Are Condos The Same As Apartments?


If you ever browse the property listings and wonder are condos the same as apartments? You are not alone. You might assume units within a tall, purpose-built building are condos and the ones within smaller structures are apartments, but would you be right?

Are Condos The Same As Apartments? No. An apartment building is a style of building in which someone lives. A condo is a legally defined term for a specific type of property ownership structure. In an apartment building, all units are owned by one person while in a condo building each unit can belong to an individual.

You cannot look at a building and know with 100% certainty whether it’s units are apartments or condominiums. Yes, the likelihood is that a 20 story block is going to be condos, but, without knowing how the ownership is structured, you can’t be positive.

Are Condos The Same As Apartments?

Most people use the words condo, condominium, and apartment interchangeably to describe a home which is a unit within a larger property. To make things more uncertain, there are plenty of other words in use that describe particular styles or types of single unit homes within a larger building. Some of these words or phrases are uniquely American; others are also used in other parts of the world. If you are browsing the property listings, depending on which part of the country you are looking, you might see any of the following terms:

  • Apartment
  • Condo
  • Condominium
  • Flat
  • Walk-up
  • Co-op
  • Loft
  • Studio
  • Garden apartment
  • Salon apartment
  • Basement apartment
  • Suite
  • Secondary suite
  • Maisonette
  • Penthouse

Many of these terms are specific to a particular location or are used to describe a particular sub-style of apartment or condo.  

Right now we are just going to consider two: Condo and Apartment.

What Is A Condo?

A condo is a single unit within a larger building made up of other condos. This “condominium” building is a legal model of ownership in which a non-profit organization owns and operates the common areas of the building while each unit can be individually owned. The owner of a unit also holds an interest in the homeowners association which runs the condo building.

How Do Condos Operate?

The developer who builds a condominium block is the first owner, and they create a “condominium association,” the non-profit entity which will own and manage the building and the land on which it sits.

As the units are sold, the developer continues to operate the association until a particular percentage of the units have been sold. Once this point has been reached, usually 50% of the building, the developer hands over the running of the association to the unit owners.

When someone purchases a condo, they buy the unit itself and an interest in the homeowners association which runs the condominium. This allows the condo owner to have a say in the running of the building, how homeowner association fees are saved or spent, and to suggest any changes to the rules of the complex.

Specific rules vary from building to building, so it is essential to review all documentation in relation to a condo’s HOA, as well as the monthly condo fees, before making a purchase. The majority of HOA rules are the kind of reasonable regulations you might expect, governing excessive noise and standards of unit repair and maintenance.

But there are some jaw-droppers

Would you like to own a condo in a building where the homeowners association has said:

  • No tenants were to use perfumed air freshening products.
  • Anyone who flew a flag from their balcony would incur a $100 a day fine until it was removed.
  • A tenant’s designated parking stall could not be used by a visitor, even if the tenant did not have a vehicle of their own and had given the visitor permission.

These are all genuine HOA rules which caught new owners unawares because they had not read the regulations before purchase.

If you are planning to buy a condo and use it as a rental, be especially cautious. Some HOAs specifically forbid renting out your unit. Not only that, but you should consider the fact that the rules of a homeowners association can be changed.

Property investors large and small have found themselves having to evict a tenant and sell their condo after an HOA has passed a “No Rentals” regulation.

What Is An Apartment?

An apartment is a single unit, within a larger building. This unit must be private and entirely separate from the other living areas in the property. The person who lives in an apartment is usually a tenant who pays rent to the building owner in order to live there. Consequently, you will not see apartments in the “For Sale” listings, you’ll only come across them when you rent or are considering Buying vs. Renting.

The legal details differ from state to state, but it is safe to say that a living space does not count as a legal apartment if:

  • It is located in a building which is not zoned for residential use.
  • The unit has shared bathroom facilities.
  • There are no private cooking facilities within the unit.
  • You share metered utilities with other people.
  • Your electricity enters the unit via an extension cord.
  • There is no private entrance to the unit.
  • The unit doesn’t have any windows

There can be two apartments in a building or 22. The number of units or size of the building has no bearing on whether or not it is an apartment.

How Does An Apartment Building Operate?

An apartment is owned by a single individual or a company. The usual arrangement is for either the owner or a property manager to be responsible for:

  • Repairs and maintenance of the exterior of the building, the communal areas, and inside each individual units.
  • Collecting, or ensuring the payment of, rent from the properties tenants.
  • Dealing with tenant complaints and issues.
  • Advertising vacancies in the building, as well as interviewing and signing lease agreements with a new tenant.
  • Processing and carrying out evictions.

Whoever manages the building may or may not live on the premises.

What Is The Practical Difference For Owners?

Setting aside the legal elements of ownership, the practical differences between condo ownership and apartment ownership are:

  • Autonomy: Buy a condominium unit, and you will always have a homeowners association with which to deal. It some cases this is not an issue, there are plenty of HOA’s out there that meet twice a year to rubberstamp a “business as usual” style of management, to attend to necessary paperwork and pay the bills.

Meanwhile, if you own an apartment building, aside from external restrictions such as local ordinances, you can do what you like with your apartments.

  • Scale: You can own one, or a number of condos within a building but with an apartment building you have to purchase the lot.

The Final Word

A condominium is not a type of style of home. It is a specific form of ownership model which allows a group of people to privately own a unit within a larger building while sharing the running costs and responsibilities of communal areas. A condo can be occupied by the owner, or by someone else because the residency status of the unit is not important, only the ownership.

All units in a condominium building will be condos.

Apartments, on the other hand, are usually owned by the same person who owns the rest of the building. They may be managed by the owner or a property management company, and there could be one apartment within a single family home or blocks of apartments.

You can purchase a single condo unit, but, apart from in exceptional circumstances with horribly complex legal issues, not a single apartment.

Geoff

Geoff Southworth is the creator of RealEstateInfoGuide.com, the site that helps new homeowners, investors, and homeowners-to-be successfully navigate the complex world of property ownership. Geoff is a real estate investor of 8 years has had experience as a manager of a debt-free, private real estate equity fund, as well as a Registered Nurse in Emergency Trauma and Cardiac Cath Lab Care. As a result, he has developed a unique “people first, business second” approach to real estate.

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