How to Avoid Unwelcome Surprises When Buying a Chicago-Area Condominium or Townhome

Mortgage and Lending with NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656 IL Lic 031.0006220/WI


How to Avoid Unwelcome Surprises When
Buying a Chicago-Area Condominium or Townhome


     One issue that has cropped-up often throughout the time I've been a Mortgage Lender (and continues to do so routinely) surrounds the question ...

     Is the property I'm purchasing really a Condominium ... or is it a Townhome?      Just last night, the question came up one more time.  My client, who had been told they were purchasing a Townhome, is in fact buying a Condominium.

     The Legal Description of the property proves it is a Condominium.  The tax Permanent Index Number (PIN) shows the property is a Condominium.  Note:  They signed their Sales Contract before they talked to me.

     As you can guess, my Borrower is not very happy. 

     Calls and emails flew back and forth all night between my Borrower and myself regarding this issue.  Question after question was raised.  

     But no amount of talk, frustration, or wishing things were different will change fact.  The Borrower has contracted to buy a Condominium ... even if they thought differently.  Facts and legal documentation don't lie.  (For additional info, please read my post:  How to Determine if You're Viewing a Condominium or a Townhome)

      When the Developer platted the property they have contracted for, they legally platted the development as a Condominium Project.  Within a Condominium Project the land is "common land".  The land on which the Condominium is built is NOT OWNED by the individual Condo owner.

     What distinguishes a Condominium from a Townhome is not building design.  

     Let me say that again ...

     What distinguishes a Condominium from a Townhome is NOT the design of the building.  Rather, it is the ownership rights of the land found underneath the building.

     In a true Townhome, the land underneath the building is separately divided and owned by each individual Townhome Unit owner.  Pretty much the opposite of Condominium ownership.

     I strongly suggest:  Everyone considering the purchase of a Chicago-area Condominium or Townhome should personally take the time to:

  • Obtain and Read the Legal Description of the property they are thinking of buying 
  • Thoroughly investigate the type of ownership that will  be received via the purchase of the property they are considering 
  • Do so PRIOR to signing a Contract     Why does it matter?  Condominium Associations can be, and usually are, more restrictive on rules and regulations as they pertain to use of the property.  Restrictive to the point that a property's marketability and "lendability" can be affected.

     So it's very important that you take the time to perform this research.  Get the facts you need to make an educated and informed choice regarding your property purchase.  You don't want unwelcome surprises when you go to finance your Chicago-area purchase ...

     *  Hoping to Buy, Construct, or Refinance a Condominium, Townhome or Single-Family Home in Will County or elsewhere in the Chicago area?  Contact Me today!  I'll put my 37 years of Mortgage experience and expertise hard to work on your behalf.
     I can be easily found at:

Direct: 815.524.2280
Cell or Text: 708.921.6331
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Gene Mundt

 Mortgage Originator  -  NMLS #216987    

                                 IL Lic. #031.0006220  -  WI License #216987                                                                                                    

NMLS #175656


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Illinois Will County Joliet
Windy City Real Estate
Chicago Area Real Estate BUZZ!
1st Time Buyers
condominium purchase
financing a condo
differences between condo townhome

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Anna Banana Kruchten Broker, CRB, CRS
HomeSmart International - Phoenix, AZ

Gene this could make a huge difference for the buyer. How does an agent miss that's it is indeed a condo rather than a townhome. Appears to me that if this buyer truly wanted out of this contract it could happen - it certainly would in my state.  Our MLS info states the type of property and rarely do I see agents making this big mistake but if they did I'd say they could be in a heap of trouble. 

Great information post for everyone!

Featured in BananaTude


May 16, 2014 02:28 AM #1
George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Gene here in CT most of the multi-level attached buildings (townhouses) are condominiums.  Attached buildings that are not condominiums are normally Planned Unit Developments (PUD's) and like you stated the owner owns the land underneath it.  Here in CT if the buildings are attached the assumption is that it is a condominium until proven otherwise.  Kind of the opposite what your borrower expected there in Chicago.

May 16, 2014 02:47 AM #2
Noah Seidenberg
Coldwell Banker - Evanston, IL
Chicagoland and Suburbs (800) 858-7917

Great Chicago Land report. Gene. I often get these questions and to explain the definition of a HOA Vs Fee Simple is a common question, especially from first time buyers.

May 16, 2014 03:05 AM #3
John Meussner
Mason-McDuffie Mortgage, Conventional Loans, Jumbo Loans, FHA, 203(k), USDA, VA, - Walnut Creek, CA
#MortgageMadeEasy Walnut Creek, CA 484-680-4852

Great info, Gene.  Suggesting this because it is often confusing to consumers - most people think if it's a single family attached with a yard, it's automatically a townhome, and as your buyer discovered, this isn't always the case.

May 16, 2014 03:44 AM #4
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi
NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656 - New Lenox, IL
708.921.6331 - 40+ yrs experience

Anna:  Although I understand that some properties can look misleading ... with condos and townhomes it's always best to perform a little extra investigating.  It sure would have helped in this specific situation.  Thanks so much for the "BananaTude Feature" ...

George:  Truth is, no matter the location ... an assumption can't be made when it comes to these properties.  When an assumption is made ... bad results occur.  This is an example of one of those instances ...

Noah:  This topic is one of particular interest to anyone that facilitates condo and townhome transactions in the Chicago area, as we have so many of these properties in the area.  First-Time Buyers are often involved in these purchases/transactions.  Glad that you are well-versed on this Noah ... I hope anyone looking to buy a Condo or Townhome in Evanston and beyond takes note of that and contacts you for info and assistance ...

John:  This property was fairly easy to figure out, as far as Townhome or Condo.  Others not as easy.  Exactly why I (sure you do the same) always make sure to do the homework needed to decipher which it is as early in the process as possible.  It was sad that I didn't have the chance to speak to this Buyer prior to their signing of the Contract ...




May 17, 2014 04:58 AM #5
Debbie Reynolds
Platinum Properties - Clarksville, TN
Your Dedicated Clarksville TN Real Estate Agent

Gene, You are so right about the difference between a townhouses and condominiums. Agents do not generally know the difference either and neither do the appraisers. I find myself explaining it at least once a month.

May 17, 2014 10:16 AM #6
Joe Petrowsky
Mortgage Consultant, Right Trac Financial Group, Inc. NMLS # 2709 - Manchester, CT
Your Mortgage Consultant for Life

Good morning Gene. The part that is crazy, not only the buyers don't always understand the distinction, but either do some agents. Then it becomes an even bigger challenge.

May 17, 2014 08:36 PM #7
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi
NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656 - New Lenox, IL
708.921.6331 - 40+ yrs experience

Debbie:  There is "fallout" from an agent not knowing, IMO ... with the client .. and their financing, even if it's only in lost time or having to explain that the property is not what the Buyer thought they were buying.  

Joe:  True.  Especially when you have had prior transactions and covered the same "issues" ...


May 19, 2014 10:53 AM #8
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