Condo vs. House Purchase:
What are the differences?
by: Keith Murkin and Michelle Pearson
published 25 August 2023
When purchasing a property, you are purchasing the title to the land and whatever is situated on the land including the structure. The most common types of titles are fee simple (stand-alone houses) and condominiums or condo (from free-standing units to duplexes and large multi-unit buildings). As part of the home buying process, you will need to decide whether you are in the market for a house or a condo.
The following are five key differences between owning a condo and a house:
Condo: You own the unit itself which generally refers to the interior walls of one unit within the whole of the condominium development, and a share of common elements in the development being your proportional share in the whole. The common elements refer to all the shared aspects of the condo, and typically include the exterior of the building(s), the green space, shared services such as amenities and grounds maintenance.
House: You own the whole of the title including all structures located on the land.
2. Regular Maintenance
Condo: Due to this fractional interest in the common elements, you become partly responsible for funding the maintenance and operation of those common elements. Generally, each unit holder will make an initial contribution to a reserve fund and pay a monthly fee as a contribution to the common elements.
House: As the sole owner you are required to attend to payment of ongoing costs of the house, but you have the option to select the contractor you want to complete the work or finish it on your own where appropriate.
3. Major Repairs
Condo: Each condominium has a reserve fund to help pay for substantial repairs or upgrades to the development. It would be wise to review the reserve fund of the condo before purchasing to ensure that there have been sufficient savings in recent years to address future substantial expenses. For example, if the roof needs to be re-shingled and insufficient funds have been saved to date, you may see a significant increase in your common element fees to come up with the required funds for the repairs.
House: You are solely responsible for the cost of any major renovations to the property. In the event that you have a significant expense, you would have the option to ask your lender about advancing funds on your mortgage to cover some of the costs so that you can pay it over time.
4. Decision Making
Condo: Another consideration when purchasing a condo is the involvement of the condo board that is responsible for managing the development. It is essential that you review the rules and by-laws fully so that you can consider all the rules that may be imposed on the property – from the number of parking spots you can access to whether or not you can have pets in the property or rent out the unit to third parties. The condo board has the authority to establish limits on what you can and cannot do with your unit. You should also review the disclosure so that you understand how individuals are elected to the board and how voting works for the condominium.
House: For the most part you are allowed to use the property in the fashion you choose. You would want to ensure that you check with your insurance company if you are going to change who is residing in the property. You must continue to follow all pertinent by-laws within the city or community where the house is located.
5. Property Aesthetics
Condo: Typically, within the confines of your unit you are permitted to decorate as you see fit. However, you have very little control over the exterior look of the units as that is decided collectively by the condo board.
House: You have control over both the interior and exterior look of your property. However, some houses in certain areas will have a Development Agreement registered against the properties in the area which contains certain rules that you have to consider and follow when making any changes to the property. Your lawyer will tell you if there are any such registrations on the property you are purchasing and can obtain copies of it should you wish.
All in all, there are pros and cons to both house and condo ownership. It is important that you as a buyer carefully research each option before purchasing a property. If you have any questions about home ownership or buying a property, the team of experienced lawyers at Meighen Haddad LLP are able to assist you.
DISCLAIMER: This article is written for informational purposes only and does not constitute legal advice. The views expressed are solely the authors' and should not be attributed to any other party, including Meighen Haddad LLP. If you need legal advice, please call our office at (204) 727-8461.