Before I get into the differences between these types of properties, I will define what a PUD is. PUD stands for Planned Unit Development. A PUD is essentially a single family home and the ownership of it is treated that way also. The major difference is that a PUD is part of a community, part of a larger development. So although you will own your home if it is a PUD you will pay a small association fee per month to maintain community areas often consisting of parks, pools and sometimes recreation rooms designed for the entire community. There is also an association as there is with condos and so if you want to make major improvements to your home or want to paint your house an outrageous color you will need the approval of your association if you live in a PUD. However, because a PUD is essentially a single family home that is simply part of a larger community you will be responsible for your own repairs and for maintaining your own homeowners insurance since you own your building (house) and land.
A condo and townhouse are essentially the same thing, in terms of legal ownership there is no distinction. Generally, the differences between these two terms refer to the architectural style in which they are built. Often, a condo is more of an apartment style building whereas a townhouse looks like an independent home that may or may not have attached walls to the rest of the townhouses in the community. However, in terms of legal ownership they are the same. When you purchase a condo or townhouse what you are purchasing is cubic airspace of a specific unit with an undivided interest in the common elements of the property. The common elements referring to the lobby, swimming pool, recreation area, land, etc. What you technically own is airspace, you dont actually own any land or building for that matter.
Every condo and townhouse community has a homeowners’ association and that association is responsible for maintaining the grounds, structures and systems of the complex. That is the reason the association fees are pretty high. You wont need homeowners insurance though because this is part of what is covered by your association. Unlike owning a house where you may have a huge repair to do every five years, you pay monthly and the money accumulates with the association and then is used when needed to maintain the community and all of the structures. If you are looking into purchasing a condo or townhouse it is important to find out about the association. If the association is bankrupt you will have problems in the future with the value of your condo and with any repairs that the complex may need.
Co-Op is short for Cooperative and is called an Own-Your-Own also. Structurally similar to a condo, like an apartment you own. A co-op is when the building itself is a corporation that holds title to real estate. As an owner, you own stock in that corporation and you are granted the right to occupy as a shareholder in that corporation. Co-ops like condos have a homeowners’ association that handles the community structure and land. The association has a monthly association fee to maintain the community. As a shareholder (owner) of a co-op you wont need homeowners’ insurances since the association covers it. Cooperatives are common on the east coast and sometimes getting a loan for this type of real estate can be challenging in an area like Los Angeles where cooperatives are rare.
A house also called a single family home or single family residence is the simplest type of ownership to understand. As the owner of a home you own the building and land beneath it and have full legal rights to the property. You are responsible for all repairs since you own it all! You need to make sure you have homeowners insurance and are able to pay for repairs the house may need. There is no association to handle problems or cause problems. Consequently, there is no association fee that goes along with owning a single family home.
So when you are looking at purchasing a home, condo, co-op or PUD remember there are FOUR major costs you need to factor into your monthly overhead: mortgage payment, property taxes, homeowners’ insurance and association fee. Homeowners’ insurance isnt always expensive depending on what you get, what part of the country you live and what types of natural disasters you insure.