What is the Difference Between Apartments and Condos?

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The H.O.A. (Homeowner’s Association) can affect home ownership in numerous ways- mainly for its high cost, but also its many benefits. First we will discuss what the difference between an apartment and a condominium (condo) and then we will explain how the H.O.A. is involved.

An apartment and a condo are very similar, but primarily vary in terms of ownership and use-restrictions. While both are usually units within a larger building, the primary difference is that a condo will have an individual owner per unit, whereas the whole apartment building will all be owned by one entity such as a person or a corporation. For a renter, there is not much of a difference, but for those looking to purchase a property, a condominium may be an affordable stepping-stone to a larger, detached home. And while an apartment building has rules written into the lease that are set by the owner/manager, a condominium complex has an H.O.A. with rules set by agreement between the homeowners of each condominium.

An H.O.A., or Homeowners Association, is a small housing “government” that sets the rules and restrictions allowed in the community in which you live. As mentioned, it’s made up of the owners of the individual units so each person has a say at the HOA meetings, and an opportunity to become part of the Board that oversees the H.O.A. (Being on the Board is not always fun and games - many times you will have to settle complaints between other homeowners and act as a referee between two angry neighbors.)

H.O.A.s are not only in condominiums - some single-family communities have them as well - but they are present in every condo building to ensure some common items like maintenance and upgrades of common spaces and the exterior of the building(s). Unlike a detached home, a condo owner cannot just paint the outside of his or her home - all units must be painted and upgraded together to ensure a common, cohesive look. Also, upgrades to amenities - like a pool or a gym - have to be agreed upon by all homeowners of the complex, both for aesthetics and for cost.

Another aspect of H.O.A.s that can’t be overlooked is the monthly cost, which must be factored into total ownership costs of the house. For example, if a monthly mortgage payment is a stretch, the extra $100-500 (on average) in Homeowners’ fees can really make or break a sale. Though there are benefits to H.O.A.s, the fees are usually the least pleasant part of the experience. Some Associations even have fees over $1000 per month! These are probably the ones that provide the most benefits, but that can definitely make or break a sale if the buyer is stretching to afford the monthly mortgage payments.

However, an expensive and important aspect of H.O.A.s is their insurance for the building, common spaces, and any incidents that may arise in the common spaces. For example, if a guest of one of your neighbors falls in the back courtyard, the H.O.A. should carry liability insurance to cover the guest’s medical bills. If a fire starts in one condo and burns down the entire building, the H.O.A. should carry insurance to help defray the costs of rebuilding the entire complex.

As you can see, these differences are important to keep in mind when renting an apartment or condo, and it’s very important to review all the rules of an H.O.A. before buying a condo. Some H.O.A.'s dues may seem too high for the benefits they offer, but keep in mind that they do oversee many services and insurance for common areas. As always, do your research thoroughly and keep everything in mind when buying your own home.

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