Purchasing Condominiums & Townhomes: FAQs
- How do I choose between condos and single family homes?
- Are condos a good investment?
- What's the difference between a condo and a townhouse?
- Are there any other legal differences between condos and townhouses?
- Are there any special protections for condo purchasers?
- Who is responsible for maintaining my condo or townhouse?
- Does the developer have to finish the development?
- Does the developer have to provide promised amenities?
How do I choose between condos and single family homes?
Using appreciation as a measure, condominiums in some areas have been as profitable an investment as single-family homes in the past five years. And in some markets, condos appreciated even more, according to some experts.
While single-family homes have been the preferred investment by home buyers, changing demographics are helping make condos more popular, especially among single home buyers, empty nesters and first-time buyers in high-priced markets.
Are condos a good investment?
Condominiums have held their value as an investment despite economic downturns and problems with some associations. In fact, condos have appreciated more in the past few years than when they first came on the scene in the late 1970s and early 1980s, experts say.
While there are lots of reports about homeowners association disputes and construction-defect problems, the industry has worked hard to turn its image around. Elected volunteers who serve on association boards are better trained at handling complex budget and legal issues, for example, while many boards go to great lengths to avoid the kind of protracted and expensive litigation that has hurt resale value in the past.
Meanwhile, changing demographics are making condominiums more attractive investments for single home buyers, empty nesters and first-time buyers in expensive markets.
What's the difference between a condo and a townhouse?
Condo unit owners own the inside of their units. Townhouse owners own the complete unit, including exterior surfaces and the land on which the unit is built.
Every condo or townhouse development also has a "common areas" of the property. Condo owners share ownership of the common areas with other owners, while common areas in townhouse developments are usually owned by the homeowners' association for the benefit and use of unit owners.
Are there any other legal differences between condos and townhouses?
YES. The creation, sale and management of condos are governed by specific statutes. There are no specific statutes governing most townhouses. However, townhouse projects of more than 20 units and created on or after January 1, 1999 are covered by the Planned community Act. So are certain developments which volunteer to be subject to all or a portion of the act.
Are there any special protections for condo purchasers?
MAYBE. If you are considering the purchase of a new condo unit created on or after October 1, 1986, the developer must give you a public offering statement. This statement is prepared by the developer and contains information about the size of the development, the projected completion date, the legal documents which govern the property, and the projected common expense assessment.
It will also inform you of your right to cancel the purchase contract within SEVEN CALENDAR DAYS following your execution of the contract.
No public offering statement is required to be given to you if you purchase a condo created before October 1, 1986, a condo which is not new, or a townhouse. And you have no automatic right to cancel your purchase contract.
However, when purchasing any pre-owned condo unit created on or after October 1, 1986, the seller must give you a "resale certificate." This statement sets forth the monthly assessment for common expenses and any other fees payable by the unit owner.
Who is responsible for maintaining my condo or townhouse?
Owners are responsible for maintaining the interior of their units; and townhouse owners may also be required to maintain their doors, windows, and the crawl space under their units The homeowners association is typically responsible for maintaining all common areas and the exterior of buildings.
Does the developer have to finish the development?
NO. Unless the developer has specifically contracted to complete the development, it can stop construction of new units at any time and sell any remaining undeveloped portions of the development. (subject to applicable local and state laws.)
Does the developer have to provide promised amenities?
For condos created on or after October 1, 1986, the developer is required to file a plat or plan showing any improvements which are planned. Each improvement must be labeled "MUST BE BUILT" or "NEED NOT BE BUILT." The developer is required to provide only the amenities which are labeled "MUST BE BUILT." However, the developer may not promote any amenities which are labeled "NEED NOT BE BUILT."
For condos created before October 1, 1986 and for townhouses, no law required developers to provide promised amenities. However, if the developer fails to provide a promised amenity, a property owner may file a civil suit based on the developer's misrepresentation.