How Do I Know If the Property is a Condo?

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I’m asked almost daily – “how do I know if this property is a condo or a townhome?”  If you’ve been through a condo transaction lately, you know that condominiums present financing challenges better addressed at the beginning of the transaction, as opposed to later.

For example: There’s no point writing up an offer at midnight for a buyer when this project isn’t on an approved list and the project wouldn’t qualify even if it was submitted for review.

Better to be safe than sorry! Recent changes to the condominium approval/review processes have made it is absolutely imperative that you understand what type of property you are dealing with BEFORE you move forward with listing or selling a property.

Before we discuss what you need to know to differentiate a condo from a townhome, it’s essential to understand the true description of a condo.

The definition of a Condominium: A form of ownership where units are owned by individuals but the land and common areas are owned jointly with all owners.

Sounds a lot like a townhome doesn’t it?  That’s what makes defining a condo so tricky!

So what should you do?

1. Do not accept MLS information or verbal information.  Get a copy of the legal description.

Blindly accepting what you read on the MLS listing or what the current owner says isn’t smart.  Very few agents or owners have actually READ the legal description.

2. Do NOT rely on the project name for determination.

Many projects have misleading names.  The developer names the project “Shady Pines Townhomes” so people assume that because the word “Condominium” isn’t mentioned that it’s not a condo and doesn’t require project approval.  I’ve seen this mistake made time and time again.

3. READ the legal description – Does the legal description of the unit include the lot?

If not, you probably have a condominium form of ownership.  Check the project documents.

NOTE: There is a special exemption from project approval for “Site Condominiums” defined as detached units with no attached/shared garages etc.  Site Condos are typical for only a few states.

While there are many other “hiccups” you can encounter when it comes to condo financing, these initial steps will allow you to clearly define what type of property you’re dealing with.

For a copy of our condo definition checklist, click here to download.