Condo? Co-Op? Apartment? Townhome?
Which is which?
Although all are part of the common-interest housing category, condos, co-ops, townhouses, and apartments may mean different things to different buyers, so here is a breakdown of what each word means and the advantages or disadvantages of one over another for the homebuyer.
First, let’s get the low-down on what makes up the common-interest housing real estate category. Common-interest housing is composed of areas owned individually and areas shared by all owners. The shared or common areas typically include landscaping, pools, parking, and clubhouses, but may also include exteriors, fences, and roofs of certain types of properties. Any community development that has shared property, including individually separate homes in developments with shared playgrounds and pools, falls into this category. Often, a management service or homeowners’ association manages the common areas.
Specifically, a condo—or more properly, a condominium—is a single housing unit within the shared property owned by the homeowner. This may be a unit in a tower building (also called an apartment) or a conjoined house with its own ground floor exterior entry (often called a townhouse, although a townhouse is not always a condominium), a single family home or a mobile home in a planned community. The term “condominium” is a legal term in the United States and so is governed by laws of real estate ownership.
In a condominium-style common-interest development (CID), the homeowner owns the interior space of the property independent of the other units and may buy or sell the real estate property as the sole owner of that specific unit.
A co-op—or cooperative housing development—differs in that “owners” own shares in the corporation that owns the real estate development rather than owning an actual unit. Each shareholder has a vote in the real estate corporation and share ownership authorizes the occupancy of a specific unit. Typically, shareholders pay a “share” of the monthly expenses of the real estate corporation. As with a condominium, cooperatives may be apartment-style units in a single building, townhomes or patio homes, single family homes, or even mobile homes. The legal term “cooperative” refers to the real estate ownership structure rather than the property type.
So, what is an apartment? Or a townhouse?
A townhome is a style of house connected on at least one side of the structure to another house. It may be individually owned real estate or part of a CID. A true townhome will have independent sidewalls even though they may touch the walls of another townhome. That being said, many condominium, cooperative, and rental unit designs mimic townhomes, with individual groundfloor entries, back patios or yards, and even differing faces and rooflines. These units may share a wall or roof, however, as part of a single structure.
An apartment is another matter. In common usage, “apartment” is a rental unit rather than privately owned real estate. The person occupying the unit does not own it, but leases it from the owner of the entire real estate development. But in legal terms, an apartment is a part of a residential structure occupied by one housing unit (family, roommates, etc.). An apartment, then, can be a rental, but it may also be a condominium unit (homeowner owns the interior space and shares the other spaces) or a cooperative unit (owner owns shares of the entire development equal to the unit being occupied).
Consult your real estate professional to see which type of CID is the best fit for your circumstances in your local real estate market.