Skip to main content

What Is a Condo?

A condominium, simply put, is a large structure, typically put up by a real estate developer, in which the property is divided into smaller units and sold. Many have trouble distinguishing condos from apartments. From an aesthetic standpoint, they can look quite similar, as they are large, predominantly high-rise style structures hosting multiple residents.

The key distinction rests with the legal status of the residents. In an apartment, some entity such as a landlord retains ownership of the property and the residents act as tenants, paying regular rent and never really owning their living space. In a condo, residents have purchased ownership, entering a mortgage as one would with a house so as to eventually fully possess the property they live on, or at least a part of it.

Condo owners only purchase ownership of the air space that makes up their unit. Everything else they share with the other condo owners in the building. This includes the four walls dividing one unit from another, the stairwells, exterior parts of the property, and any other space not contained within the walls of an individual unit.

Condo buyers sign a declaration of covenants, conditions, and restrictions (CCRs) that set the standards of behavior between all residents that share ownership of the property. These standards are set by the board of your condo's respective homeowners association (HOA). An HOA forms in every condo complex, with each new resident automatically becoming a member and thus bearing the requirement to pay regular dues. The dues money usually goes toward covering the costs of insuring the property, paying for shared utilities, and keeping money stored for emergency maintenance. The board of each HOA determines the structure of these dues along with the conditions of shared property use as outlined in the declaration of covenants, conditions, and restrictions--which also establishes how residents can select who is on the HOA board.

What Is a Townhouse?

A townhouse presents something of a middle ground between the communal nature of a condo and fully independently-owned house. Townhouses overwhelmingly come as rows of connected houses. Each home within the row exists as its own unit, with a front and back entrance, multiple stories, and one or two shared walls. They exist mostly in dense urban areas like New York or San Francisco, where plenty of buyers exist who want property that gives them a sense of privacy but can't afford the costs of a detached, fully-independent home.

While some communal space exists for townhouses such as pools, parks, or playgrounds; it's the expanded ownership an individual resident wields over their townhouse that distinguishes it most from condominiums. The land underneath the home, the ceiling, the yard outside, all of these fall under ownership of a single townhouse owner along with the space contained in their home.

An HOA still exists among townhouse owners, but because of the smaller amount of communal property, residents pay significantly lower fees to the association than they would in a condo.

Condo vs. Townhouse - What Are the Differences?


Purchasing a condo means purchasing air space. Buying a townhouse comes much closer to owning a home.

In the condo, you only have total control of whatever's inside your walls. Shared ownership of everything else on the property can touch upon your day-to-day life, whether you like it or not. These often restrict themselves to banal issue like what pets are allowed on the property or playing loud music at certain hours, but the regulations can touch a nerve for some, so remember to read your declaration of covenants before signing. Exterior areas also remain totally in the hands of the community. If the HOA board determines any changes do or don't need to be made, you're going along for the ride.

A townhouse owner enjoys much greater autonomy. The amount of communal space is smaller, usually restricting itself to one or two walls and a shared neighborhood space like a park. With this increased private space comes decreased regulations. Outside of what happens in the shared public spaces of the neighborhood, the most you can usually expect might be one or two aesthetic standards regarding how you treat your townhouse's exterior. While this holds generally, no set rules exist on the regulations governing townhouse owners, so read over what you're agreeing to before signing anything.


Whether you buy into a condo or townhouse, you'll have to enter into an HOA. The nature of membership, however, drastically differs between the properties.

In a condo, HOA membership is a fundamental part of your residency there. Monthly fees can be high but are also essential to keeping the building insured and in good order. The HOA can also decide on maintenance and renovation projects, kicking up the cost of your fees without you having much of a say other than a vote--unless you get on the board, that is. 

HOAs still exist for townhouses, but they remain more in the background of residents' lives. The lack of communal space means a lack of shared costs and property to be jointly managed. Funds for upkeep or renovation to parks and other shared amenities may be included, but not too much more.

Private Costs

While HOA fees may plummet when you enter a townhouse, don't forget it's because much of the property that would be shared is now falling solely on your shoulders. You'll typically have to pay much higher property insurance rates, and of course, with more property comes a higher price tag. While prices fluctuate among townhouses and condos, the average townhouses costs much more than the typical condo. This comes with the luxury of increased privacy and a living situation that's almost indistinguishable from a regular home, but that also means costs that are almost indistinguishable from a regular home. And with most of these townhouses existing in dense areas where property already comes at a hefty premium, you'll want to make sure you've got the cash to back up what you're getting into. Don't forget utilities and maintenance aren't shared either, so you'll see a bump in costs for that as well.


Townhouses have a relatively set but broadly-appealing architectural standard. Condo styles can vary widely.

The prevailing standard of a townhouse is a narrow, single-family home, containing at least two floors, with bedrooms on top and a kitchen plus living room on the bottom. A front and back yard may be included as well.

Condos come in all shapes and sizes. High-rises are the most common. But low-rise properties exist as well. The actual unit you purchase in these properties can vary drastically. Some can be affordable, utilitarian spaces while others can be lavish luxury condos teaming with space to make into your own.

Advantages and Disadvantages of a Condo


  • Shared costs for maintenance, utilities, and insurance
  • Cheaper than other non-rent housing options
  • Sense of community among residents
  • Low-maintenance
  • Security


  • Regular HOA fees subject to change
  • No private exterior spaces
  • Potentially cumbersome regulations
  • Lack of privacy compared to regular houses
  • Risk of HOA not properly maintaining building or managing funds

Advantages and Disadvantages of a Townhouse


  • Traditional home atmosphere at a lower cost
  • Exterior spaces included with property
  • A stronger sense of privacy than condominiums
  • Typically more spacious
  • Minimal regulations


  • High costs for upkeep and maintenance
  • Restrictions on customizing your property
  • Smaller yards than free-standing homes
  • Mortgage financing can get expensive
  • Less shared amenities than in condos

It's never too late - or too early - to plan and invest for the retirement you deserve. Get more information and a free trial subscription toTheStreet's Retirement Dailyto learn more about saving for and living in retirement. Got questions about money, retirement and/or investments? We've got answers.