You may have heard some terms floating around when it comes to buying a townhouse or a condominium apartment. What does “Freehold” versus “Condo” mean, and how will it affect what your monthly costs are?
Let’s do a little Real Estate 101 and learn what these different terms mean to you and your home buying experience.
Freehold Ownership
When you own a freehold home, this means you not only own the interior of the home, but you are also the owner of the exterior of the building and the land surrounding it.
Most detached and semi-detached homes are freehold: the owner of the house is responsible for everything that is on the property because they purchased the land in addition to the house itself. But when it comes to townhouses, every complex can different and there are different pros and cons.
A townhouse is considered freehold when every homeowner in the complex owns the land that their unit is sitting on.
PROS:
- There are no monthly condo fees to pay out
- The homeowner can do anything they want to the exterior of their unit or their parcel of land
- Freeholds tend to be a more valuable investment over time
CONS:
- Freehold homes tend to be more expensive up front because you’re buying the land
- You’re responsible for the maintenance and repairs to the outside of your property
- You can’t be sure if your neighbours will upkeep their property as nicely as you will
Condominium Ownership
While most people hear the word “condo” and think of an apartment style unit, that’s not always the case. Some townhouses (and even certain detached homes) are considered condos too.
When you buy a condo, you generally own the interior aspects of your unit. Whatever you want to do inside your property is pretty much up to you.
But the exterior of the property—the communal spaces and the land your home is built upon—is managed by a Condominium Corporation. You will be required to pay this Condo Corp a fee every month (i.e. condo fees) to maintain these exterior spaces.
PRO TIP: When considering purchasing a condo, have your lawyer examine the Status Certificate of the Condo Corporation to make sure they are in good standing with fees and allocation of the condo’s funds.
PROS:
- Because you’re not buying the land condos tend to be priced lower than freehold homes, making them a great option for first-time homebuyers
- You don’t need to worry about expensive exterior maintenance and repairs like roofing or siding issues
- Some condo corporations are responsible for things like plumbing and hidden wiring in the walls (double check what’s included in your condo fees)
- You get access to amenities maintained by the condo corporation (e.g. fitness rooms, pools, playgrounds, common areas)
- You can bet that the neighbourhood will be nicely maintained and everyone’s exterior will be attractive since it’s being maintained by one entity
CONS:
- Although buying a condo is generally less expensive up front, you will pay a fee every month for these amenities and services; it may end up being more expensive over the long term
- You need to pay these condo fees whether you use the amenities or not
- Some condo corporations have strict rules about the exterior of your home and what you can and can’t do with it
- You are relying on the condo corporation to effectively manage the funds they collect
Common Elements Fee/Road Fee
While you search for a home, you may occasionally find a freehold townhouse complex that has a small monthly common elements or road fee. Your common elements fee is paid monthly to the neighbourhood complex to look after things like plowing snow, conducting road work or maintaining the complex’s playgrounds etc.
This fee is generally not as expensive as most condo fees are, and you do in fact own the land your home is built upon. But it’s a small fee that you’ll be required to pay in order to maintain your townhouse complex’s general upkeep.
Your REALTOR® should be able to tell you specifically what is included with your common elements fee should there be one with your purchase.
As always, your real estate agent will keep you in the loop with the type of property they’re showing you. They will give you an idea of what any associated fees may come with it.
Be Informed!
Consider your options: paying more up-front for a freehold property, or paying less for the condo unit and then paying a regular fee each month. By knowing what your monthly costs will be up-front, you won’t have any surprises later on.
Contact The Kate Broddick Team to start your search for your next condo or freehold home today!
