Understanding The Different Home Types

Dated: 07/14/2016

Views: 173

While the single-family home is still the most common, land scarcity and rising prices are making alternatives more and more appealing. Condominiums, townhomes, PUDs, and co-ops are a good options if you're trying to squeeze in to a crowded market, but what are they, and what’s the difference?

First, they are all considered Common Interest Subdivisions (CIS), in which individual ownership of a residential unit is combined with the shared ownership of a common area. More specifically...


Houses and condos are very similar - you have a deed, a mortgage, and pay property taxes. The biggest difference is that what you really own is “airspace.” Walls, floors, and ceilings are owned in common among all residents. You join the homeowners association and pay monthly dues to cover management, hazard insurance, maintenance, garbage collection, hallway lighting, and landscaping. A portion of the dues are set aside in an account for long-term maintenance.

Remodeling must fall within the guidelines provided by covenants, conditions, and restrictions, which may specify everything from how maintenance is handled to what color curtains you can hang on your windows. While most are agreeable enough, the general idea is to prevent major disturbances to your neighbors, or make any modifications that could decrease property value. It’s a smart idea to read them thoroughly before buying a condo. Also, ask for recent reports outlining future plans for the complex.

Planned Unit Development (PUD)

Often indistinguishable at first glance, PUD's are an individually owned residential structure and a small section of the surrounding land. Just like a condo, PUDs require membership in the homeowners association, but the land around each unit is generally maintained by that unit’s owner. If you’re interested in having a bit of a yard, this is the way to go.


This is a housing complex owned by a corporation made up of all the tenants — you become a shareholder in the corporation that owns the property. The number of shares you are issued depends upon the size of the unit you own. Larger units’ owners have more power in deciding how the building is run. You also pay fees to cover your portion of the building’s property taxes, mortgage, and the costs of repairs and improvements for the common areas.

Co-op owners lend on each other financially. You are likely to receive scrutiny of both your financial history and your personal life if you’re buying, and may need to 


This is an architectural term and doesn’t actually describe a form of ownership. It’s commonly used to describe an attached row house. If all you know is that something is a townhome, but you're not sure if it's a PUD, co-op, ect, contact your agent for more information.

All-in-all, prices are typically much lower for these options than for single family homes, and landscaping and maintenance are minimal or nonexistent. For busy families, this can be a blessing. Some residents say they feel safer in a "cluster" environment, while others cite the peace of mind from having common maintenance service. Pools, clubhouses, and exercise facilities are all common and convenient onsite amenities.

What are the common pit-falls?

Homeowners’ dues are not tax-deductible, and the dues are considered an ongoing expense that will lower the amount of mortgage you can qualify for. While this is often off-set by a lower cost, knowing the HOA and having all the information from your agent is critical. CIS documents are long and complex, often hard to understand. Make sure to review the documents with your agent so they can explain the significant points.

The most important thing before considering buying any property is to do your homework. Once you’ve decided to take the plunge, you’ll be building equity and get a tax break to boot. Buying into a CIS can be a great way to get your feet wet in home ownership without being burdened by some of the maintenance responsibilities unique to a single family home.

Need more advice?

Contact a Weichert Andrews agent for a free consultation.

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