Before I get into the differences between these types of properties, I will explain what a PUD is. PUD stands for Planned Unit Development. A PUD is essentially a single family home and the ownership of it is treated that way also. The major difference is that a PUD is part of a community, part of a larger development. So although you will own your home if it is a PUD you will pay a small association fee per month to maintain community areas often consisting of parks, pools and sometimes recreation rooms designed for the entire community. There is also an association as there is with condos and so if you want to make major improvements to your home or want to paint your house an outrageous color you will need the approval of your association if you live in a PUD. However, because a PUD is essentially a single family home that is simply part of a larger community you will be responsible for your own repairs and for maintaining your own homeowner’s insurance.
A condo and townhouse are essentially the same thing, in terms of ownership there is no distinction. Generally, the differences between these two terms refer to the architectural style in which they are built. Often, a condo is more of an apartment style building whereas a townhouse looks like an independent home that may or may not have attached walls to the rest of the townhouses in the community. However, in terms of ownership they are the same. When you purchase a condo or townhouse what you are purchasing is cubic airspace of a specific unit with an undivided interest in the common elements of the property. The common elements referring to the lobby, swimming pool, recreation area, land, etc. What you technically own is airspace, you don’t actually own any land or building for that matter. Every condo and townhouse complex has a homeowners association and that association is responsible for maintaining the grounds, structures and systems of the community. That is the reason the association fees are pretty high. You won’t need homeowners insurance though because this is part of what is covered by your association. Unlike owning a house where you may have a huge repair to do every five years, you pay monthly and the money accumulates with the association and then is used when needed to maintain the community and all of the structures. If you are looking into purchasing a condo or townhouse it is important to find out about the association. If the association is bankrupt you will have problems in the future with the value of your condo and with any repairs that the community may need.
A Co-Op (short for Cooperative) which is also referred to as an Own-Your-Own is very different than a condo in terms of the type of ownership you hold. Architecturally they often look the same, like an apartment you own. The way a co-op works is the building itself is a corporation that holds title to realty, and as an owner what you own is stock in that corporation which grants you the right to occupancy as a shareholder. Similar to condos there is also an association that handles the community structure and grounds and of course a monthly association fee to maintain the community. Also, with a co-op you won’t need homeowners insurances since the association covers it. These are most common on the east coast especially in New York City. Sometimes getting a loan for this type of real estate can be challenging if it is in an area like Los Angeles where cooperatives are not as common so the banks are hesitant to offer loans.
A house also referred to as a single family home or single family residence is the simplest type of ownership to understand. When you own a home you own the structure and land beneath it and have full rights. You are also fully liable and responsible for repairs since the buck stops with you. You need to make sure you have your own homeowner’s insurance and are able to cover repairs the home may need. There is no association there to handle problems you may have. Consequently there is no association fee that goes along with owning a single family home.
So when you are looking at purchasing a home, condo, co-op or PUD remember there are FOUR major costs you need to factor into your monthly overhead: mortgage payment, property taxes, insurance and association fee. Homeowners insurance isn’t always expensive depending on what you get, what part of the country you live and what types of natural disasters you insure.
