Differences Between Condos and Townhouses

If you’re thinking of renting or possibly buying a townhouse or condominium in the Lynchburg, Virginia area, there are some differences that you should be aware of. To help you learn before you rent or buy, we can explain some of the differences are between townhomes and condos including ownership, insurance types, sizes and so on. It's surprising how many real estate agents and people do not truly understand the difference in a condo versus a townhome. Many times, from lacking of knowledge, people just call everything a "townhome" or everything a "condo" which is far from accurate. The two are very different in how they are owned, maintained, and insured.

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What is a townhouse?

A townhouse, also known as a townhome, is a single-family home that shares one or more walls with other independently-owned units. They are often rows of uniform homes, that are usually two stories or taller. Residents own their interior and exterior walls, lawn, and roof, as well as the insurance for both their home and property just like with a single-family home. A townhome really is like a traditional home, it just has at least one shared wall with other adjacent homes. Townhomes are built on land where the townhome owner pays real estate taxes on the Parcel just like a regular home would. However, common areas like lawns, parking lots, trash receptacle areas, and mailbox areas are all owned by the HOA (Home Owners Association). A townhomes HOA is usually managed by a licensed property manager in the area where they have regular meetings with homeowners to discuss things like budgets for snow removal, irrigation systems, signage, speed bumps, fixing sidewalks, repairing fences, power washing vinyl siding, and so on. 

What is a Condo?

A condominium, also known as a "condo", is a building or community of buildings in which units are owned are usually stacked like apartments. Since the land is owned by the building owner and not the condo unit owners, condominiums can be stacked where you have units above and/or below you. Remember, a townhome, the homeowner also owns the land below the unit just like with a single-family home. But with a condo, the building's outer shell, the roof, the outside walls, the decks, porches, landscaping, driveways, parking lots are all owned by the building owner. The building owner must maintain insurance on the entire outer shell of the building, and the condo unit owners must maintain their own insurance. This is a common mistake where someone buys a condo and they think that "insurance is included", where it is included but that's the building insurance and not the insurance that a condo owner must maintain. Condo insurance for owners is usually called "walls in" coverage. Walls-in coverage are called an HO-6 policy, because they protect your individual unit, while your condo association's master policy covers the building's common areas. However, standard condo insurance doesn't apply in certain situations, such as floods, so make sure you discuss your policys coverage with your insurance provider. Keep in mind that a condo building owner could possibly allow the insurance to lapse for one reason or another and that would leave you as the condo unit owner uninsured in the event of a storm or issue. I think it would be safe to say that condos are typically better suited for areas like at the beach or some type of vacation spot like a golf or ski resort, and townhomes are better suited for people that want to live in them full time like they would a traditional home where you own the land and have more control over things such as ownership and insurance.

Condominiums also usually have an HOA (Home Owners Association) that collects fees that are typically higher than townhouses because condo owners pay for exterior upkeep, such as lawn care, trash removal and pest control.

Also keep in mind that a condo can also be owned by someone that acts like a landlord or real estate investor that rents the space out to a tenant. The same things in regards to ownership and insurance apply but to the owner or landlord and not the tenant. The tenant is simply renting the space from the condominium owner. If you rent a condo, then you should make sure your landlord maintains walls-in coverage, and you should also check into renters insurance to cover your belongings.

Hopefully this article helps explain the differences in condominiums and townhomes. As mentioned earlier, many people simply lump the term "condo" or "townhome" into the same bucket so to speak and its far from accurate. Knowing the difference can save a lot of time, money and avoid frustration as a home buyer, investor or tenant. Both Condos and Townhomes have their function and can serve a need in the world of real estate, but knowing the difference in the two can make a world of difference in how they are bought, sold, insured and maintained.


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