What is a Townhouse or Condominium
When purchasing a townhouse or condominium, you are buying the interior space of an individual unit, and share an undivided interest in the ownership of the common areas with other owners in the complex. Common areas may include areas such as exterior grounds, hallways and recreational facilities. Your membership to the community homeowners’ association becomes automatic with your purchase. Typically these associations charge annual dues which often times are paid on a monthly schedule.

So what is a condominium or townhouse? It's a cooperative form of ownership in which homeowners "join with each other on a democratic basis to own or control the housing and/or related community facilities in which they live," defines the National Association of Housing Cooperatives.

A condominium/townhouse owner actually owns part of the building and land (their own unit and a pro-rata share of the common property,) while in a "co-op" the owner owns a part interest in a cooperative that operates the building and land.

A homeowner's association manages and maintains the common areas and dues can also pay for some or all utility bills, trash removal, snow shoveling, window-cleaning, and whatever else the HOA members agree upon.

Condos and Townhouses are ideal properties for the mixed-use trend in city planning and redevelopment -- the concept that people can live and work in the same area, walk to the grocery and park, and generally build a neighborhood that is supported by both commercial and residential interests. A Wall Street Journal report November 28, 2005 noted that mixed-use development is "all the rage." The report cited real estate research firms Property & Portfolio Research and Reed Construction Data as finding that "21.6 percent of all new construction this year will be mixed use, compared with 17.5 percent in 2002."

The nation's largest builders are changing their business models to build more multi-family housing for purchase. D R Horton built only single-family detached homes until 1996. Today, condos and townhomes are over 17 percent of the company's business, and it expects to build more in the future, according to a Wall Street Journal report in December 2005.


Buying a Townhouse or Condominium
You begin your investigation about the community by carefully reviewing the CC&R’s (Covenants, Conditions, and Restrictions), Articles of Incorporation and Bylaws. These documents cover the rules and regulations governing the community and will answer many of your questions about the community.

Another important issue to consider is the resale value in the future.  Some factors affecting resale value are: demand for particular models (number of bedrooms and baths), upgrades, the location of the unit within the complex  (End unit versus interior unit, backs to woods, near the playground, golf course or on a pond), location of the complex (accessibility to major roads and public transportation), the school system and the taxes.

Condos/Townhouses: A lifestyle choice that continues to gain popularity
There are about 15 single-family dwellings to every condo, but buyers are pouring into condominiums, presumably for the lock-and-go, low-maintenance lifestyle they promote.

Celia Chen, an economist for Economy.com told American Demographics that condominium prices have now shot above those of single-family homes. From September 2004 to September 2005, condo prices shot up nine percent to $213,600. Clearly, people aren't buying them because they are cheaper. It's a lifestyle choice, and pundits believe that they'll only become more popular.

From 2005 to 2015, American Demographics projects that all owner-occupied households of ages 55 to 74 will rise 36 percent, an increase of over 8 million older homeowners. According to a 2005 Del Webb survey, 45 percent of "active adults" (those aged 59-70) plan to move upon retirement. The number one reason they cite for moving is that they "want a home with less maintenance."

The nation's largest builders are changing their business models to build more multi-family housing for purchase. D R Horton built only single-family detached homes until 1996. Today, condos and townhomes are over 17 percent of the company's business, and it expects to build more in the future, according to a Wall Street Journal report in December 2005.

Guide To Townhouse and Condo Insurance      
While condo/townhouse associations have their own special insurance coverages, equally important is the kind of insurance carried by the owners. Unit Owners Insurance is available to condo/ townhouse owners who reside in an association. There are several key forms of coverages:

Building Property: This covers the unit features that are the owner's responsibility to maintain and insure including wallpaper, flooring, fixtures lighting, cabinets, etc.

Personal Property: Covers items like clothing and furniture. Make sure to buy replacement cost insurance.

Inflation: This automatically increases the amount of coverage by an inflation index.

Loss of Use: This coverage pays certain expenses if a condo is damaged and uninhabitable.

Additional Living Expense: This covers the expenses in excess of what the insured would normally have spent for food, shelter and related items, for the shortest time required to repair or replace your unit or to relocate elsewhere for a certain period of time.