Q: What's the Difference Between a Condo and a Townhouse?

Good posting. I have seen Condo's listed as Townhomes and Townhomes listed as Condo's. This is a good way to explain the difference.

Interesting post Lorrie. i guess it varies from state to state. Here in MA a condo refers to a type of ownership whether it's freeetsanding or attached. Each owner has a percentage interest in the land and common area. A townhouse simply refers to the style which typically has at least 2 floors and is a condominium.

Ive always thought that condominium is a form of ownership not a type of construction, A condo can be free standing, attached, or an apartment. A townhouse can be fee simple, leasehold or condominium. Another question you might be asked, is:  whats the difference between a homeowners association and a condominium association?

Interesting to see how definitions vary by location.

In NY, condominimum is a type of ownership and townhouse is a residential style.  We have condo townhomes, co-op townhomes and pud townhomes.  We also have condo's and co-ops that are single level flats or in apartment type buildings.  The type of ownership determines whether its a condo or not and a condo can have many variations of style.

Lorrie,

Thank you for your post, and your clarification "in Texas."  I spent more than 25 years as a mortgage loan officer, and dealt with the confusion on an almost daily basis.  I see the confusion is not limited to Tennessee or Texas--that is one of the great things about ActiveRain: your horizons are broadened daily.

I have always encourage agents, buyers, and unlicenced "experts" to review the legal documents: Master Deed, Warranty Deed, Trust Deed, Plat, etc. OR check with your attorney.  You know the drill, "I am not an attorney, and cannot give legal advice, so check with an attorney."

Knowing the type of ownership, and covenants & restrictions is critical to the obtaining of mortgage financing and homeowners insurance.  Condominiums generally have a Master policy in place, and the individual unit owner purchases content coverage and pays their share of the Master policy as part of the monthly condominium fee.  By contrast, fee simple dwellings generally require individual homeowners insurance. 

I would encourage any REALTOR® that feels a void in their understanding about Condominiums to take a real estate attorney to lunch or to the golf course--pick his brain.  By all means, don't try to bluff your client into thinking you are an expert--I promise, it will turn around and bite you.

Furthermore, I suggest a lunch with your mortgage lender & insurance agent to gain insight into the critical issues that arise out of the differences between Condominium and Fee Simple properties.  The FHA 203b loan program covers fee simple residential properties, while Condominiums are covered by the FHA 234 progam.  There are differences in underwriting guidelines between the programs, so beware.

If unwilling to familiarize oneself with the differences, I'd suggest taking a referral fee and let a REALTOR® who is compent in these matters handle the deal.  It is not so complicated as to be beyond understanding, but referral is better than embarrasment or potential lawsuit.  Come to think of it, Lawyers do serve a purpose.  Seriously, several of my friends are lawyers, and I value their counsel.

Again, thank you for this dicussion...

This is very interesting to me - in our small community we have neither condominiums nor townhouses, so while I knew that both existed, I'd never given thought to the difference between them.

I always thought it was a question of whether you owned the land underneth!

Its important to know if the property you have is a condo or townhouse because it affects the types of financing you can get. Both have HOA dues but only one requires that an HOA questionnnaire is completed... which can open up a can of worms.

Mr Tutus was right - but from the comments I see where many of our fellow REALTORS are still confused.  I understand this may vary from state to state - but bottom line is - a condo is a type of ownership - not a style of architecture.  Townhomes may be singe or two or three or more stories and may be condos, or fee simple properties depending on if there have been condo docs filed.  A  PUD can have single family homes, condos, townhomes etc within it.  A PUD is a Planned Unit Development with usually also has commercial property too.  Ownship on the single homes and townhouses are usally fee simple in a PUD.  A great example of a PUD is Celebration, Florida.  When in double check with your title company.  It will make a huge difference to the buyer's lender.

I researched this before.  In California I do not think there is a legal difference, but stylistically you have nailed it.

@Kimberly in #61:  I suggest you get your facts straight before you make a statement like you are bringing the Ten Commandments down from the mountain, my dear. 

IF... you have researched every single one of the fifty states... and know how the definitions can vary state to state... only then can you even attempt to make such a pronouncement.  Only some of the states conform to your version of the definitions.  Many are different. 

I have sold both new homes and resale in four major markets within the US... and know for a fact that just in those four areas... some definitions DO change.

Things DO change.  Words mean different things in different states.  I suggest you take a chill pill before you come off attempting to be such an expert.

By the way... if you call Bryant "Mr Tutas..." he will probably think you are talking about his father.  <smile>

Lorrie:  Thanks so much for your recap of how things are IN TEXAS.  I amazes me sometimes when some folks think what is normal for them in their market... is somehow the norm for the entire country.  Just like all real estate is local... many times many other things about real estate... are local as well.

Again... thanks for the great recap.

I thought the condo ownership was just of the condo itself and shared for rest of community facilities, and town house was through the ground and up through the sky ....

Great discussion and very informative. Thanks, Rainers.

Lorrie - Here our hotel rooms are called condo's!  Good blog to have us ready to ask the right questions to our clients to determine what type property and ownership responsibility they want. 

Great post Lorrie! Love the links, looks like a little Realbird!

Clear and concise, Lorrie. And the links give a nice variety to the types.