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Published: Thursday, 6/15/2006

Collective Ownership: Understanding Townhouses, Condos and Co-ops

Home ownership is a goal many aspire to reach. Fed up with the renting scene, thousands of people each year consult their local newspaper or real estate offices to find their dream home. In 2003, close to 2,000 new homes were purchased across the country, according to the U.S. Census Bureau. That number doesn't even account for the number of yearly resales. Even with inflated home prices, it seems that real estate remains a booming business.

However, there are some who are hesitant to purchase a home, because they are weary of the upkeep and responsibility surrounding ownership. There are solutions for those who desire minimal maintenance responsibilities: townhouses, condominiums and cooperatives. Often the terms are used interchangeably, but there are distinct differences between these types of dwellings. If you are interested in one of these homes, arm yourself with the following information to help you decide what type of ownership is right for you.


Townhouses are usually a series of single story or multistory units that are linked to each other by common walls. Some even have attached garages or driveways. Townhouse owners hold title to their units and the land beneath them, so the units cannot be stacked on top of each other. Owners are responsible for the upkeep of the interior and exterior structure. All townhouse owners jointly own common grounds such as recreation areas, pools and sports courts. In addition, owners pay property taxes on their individual units.

A property owners' association usually manages the townhouse complex and collects fees from all owners to maintain common areas. Depending upon the association, snow removal, lawn care and garbage disposal are often covered by the maintenance fees. When browsing real estate listings, look for the term fee simple, which will denote a homeowner's association ownership and confirm that you are purchasing a townhouse property.


Condominiums are similar to townhouses but have some striking differences. An individual condo owner only holds title to the condominium unit, not the land beneath the unit, so condos can be stacked on top of each other. Although some condominiums are designed to look exactly like townhouses, you still do not own the land beneath your unit.

All condo owners share title to common areas. Common areas include land, the exterior of buildings, hallways, roofs, and swimming pools -- any area used by multiple owners. Like townhouses, condominium owners pay property taxes on their individual units as well as fees to the property owners' association. Generally, condominium owners are responsible for less maintenance than townhouse owners. For example, many condo association fees will cover exterior repairs like a new roof, windows, etc. Condo fees can be higher than townhouse fees.


If property is a cooperative arrangement, a corporation holds title to all associated real estate. Buyers purchase stock in the co-op corporation and are considered shareholders, not owners of real property. Each shareholder holds a lease to his unit that runs for the life of the corporation.

The corporation pays taxes. Any mortgages are normally held and paid by the corporation. All costs to operate the building, including building and common area maintenance, are shared by shareholders.

An administrative board must usually approve new cooperative shareholders. Cooperative ownership is not common in most states.

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