Community Living:
Is It Right For You?

Is a traditional single-family home out of your price range, too much upkeep, or just not your style?  Then community living – condominium, townhouse, or cooperative – may be a practical solution for you.  All three dwellings are forms of attached housing, a setting where you share common walls.  These homes come with minimal maintenance responsibilities and are often affordable even in premium priced markets.  Sound great?  They certainly can be.  But before you jump into the market for one of these homes, understand each one and use that knowledge to decide if this type of ownership is right for you.
 
To help you get started, here is a quick comparison:

Condominiums

Most condominiums, or condos, resemble apartments.  These individual units are typically located in a complex of multi-unit buildings that can range anywhere from two stories to a towering high rise.  Buy a condo and you own the interior space of your unit.  You do not own the land beneath the building.  You share common walls with neighbors who can be on one or both sides as well as above and below.  You also share ownership and use of common areas and amenities.  Examples of common areas are hallways and exterior walls.  Amenities vary with the complex and can include swimming pools, clubhouses, and tennis courts.

As a condo owner, you are responsible for paying property taxes on your individual unit.  You also become a member of the Homeowners’ Association (HOA), along with the other owners in your complex.  Because the day-to-day operation of your HOA is a job in and of itself, a professional management company usually handles that work.  This group is charged with maintenance and upkeep of the exterior buildings and grounds.  To cover that cost, they charge all homeowners a monthly association fee.  The amount you pay will vary depending on the amenities offered and that fee can sometimes be significant.   What the fee covers also varies from complex to complex, so it is important that you have a clear idea of what it does and does not include.   Your HOA also sets and enforces rules and restrictions to which all owners must adhere.  The goal is to maintain a certain uniform look and feel throughout the complex.  These rules can sometimes be quite restrictive and can govern anything from the color of window treatments to the number of parking spaces you have.

Townhouses

The architectural style of townhouses differs from condos which are stacked on top of each other.  Townhouses are multi-story homes in rows.  Units are connected to each other by shared vertical walls, and they may have attached garages or individual driveways as well as front and/or back lawns.  If you buy what is called a fee simple townhome, you own your entire unit and the accompanying land.  You also jointly own one or more common walls depending on the location of your unit within the row.

Just as you do for a condo, you also pay property taxes on your townhome.  Other characteristics that townhomes can share with condominiums are common areas, homeowner associations, and maintenance fees.   Typically in larger townhouse communities, you will have shared ownership in the common areas and any amenities.  You may also be part of an HOA where there will most likely be maintenance fees associated with your ownership.   Conditions and restrictions enforced by your HOA can also govern your duties and obligations as a townhome owner.

Cooperatives

Also known as co-ops, cooperatives are not as common as condos or townhomes.  A cooperative is a housing arrangement in which a corporation owns single residential units, which may have been rental apartments at one time.   A board of directors governs the corporation and each resident has one vote.  As a resident, you are a shareholder in the corporation.  You don’t own any real property.   What you have is a proprietary lease to live in your unit.  Your lease runs for the life of the corporation.

Since the property is owned by a corporation, it is treated as a single piece of property for tax purposes.  The corporation pays those taxes.  It also handles maintenance and upkeep, and sometimes utilities.  These costs are shared by co-op residents and are usually assessed on a monthly or quarterly basis.  The board of directors of the corporation also exercises a fair amount of control with respect to rules and restrictions.  Examples of restrictions that may come with your lease include a maximum number of residents per unit, rules prohibiting pets in the building, and no subleasing of units allowed.

No matter which of these homeownership options you are considering, take time to check out the complex or building and even meet some of the neighbors to get a sense of what they are like.  Also get an idea of how governing groups are organized and how financially stable they are.  And remember to review all governing documents so that you make sure you understand and can live with all the rules.

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