What’s the difference between a condominium and townhouse?

This week is “Condo Week” on the Sacramento Appraisal Blog, so we’ll be talking about condominiums throughout the week. Exciting stuff, right? It seems fitting to kick things off by discussing what a condominium is and how you can tell the difference between a condo and a townhouse (PUD) in the Sacramento area. 

What is a condominium?

A condominium is a multiple-unit dwelling in which there is separate and distinct ownership of individual units and joint ownership of common areas. For example, in an apartment house [or condo development], the individual owners would each own their own apartments while all the owners of the separate apartments would together own the parts of the building common to all of them, such as the entrances, laundry rooms, elevators, and hallways. The building is managed by the condominium association, either directly or through a professional manager. The owners of the individual units are jointly responsible for the costs of maintaining the building and common areas, but they are individually responsible for the maintenance expenses of their particular units. (definition from Free Dictionary)

Sometimes it’s not clear if a property is a condominium or townhouse though. How do you know the difference when these types of units can actually look very similar on the outside? The terms “condo” and “townhouse” are used interchangeably quite a bit too, which complicates things (sort of like “manufactured” and “modular”). There is usually an HOA managing the condo or townhouse development, but the big difference really boils down to a condominium owner not owning the individual parcel and a townhouse owner actually owning the land on which the unit is built.

It’s still not easy to identify whether a property is a condominium or townhouse though sometimes, so let me give you a few pointers if you’re searching in the Sacramento area. These tips may or may not work in other areas.

How can you identify a condominium in comparison to a townhouse in the Sacramento area?

1)  Are the units called condos or townhouses by the development? This is the first step to identify a property. I know this sounds simplistic, but most of the time units are not called “condos” unless that is what they are.

2)  Is there a lot size listed in Tax Records? If there is a lot size, this often means the property is a townhouse and not a condo. However, don’t use this “proof” by itself because many times condominiums actually have a specific lot size mentioned (even though they don’t have an individual lot). Ultimately, keep in mind that Tax Records is not the authority on determining what a property is and is not. 

3)  Does the plat map show specific lot dimensions for the individual unit on a parcel? If so, it’s most likely a townhouse PUD and not a condominium. This is an important indicator. The owner of the condominium does not have ownership of the entire site on which the unit is built, so there is no reason to give specific dimensions on the plat map for the lot shape. If an individual parcel is identified with dimensions on the plat map for the individual lot, it’s not a condo. Click the thumbnails to view larger images.

     

4)  What does the local planning department say about ownership?

5)  What does the preliminary title report say about ownership? This is the best source to identify what form of ownership a property has.

How else would you describe the difference between condominiums and townhouses?

If you have any real estate appraisal, consulting, or property tax appeal needs in the Greater Sacramento Region, contact me at 916.595.3735, by email, on our appraiser website or via Facebook

Comments

  1. says

    Do you ever mix them up and get away w/it?

    I had one on Hood Rd that had land and the other condos on the same street didn’t but they had the same amenities – a balcony or patio and an assigned carport space. They made me leave the street and run all over the neighborhood to find townhouses and I had to ignore the condos.

    I’m having to do it again today for one on Garfield and I don’t want to go 3miles out and ignore the similar units in the same neighborhood, kwim?

    • says

      Hi Anne. Lenders usually catch it if a property is on the wrong type of form. It is frustrating to have to go out several miles when there are seemingly competitive properties right next door. However, we have to compare apples with apples, right? I always check the plat maps too to be sure the land really is owned. I just appraised a condominium last week and Tax Records indicated that the unit had a specific lot size, but it really didn’t. Had I only used the information in Tax Records rather than looking at the plat map, I would’ve been wrong about my comparisons.

      Good luck on the files you have in your queue right now (I assume maybe for BPOs). Going out several miles from Hood Road is a huge leap to a different market. Yikes.

      • says

        Thanks to YOU, Ryan, I learned a lot today! Researched the plats and yep, they’re condos, just like you said they’d be – condo’s w/lot sizes and so I won’t have to leave the ‘hood (lol) for similar comparables. Thanks again! 😀

        • says

          Thanks Anne for such a nice comment. I’m so glad it worked out in your situation. There really are quite a few developments locally that list a specific lot size despite the property being a condo. I find that most of the time when the land use says “condo” it is usually a condo. I just make sure to really look at the plat map and consider all things above that I mentioned. Having a system of checks and balances is really helpful because the distinction between “condo” and “townhouse” really isn’t that obvious in many cases. Take care.

  2. says

    Yes, I’ve had it happen to me. I look for the same tell tale signs whether it is a condo or a townhome. I just convert the file, and kick myself for not catching correctly the first time. There is always more work on a condo appraisal, but it only takes about 15 more minutes to make the corrections on the right form. The Prelim will mention if there are CC&R’s and that is the fastest way a lender can tell if it is a condo or not.

    • says

      Exactly. Your comment highlights how simple it is to mistake a condo and townhome. I’ve done that many times in the past, and that is one reason why I have my set of criteria to look through to really diagnose the property. You’re right about the prelim. That’s really the best tool.

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