What's the Difference Between a Condo and a Townhouse?

If you’re a first-time home buyer, you may have asked yourself what the difference between a condo and townhouse is.

In this article, we’ll go over what condos and townhouses are, the pros and cons of each and which option is best for you.

Is There a Difference Between a Condo and a Townhouse?

First, let’s define both terms:

A condominium describes a type of legal co-ownership. It’s a specific housing unit within a larger property. The areas that connect the units as well as the amenities are owned by all the condo residents.
Townhouses are individuals houses stacked side-by-side where one or more walls may be connected to a neighbor.

It comes down to this: a townhouse is an architectural style whereas a condo is a type of legal ownership.

It’s possible for a townhouse to be part of a condo complex. However, it’s also possible to find townhouses that are deeded single family residences. Those are sometimes called freehold or stand-alone townhouses.

So yes, there is a difference. But it’s between condo townhouses and freehold townhouses.

Other than architecture, there is no difference between a condo and a condo townhouse from a legal perspective.

Terms We’ll Use

With that difference in mind, we’ll use the following terms for the rest of the article:

Condo: the typical unit within a large apartment-style building.
Condo townhouse: a townhouse that’s part of a condo development.
Freehold townhouse: a standalone property from a legal perspective.

Differences Between a Condo and a Condo Townhouse

In both condos and condo townhouses:

You’re the owner of your unit.
You’re part owner of the communal areas.
You have to pay condo or homeowner association fees.

However, there can still be important differences between the two. These come down to how and what the condo fees cover. Usually when someone buys a typical condo, they expect a hands-off approach to maintenance and repairs.

Roof repairs, lawn maintenance, window replacement, exterior wall maintenance, etc. Those are items a condo owner doesn’t worry about.

Make Sure You Know Where the Legal Boundaries Are

In most high-rise condo buildings, the owner is responsible for what’s inside the drywall of his or her unit. Everything outside of that is the responsibility of the condo corporation.

Here’s the catch:

In some condo townhouse arrangements, only certain aspects of the exterior shell and landscaping maintenance are covered.

For example, it’s not uncommon for condo townhouse owners to be responsible for a broken window. In some condo townhouses, owners may even be responsible for water damage inside their unit, even if it came from a leaky roof!

Conclusion?

If you’re buying a condo townhouse, make sure you understand what your condo fees cover (or don’t cover).

Condo Fees May Be Lower… For a Reason

You may have noticed that per square foot, condo townhouses have pretty low condo fees. In rare instances, depending on the way the legal structure is setup, condo fees may not cover certain aspects of the townhouse’s maintenance.

That means you’ll be responsible for certain maintenance or repairs items years down the road.

But it’s not just that.

Condo fees are low in condo townhouse arrangements because there’s little to no common areas. Units face onto the sidewalk so no lawn or landscaping maintenance. Additionally, these types of developments generally don’t offer amenities like pools, gyms and lounges.

Less items that can break means less maintenance. That translates to cheaper condo fees.

Differences Between a Condo Townhouse and a Freehold Townhouse

This is where it gets interesting for you, the buyer.

In a condo townhouse, you pay condo or home owner association (HOA) fees. In a freehold townhouse you don’t.

You may have expected that.

The real difference comes down to how much involvement the owner will need to have in a freehold townhouse.

Expect Maintenance Costs

Let’s say you’ve decided to go with a freehold townhouse to avoid paying the condo fees.

When maintenance items will come around, you’ll need to be prepared financially and from a DIY perspective. You may save money month by month, but when the time will come to repair the roof or fix the brick siding, expect a salty bill.

If you’re not a DYIer you’ll have to manage hiring contractors to come in a do the work and oversee the job. From the perspective of maintenance and repairs, freehold townhouses are the same as single detached houses.

Condo Townhouses Have Condo Rules

Perhaps the greatest downside to condo vs freehold townhouse living is having to comply to condo rules and bylaws.

Condo living always means giving up a bit of personal freedom. After all, you’re living in a community with others. When you live in a condo community, you have to be conscientious of others. For example, condo rules and bylaws strictly regulate noise.

