Attached Housing, A Primer


Condominiums, townhouses or cooperative apartments are three forms of attached housing, or homes that share common walls and common areas with neighbors. This type of housing is popular and essential in expensive real estate markets where only a small percentage of households can afford to purchase a house.

Condominiums are beginning to proliferate in less-populated areas too, as an alternative retirement housing for active adults.

Here's a quick comparison of the three:

Condominium Townhouse Cooperative
What it is Single unit that usually resembles a finely finished apartment. Found in large and small, high-rise or low-rise complexes Two-floor unit that shares a common wall with at least one other townhouse, found in clusters (also known as rowhouses) Single apartment unit owned as shares in a corporation, partnership or trust that holds title to building.

Ownership Status Owner has title to interior space of unit and shares title to common areas in complex.

Owner has title to unit and land under unit and shares title to common areas (if any).

Some ownership arrangements more closely resemble those of condominiums Owner who has proprietary lease to live in the unit and corresponding number of shares in cooperative corporation that owns buildings Governed by Condominium board of directors (elected by residents) in accordance with bylaws and covenants, conditions and restrictions. 

Homeowners' Association, in most cases (elected by residents)

Board of Directors (elected by residents)

Know Your Condominium
Before you buy a condominium, research the project by yourself or with a real estate attorney. There are several documents you'll want to review carefully before you sign any kind of purchase contract. These papers should be available from the condominium board of directors or its representative:

Master deed
This key document establishes the project as a condominium project. It gives residents the authority to form an operating association and includes the legal descriptions of all individual units and common areas.

Bylaws
Bylaws are the operating rules for the condo association. Among other things, they authorize the board of directors to create a budget, assess fees, hire professional management staff and perform other operating duties.

House rules
House rules govern what owners can do in common areas.

Covenants, conditions and restrictions
Private restrictions on the use of project property; usually created by the developer.

Purchase agreement
This is similar to a standard purchase. It should include a cooling-off period during which you can back out, and financing and inspection contingencies.

Other papers
You may also ask to see current operating budget, current and proposed assessments, financial statement of the homeowners' association and any leases, contracts, blueprints or other design plans.

Know Your Co-op
Some cooperatives are run like families, but most have budgets and rules that you must follow to the letter. Some cooperatives prohibit renting; others do not allow pets. Make sure that you can live with the restrictions before you buy.

Co-op rules
Review all of the co-op rules, including membership regulations and house codes.

Legal documents
Check the legal documents including incorporation, bylaws and proprietary lease.

Budget
Examine the financial statements and the operating budget of the cooperative.

Legal issues
If you are confused by the legal jargon, ask a lawyer who specializes in cooperatives.

WARNING SIGNS
More than 50 percent of the units are rentals. Upkeep may be poor and some lenders will not make a loan on a unit in the complex, which may reduce your investment's long-term value. 

The condo association doesn't have a healthy reserve fund. Members may have to pay a special assessment to cover the cost of major repairs.

Members of the board of directors don't get along with each other. If they can't agree they will make poor decisions for everyone else.

The project is heavily involved in litigation. Lawsuits with builders and otherhomeowners can sap reserve funds and affect resale value
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