Business & Real Estate

What's in a name? : Explaining types of homeownership

I am asked often about the differences in homeownership. The answer is fairly straightforward if you think in terms of two distinct categories: what the building looks like and how it’s owned.

Q: I saw a house for sale that looked like a townhome, but they called it a single-family home. How can this be?

A: There are basically three descriptions used in today’s market for what a building looks like:

• Condominium. Typically think of a hotel. Condo buildings usually have elevators or stairs that take you to an interior hallway that takes you to the door of your unit. Parking is generally in a basement or connected parking lot.

• Townhome. These typically are two to three stories tall and lined up side-by-side with a shared wall and a front door that leads to an outside entrance, maybe even with a small patio or entry area.

• Single-family home. This is what you think of when you see the suburbs – a house on a lot with maybe a fence, garage and some landscaping.

Here is where you see the most liberty being taken in for-sale listings, as the terms are open to a bit of interpretation. There aren’t really any “description police.”


Q: Then how is that different from the ownership question?

A: There are two main ownershop options:

• Single-family home. With this type of ownership, you have the rights and responsibilities to the land your house is built on and the house itself. Often, you may actually own mineral rights belowground and air rights above, but that’s a longer answer.

• Common-interest development. Think of a condo complex. You don’t actually own the building or unit you live in. Rather, you own a partial interest in the entire complex and are granted exclusive rights to use, for example, your unit, your balcony, your storage area, your garage space, etc. Everything else that isn’t yours or your neighbors’ is referred to as a “common area,” and is typically for the enjoyment of everyone in the complex. There will be a homeowners association that manages the upkeep of the buildings and common areas. Typical monthly HOA fees range between $300 and $500 per month, depending on the services they include.

• Planned unit development. This much less common hybrid describes when you own your building and the land it is on, but you are part of a larger development managed by an HOA, with regular fees.


Q: How do I know which one I am in?

A: Ownership is really the only thing to care about. On your preliminary title report, there will always be a category for “Legal Description” of your property. If that legal description says something like “Lot No. 123” or gives a “metes and bounds” description (“From the metal stake 113 feet from the marker on the southwest corner of the intersection of …”), then most likely you have a single-family-home ownership. If that legal description says you own “Unit 456” and “partial or undivided interests in … ,” then most likely you are part of a common-interest development. (Call or email me if you don’t know.)


Q: Are there advantages to one over the other?

A: It’s a matter of personal taste. With single-family-home ownership, not only can you do most anything you want to the house and yard (city rules must be followed), but you have to take care of your house and yard. With an HOA, much, if not all, of the exterior building and yard maintenance is taken care of by the management company (for a monthly fee). It could be argued that there is more potential to value-add to a single-family home by making upgrades and improvements, whereas condos tend to be a bit more of a commodity.

Owen Halliday is a realtor with the Sereno Group in Los Altos. Call him at 492-0062.

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