Not only that, condo townhouses usually have rules that dictate what can or can’t be done to the exterior of the building. Some communities even regulate the color of the blinds or drapes you’re allowed to have. Not to mention the issue of BBQs on balconies.

The loss of freedom can be frustrating for certain people. That’s why it’s important to carefully read the condo bylaws before you buy a resale condo.

The final consideration is the issue of special assessments. Should the condo fees be insufficient to cover an expensive repair, your condo board will issue a special assessment. In other words: if your condo association wasn’t managed properly, you still have to pay for the maintenance on top of the monthly condo fees.

Condos vs Condo Townhouses vs Freehold Townhouses

Whether you buy a regular condo, a condo townhouse or a freehold townhouse, each type of property offers distinctive pros and cons.

Price

First off, all three options share the same pro when compared to single detached houses: they’re all much more affordable.

Just how affordable? Let’s take the 2019 Toronto market as an example:

Avg 2 bedroom condo: $56,000
Avg townhouse: $715,000
Avg detached house: $925,000

What does this mean at the end of the month for you? A difference of $225,000 (townhouse vs detached) comes to roughly $1,000 less in monthly mortgage payments. That’s no joke for the average household.

The same difference can be found in more reasonable markets too. Let’s take Calgary as an example:

Avg 2 bedroom condo: $280,000
Avg townhouse: $330,000
Avg detached house: $500,000

Hands Off

Since we’re on the issue of money, you have to consider your financial discipline. If you just can’t seem to save up every month, a condo townhouse may be the better option. As we explained earlier, you’re on the hook for expensive repairs when they come around. Without a hefty emergency fund, you may face financial difficulties.

Neighbors and Noise

Now consider that all three options also share the same con. Noise transfer. In all three, you’ll have to be conscientious of your neighbors. You share a same wall.

You may also be bothered by noisy neighbors if you’re unlucky. In a condo townhouse, you have recourse to rules and bylaws. In a freehold townhouse, it’s more complicated. You’ll have to deal with the neighbor directly and have little to no recourse other than calling the bylaw officer.

Space and Storage

The major difference between a condo and a townhouse comes down to space and storage.

It’s not uncommon for an affordable townhouse (whether condo or freehold) to be at least 1,200 square feet and above. That kind of square footage in a condo development would be extremely expensive.

Flexible Use of the Property

The way townhouses are laid out makes it easier for different occupants to do different activities without bothering each other. Your partner can be watching television downstairs while you’re trying to sleep. In a typical condo, everything is on the same floor. That can make it difficult for the other partner.

Market Availability

Whether you’re leaning condo or townhouse (either type), you’ll be limited with what the market has to offer in your area. Some neighborhoods have no condos available for purchase, while others do.

Communicate your requirements with your realtor early on.

Location Limitations

Townhouses occupy a larger footprint than a high rise condo development. That makes them rarer in most downtown cores. In real estate, when something is rare, that also means it gets expensive.

So if being close to the amenities of living downtown is important to you, condo life may be the better option. This is one of the many reasons millennials are choosing to live in condos in record amounts.

Which Option Is Best For You?

Ok so you’re still unsure which option is best for you. Here are a few questions you need to ask yourself:

Is space important to me or for my lifestyle? If it is, a townhouse may the better option.
Will I one day rent out the property? If you plan on one day moving out and renting the property, freehold townhouses don’t have limitations on rentals.
Do I plan on starting a family in the near future? If you do and don’t want to move, you may want to steer towards a townhouse. Selling a condo can be expensive and eat away your equity.
Can I DIY repairs and maintenance? If you don’t like that kind of stuff, consider a condo or condo townhouse. Everything outside your unit is hands-off.
Do I require to be autonomous of my real estate investment? If you can’t handle others making decisions on your behalf, living in a freehold townhouse may be a better option.
Will I want to rent the property on AirBnB? If you do, condo corporations usually ban short term rentals. Consider a freehold townhouse.
Am I financially disciplined to build a reserve fund? If building up the down payment was a test of your financial discipline, the condo or condo townhouse option may be better for you.

Wrapping This Up

As you can see, there’s a difference between a condo and a townhouse. That said, each option has its pros and cons. Pick the one that suits your lifestyle and future goals!