Homeowner, condominium, and co-op associations are similar in that they all include multiple properties within one association and they are each governed by an association board. What follows are some important differences between them:
Homeowner’s Associations – Usually include single-family homes/townhomes.
Ownership – A deed is used to transfer the property. Owner owns the home outright and there are limited restrictions.
Costs – Single-family homes in homeowner’s associations are comparably priced to single-family homes outside of homeowner’s associations. A single-family home in a homeowner’s association will require monthly, quarterly, or annual payments to the homeowner’s association. The payments go toward maintaining the community. The homeowner is usually responsible for their own utilities and property tax bills.
Restrictions – Homeowner’s associations tend to have the least restrictions. The restrictions are usually around the appearance or structure of the home. For instance, a homeowner’s association may have restrictions on what color a house can be painted.
Condominium Associations – Includes condominium units.
Ownership – A deed is used to transfer the property. Owner owns the condominium unit, but the condominium association owns the exterior of the unit, the common areas, and the land outside the building.
Costs – Condominium units tend to be more expensive than buying in a co-op and closing costs can be a bit more expensive as well. Monthly or quarterly fees will include association dues and possibly special assessments. Unit owners are typically responsible for their own utilities and property taxes.
Restrictions – Condominium associations tend to be strict. They usually have restrictions around renting, modifications to units, use of amenities, and many more. The approval process for prospective buyers can be extensive and buyers can be denied for reasons specified by the association, such as income, credit score, etc.
Co-op Associations – Usually include units in a single building.
Ownership – A lease is used to transfer a leasehold interest in the property. The owner does not technically “own” the co-op unit, instead the owner leases the co-op unit from the co-op association. It is the co-op association who really owns the co-op unit.
Costs – Co-ops tend to be cheaper than condominium units. However, monthly fees and annual fees, such as utilities and property taxes, can be higher because such fees are rolled into one bill that the entire co-op shares. For instance, if you are a co-op shareholder with a five percent share of the property, then you will be responsible for five percent of the electric bill, water bill, etc. Like condominium associations, co-op associations usually charge a monthly fee to maintain the co-op.
Restrictions – Co-op associations tend to be strict. Many co-ops have an extensive interview process for prospective buyers, and they can deny buyers for many reasons. Renting is usually not allowed in co-op associations.
Leave a Reply