What Is the Difference Between a Townhouse, Condo, and Co-op?

Feb 3, 2022

There are many different kinds of real estate on the market, each with its own benefits and drawbacks. While an experienced or first-time homebuyer usually has a solid grasp on what single-family homes are, it’s pretty common to have questions about townhouses, condos, and co-ops, including:

  • What is a townhouse considered?
  • What is the difference between a co-op and a condo?
  • Is a townhouse, condo, or co-op the better choice?

Whether you’ve recently inherited property and are trying to decide what comes next or are looking to purchase a new home, here’s what you need to know about townhouses vs. condos vs. co-ops.

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What Is the Definition of a Townhouse, Condo, and Co-op?

Before digging into the difference between a townhouse, condo, and co-op, it’s helpful to understand the features of each option. That way, you can see how they are similar and where they differ with greater ease.

What Is a Townhouse?

If you’re asking yourself, “What is considered a townhouse?” shared walls are mainly what defines a townhouse. Also called “row homes,” townhouses are physically connected to adjoining properties on one or two sides. Any shared walls are thicker than what you see in home interiors, usually featuring concrete or brick, along with soundproofing and fireproofing materials.

While there is a physical connection, each townhome is its own property. The owner has full control of the residence, barring any limitation set by a local homeowner’s association (HOA).

What Is a Condo?

A condo is a housing unit – usually an apartment – that comes along with a share in any community spaces associated with the larger property. Usually, condos are overseen by a board, ensuring that the broader property is maintained and that any renovation activity in individual units is approved. In many ways, it’s not unlike an HOA that comes with certain single-family dwellings.

If you’re wondering, “Do you rent or buy condos?” the answer is “it depends.” Condos can have different rules, so some may allow rentals while others might bar the practice.

It’s important to note that, while the board may limit renting, it doesn’t have any say in who can purchase a unit. However, when it comes to what to know before buying a condo, it’s critical to understand that the board may have a right of first refusal. That gives the board a chance to buy the property before it’s made available to outside buyers.

What Is a Co-op?

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You may be wondering, “What does co-op mean in real estate?” If that’s the case, the co-op definition in real estate is easier to grasp when you know that “co-op” stands for “cooperative housing.”

Co-op buildings are actually owned by corporations, not individuals. When you purchase a unit in a co-op, you’re technically buying a share of the corporation. You end up with a proprietary lease, essentially ending up with stock in the property in its entirety, not just a single unit.

Buying into a co-op is fairly challenging. You’ll have to meet requirements set forth by the co-op board of directors, something that isn’t always simple. Along with providing extensive financial information, you may have to gather up personal and professional references, attend interviews, and more.

However, the extra effort can be worthwhile. Those living in a co-op have more say in what happens to their building. Additionally, co-op rules tend to be strict, often barring turning any units into short- or long-term rentals. Plus, residents tend to be in it for the long haul, so there can be significant pride in ownership.

What Is the Difference Between a Townhouse, Condo, and Co-op?

While the definitions above likely gave you some clues, you may still be wondering how townhouses, condos, and co-ops compare. If so, here are some direct comparisons that can make the differences easier to see.

Condominium vs. Townhouse

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A townhouse differs from a condo in several ways. First, a townhouse is a completely independent residential property, while a condo is a portion of a larger building.

Condos almost universally come with boards that manage shared spaces, but that isn’t the case with townhomes. However, a townhouse can fall within an HOA; that just doesn’t always occur.

When it comes to purchasing the property, both townhomes and condos use essentially the same process. The only difference is that a condo board may have the first right of refusal with condominiums, something that townhouse owners don’t have to navigate.

Townhouse vs. Co-op

When it comes to the differences between townhouses and co-ops, the main one is the kind of ownership. Townhomes are independent properties where the owner is typically in full control. With a co-op, the owner is more like a shareholder with a stake in the building. While they can use the property, they are buying into a corporation, not purchasing the unit outright.

Since co-ops have boards that exert strict controls over residents, co-op owners are highly limited in what they can do with a unit. However, the board also handles a significant amount of the responsibility when it comes to maintenance and upkeep, something you don’t usually get with townhouses.

In exchange for some convenience, co-ops are far harder to buy and sell. The board plays a significant role in the process, actively deciding who is and isn’t allowed to make the purchase. Plus, they can require a lot of information, far more than most aspiring homeowners would have to share with a traditionally purchased property.

Co-op vs. Condo

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Co-ops and condos have a bit in common, as both have a board that manages certain aspects of the property. However, the difference between a co-op and a condo is that co-op boards are far more involved and controlling, particularly when it comes to buying, selling, and property changes.

When it comes to buying a co-op vs. condo, co-ops may require far more financial documentation, references, and interviews, and that’s before dealing with any loan or purchase-related documentation. With a condo, there’s usually no more paperwork that you’d find with a typical home mortgage and purchase.

Another difference between a condo and a co-op is the type of ownership. With a condo, the buyer does own the individual unit. With a co-op, that is never the case.

Townhouse vs. Condo vs. Co-op: Which Is Right for You?

Townhouses, condos, and co-ops all have their merits. Which option is best for you may depend on the amount of say you want over the property. Townhomes give you the most control (though an HOA may limit some), while co-ops provide you with the least. However, co-ops also handle more of the property ownership challenges, while townhome owners typically have to do it all.

A condo is a medium between the other two options in most cases. There’s more control than you find with a co-op but less than what you get with a townhouse. Additionally, the condo board will handle some maintenance in shared spaces but may have a say in what you can do within your unit, too.

Consider what you’d like to get out of a property and use that as a guide. That way, you can choose the option that’s best for you.

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