What Is the Difference Between a Condo and a Townhome When I Buy?

It's mostly a style. Many buyers picture a condo as a unit in a larger building and a townhome as a row of attached homes. In California, the documents decide what you're buying, not the look of the building.

I'm Jeanette Nelson, a REALTOR® with Jeanette Nelson Real Estate, Keller Williams Realty, serving Orange County, Huntington Beach, Costa Mesa, Fountain Valley, and surrounding areas. When first-time buyers tour attached homes, one of the first things we confirm is how the property is legally set up.

Both condos and planned developments are common interest developments under California's Davis-Stirling Act, so both usually come with a homeowners association.

California Civil Code Section 4125 describes a condominium as a separate interest in a space, called a unit, plus an undivided interest in common in the rest of the property. In plain words, you own the space inside your unit, and you share ownership of the building and grounds with the other owners.

The exterior walls, roof and land are often common area. The HOA usually maintains and insures those parts, and every owner shares the cost through dues. The project's CC&Rs and condominium plan spell out exactly where your unit ends.

Civil Code Section 4175 describes a planned development as one where owners have separately owned lots and the common areas are owned by the association or by the owners together. In many townhome communities set up this way, you own your lot and the structure on it.

That can mean more responsibility for your own roof, exterior and insurance. It varies by community, so the CC&Rs are what tell you who maintains what.

It touches three things you'll feel after closing:

• Maintenance. Who fixes the roof, the exterior paint or a leaking pipe between units.
• Insurance. If the HOA's master policy covers the building, you may need a policy for your interior and belongings. If you own the structure, you may need a policy that covers the whole home. Share the CC&Rs with your insurance agent before you remove contingencies. My article on shopping for homeowners insurance explains more.
• Financing. Lenders look at the project, not just you. Fannie Mae's Selling Guide waives its full project review for many planned development units, while many condo projects still need a review. Ask your lender early whether the project meets their requirements.

California Civil Code Section 4525 requires the seller to give you a set of HOA documents. The California Department of Real Estate (DRE) lists items such as the governing documents, a statement of current regular and special assessments, the latest budget report, unresolved violation notices, construction defect information, the most recent balcony inspection report, and, if you ask, the last 12 months of board meeting minutes.

The DRE urges buyers to read the CC&Rs, rules and architectural guidelines closely, since they can include limits on pets, vehicles, rentals and exterior changes. It also notes that HOA litigation can lead to special assessments and can make financing harder.

My article on reading an HOA budget and reserve study walks through the numbers to check. For what changes when you move from a condo to a house later, see moving up from a condo to a house.

This is general information. For questions about specific CC&Rs, talk with a real estate attorney, and ask your lender and insurance agent about their requirements.

If you're weighing a condo against a townhome for your first home, I'd love to help you compare the documents, not just the floor plans. Call or text me at 714.366.8575 | DRE: 01397168, or contact me. Jeanette Nelson is a REALTOR® with Jeanette Nelson Real Estate, Keller Williams Realty, serving Orange County, Huntington Beach, Costa Mesa, Fountain Valley, and surrounding areas.