For many years, condo developers were hesitant to build in Colorado due to fear of litigation. Colorado’s current construction-defects law scared many developers away, but there has recently been a slow trickle of builders who are ready to take on the challenge. The Denver metro area is seeing a modest comeback and the rest of the state is also poised for growth in this area. For those with smaller budgets and fewer resources, purchasing a condo or townhome is a great alternative to the traditional single family home.
What is a Condominium?
Many people think of a condominium as an architectural term—an apartment unit that can be owned versus just rented. In reality, a condo is a legal concept that defines precisely what you own by yourself and what you own in common with other people. Condos, townhomes, and cooperative apartments all possess some type of shared responsibilities and expenses, and less control compared to the traditional single home type of ownership.
In most cases, when you buy unit in a condo development, you get varying levels of ownership and usage rights. Usually you have:
● exclusive ownership of all the interior spaces
● common ownership of everything else
● exclusive usage (although not ownership) of things like your patio and parking place
● limited usage of items that common land, such as HVAC units
● restricted usage of plumbing and wiring
Common elements range from the structural components of the building, your front door along with your windows, and the common areas (like hallways and recreational facilities). Plumbing, electrical and phone wiring, and HVAC systems will often be part of the common elements, even if all the parts are inside your four walls. All owners in the project own the common elements, together. Technically, any common element may be used by any condo owner in the development, since they are part-owners. Realistically, though, some common elements are specified as exclusive usage or sometimes semi-restricted usage. These would be things that are truly useful just to you, like your balcony, an assigned parking place, or a locker in a health club. It would be unfair to allow other owners the usage of those areas. Other things are defined as restricted usage, such as plumbing and wiring.
Every condo development has a condominium association. It is the governing and enforcement body of the community. All unit owners automatically become members of the condo association.
What is a Townhome?
The townhome, occasionally referred to as a rowhouse or townhouse, combines features of both single family ownership and condo ownership. Just like a stand-alone home, ownership of a townhome includes both the dwelling and the piece of land on which it is built. It is like a condo because there are shared elements, but unlike a condo because there is no shared ownership. The one thing that defines a townhome is a common wall that connects it to another townhome. Think of two traditional houses on small lots, but smashed up tightly against each other so there are no side yards—just a wall they share in common. This common wall, known as a party wall, runs the entire length of the adjoining homes.
Individuals own their unit, including the outside walls and roof, and the land on which the unit is constructed. They also own the portion of the party wall built on their land, and they have easement rights in the portion built on the neighbor’s land. An easement is a right to use land without actually owning or renting it.
There may be other jointly owned common elements in a town-home development, such as sidewalks, driveways, and fences between homes. These are treated just like the party walls. Your neighbor cannot dig up his or her half of the driveway in order to plant pansies.
Sometimes townhome communities will have areas shared by every-body—much like a condo—owned by a separate homeowners association. In a condo project with twenty units, each person owns one-twentieth of the common areas. A townhome owner does not own any of the common areas—the homeowners association does.
The rising price of single family homes in Colorado is leading many to consider purchasing a condo or townhome. With developers slowly starting to build again in Colorado, this could be an excellent option for budget-minded buyers.