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Townhouse or a Condo? Fee Simple Ownership?

Should I buy a townhouse or condo??

To answer this question, let’s take a look at some pros and cons and clarify some of the misinformation out there.

Form of Ownership

The word “condominium” does not refer to the type of building or construction design (apartment, townhouse, garden homes, etc.) it refers to a form of ownership of real estate. In a condominium, or condo, the owner has full ownership of the inside of the unit plus an undivided interest in ownership of the common elements (land, building, etc.) which are all owned jointly with the other condominium owners.

Unlike condo ownership, you may also own real estate by fee simple. Fee simple ownership basically means you have complete ownership of both the land and the structure.

Condo Fees

While condo owners are responsible for maintaining the interior of their units, the condo association is responsible for maintaining the exterior. The condo association charges a monthly condo fee for maintenance and any repairs to common elements in the community.

If you own a property in fee simple, you may be subject to paying a home owners fee (HOA) which is much less expensive than condo fees, but on the flip side, you will also be responsible for maintaining the exterior of your house.


An owner of a condo unit does not have as much flexibility in making modifications to the common elements of the community when compared to fee simple ownership. Since the condo complex is responsible for the upkeep of the common areas, the condo owner would need to get the approval from the condo board to make any modifications to the common elements (landscaping for example). In addition, interior renovation projects that you plan to pursue may need to be approved by the condo board. For example, I recently installed hardwood floors in my condo unit. The condo documents (rules/laws of the condo association) specified a certain type of padding to be placed under the wood floors for sound proofing purposes. The project had to be approved by the board.

Rental Restrictions

In addition to restrictions on modifications of interior and exterior parts of the condo, the condo board may restrict your ability to rent your condo. If your plan is to eventually convert your unit to a rental, you should pay attention here!

From a lender’s perspective, it is more risky to lend in a community with a large amount of absentee owners (or investment properties that are used for rental purposes). Traditionally, investor owned units have a higher rate of foreclosure when compared to owner occupied units. The higher the amount of absentee owners in a condo community, the less financially stable the complex. As a result, lenders have owner occupancy guidelines that need to be met in order for buyers to obtain financing in condo complexes.

If absentee owner levels increase too much, it may be difficult for people to obtain financing in the community. This could ultimately lower demand for the property and jeopardize your ability to sell your property at an ideal price.


I hope this article helped to clarify some of the differences that exist between condo and fee simple ownership! Please make sure that you are well aware of the type of ownership before you purchase property in a community. If you need any further clarification, please don’t hesitate to reach out to me!

Kevin Barbera

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