difference between a condominium unit and a townhouse is the different types of ownership that each entails. Owning a condominium unit means you are owning an individual unit within a building or a community of buildings. You are responsible for the internal maintenance of your unit. Normally, you are not responsible for any other portion of the building shared by anyone else. Shared walls are owned by the condominium plan or a neighboring building (if it is the exterior part of the wall), however, if it is part of the interior of the wall, it is owned by the unit owner.

With a townhouse, the owner owns the interior walls, the exterior walls, and the land under their individual unit. Generally, townhouse ownership includes any front yards and backyards associated with the townhouse. Any shared space is generally owned by the homeowners’ association (HOA).

Owner Responsibilities

A major distinction between condominium units and townhouses is the responsibilities the owner has towards the condominium building or the HOA. With a condominium, the owner is generally responsible for everything within the unit; everything else (i.e., exterior walls, roofs, common areas) is the responsibility of the condominium building through its board.

With a townhouse, however, owners are again responsible for anything that they own. That means they are responsible for the interior, exterior, and any land the townhouse is on. While an owner’s responsibilities are based on what they own, you should always look to the HOA’s plan to know exactly what does and does not fall under the responsibilities of an owner.

Costs

As part of making an informed decision, purchasers should know the different costs associated with each type of ownership. When trying to decide which is better, a homeowner should first look at the purchase price of both. The purchase price will generally be based on square footage and location. With a condominium unit, you are likely to acquire less space, however, the location tends to be better than it would be in a townhouse. A sacrifice of the smaller space in a condominium unit may result in the ability to be closer to the center of town.

After looking at the purchase price, purchasers should review the fees and homeowner’s insurance under a condominium and an HOA. It is important to remember that maintenance costs on a condominium unit may be higher than a townhouse because in a condominium unit, the condominium through its board is responsible for the upkeep of the building. On the bright side, a condominium unit’s homeowner insurance will probably be cheaper as the owner only needs to insure the interior of his or her unit, not the exterior.

A condominium unit can be a great option if you are looking to avoid some of the bigger financial burdens such as a casualty loss due to a tree falling on your home. Normally, the condominium board will cover anything that happens to the exterior of your unit.

As for the townhouse’s costs, the HOA fees should be lower. However, they may have higher maintenance costs and higher homeowner insurance.

Financing

The financing process is typically more complex for condominium units than it is for other homes. Not only do you have to qualify for a loan, but a lender will want to examine the financials of the condominium as well. This is why being in a reputable and fiscally responsible building will make it easier for condominium unit owners to receive a loan.

Some of the factors examined may include whether the condominium is involved in any ongoing litigation or if more than half the units are owned as real estate investments or the sponsor instead of by owners as their primary residence. Lenders prefer the owners to have the condominium unit as their primary residence because it leads to financial stability, and reduces the risk of default.

Amenities

A major upside of owning a condominium unit is the amazing amenities that are generally given to the unit owners. One of the reasons owners are given smaller units is to sacrifice space for the amenities in common areas. Condominiums are well known for boasting about their swimming pools, gyms, and even roof decks in densely populated urban areas.

Townhouses on the other hand offer more limited amenities. It is a sacrifice for a bigger living space. This usually means lower maintenance costs because owners do not need to pay for over-the-top recreational areas.

Rules and Regulations

Both condominium units and townhouses can have their fair share of restrictions. Condominiums are generally stricter. There may be restrictions on pets, loud noises, smoking, etc.

Townhouses generally require you to keep a certain aesthetic to the exterior design in order to have uniformity with the other buildings in the HOA. The HOA restrictions may also include limits on pets, noise, garbage disposals, and renovations. When buying a townhouse, you will probably enter into a restrictive covenant with the HOA, thereby binding you to their rules, declarations, bylaws, and amendments.

Sometimes, the restrictions of condominiums and the HOAs may seem overbearing, but the intent is to preserve the best interests of all the owners.

For both condominium units and townhouses, it is important to check the covenants, conditions, and restrictions affecting your ownership to know your obligations. It is always important to consult an experienced real estate attorney to ensure that your rights are protected.

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