Townhouse, Condo, Co-op, Conversion ... What's the difference?
In real estate, we frequently hear these terms used in relation to each other, but everyone may not agree on the meaning. People often ask if a unit listed for sale is a condo or townhouse? But the two are not mutually exclusive.
When they ask that question, they are usually trying to determine if the home in question is a single story apartment-style home or a multiple story townhouse style home. That is a question of style, number of floors, and stairs. Both homes may be condos. So let's clarify.
The term "condo" refers to a form of home ownership, "condominium." A condo may look like an apartment, a townhouse, or even a house. The thing that makes it a condo is that, unlike a single family home, a condo is part of a shared community of ownership.
With a single family home, you have an owner, family or partners that own the house and either own the land or have a lease on the land. This is the most common form of home ownership in our area.
Some developments have single family homes that are sharing common grounds, tennis courts, etc. and have a home owners association, but are still classified as single family homes because of seperate complete ownership of each house and lot.
There are also special communities where several detached homes are situated very close togeather on a large lot. These are often called PUDs "Planned Urban Developments." They often funtion legally as codominiums even though none of the houses are attached to each other.
The owners of a single family house and land can do what ever they want to, or in, their house, within the limits of the law.
The owners of a condominium, on the other hand, are usually part of a HOA (home owners association). There are common (shared) areas, rules, bylaws, CC&Rs (covenants, conditions, and restrictions) and a self appointed board of directors. These owners are limited in some ways by rules regarding pets, or noise, or use of common areas. They usually can not make any changes to the exterior of their homes.
Owners of a condo unit have ownership and control of their particular unit, but also share responsibility for the common areas. It doesn't matter whether or not the structure of their home looks like a house, apartment or townhouse, and it doesn't matter whether or not your home is attached to another home or not.
There is also a form of home ownership called a co-op. This is very common in the eastern United States, but we also have a few co-ops in our area. Co-ops are a little like condos. They have common areas, rules, CC&Rs, and a home owners association, but there is more.
In a co-op, all the owners are partners in a cooperative partnership. You are assigned a unit, and it is yours, but technically, you own shares of stock in the total co-op. All owners are partners in the complete ownership of the entire building.
The owner of a co-op has far less freedom to control his own unit. For example, in a co-op, you may not have the right to rent out your unit, without the permission of the other partner owners. When you sell a co-op, the other partner/owners usually have the right to approve the new buyers in order for the sale to be closed
The city and county rules for the building of condos and co-ops for sale may be different then rules for building rental units. Especially when it comes to laundry, guest parking, HVAC, and hot water.
A conversion usually refers to a building that was built as a rental apartment building, that has been converted to be sold as individual condo or co-op units.
Some things that are more common to find in conversion units include: shared water heater, shared laundry facilities, shared parking garage.
So remember, when buying a home ... ask the questions ... find out if there is a home owners association, CC&Rs, and Ppease read the rules minutes and check their financial situation.