Before I get into this topic let me define PUD: PUD stands for Planned Unit Development. A PUD is essentially a single family residence and the legal ownership of the home is legally defined that way. The major difference is that a PUD is part of a neighborhood, part of a larger development similar to a condo complex. You will own your home and still pay an association fee per month to maintain community areas such as parks, pools and sometimes recreation rooms. The association regulates neighborhood improvements so if you want to make major changes to your home or want to paint your house you will need the homeowners’ association’s approval. Since a PUD is basically a single family home that is also part of a larger neighborhood you are liable for your own repairs and maintaining your own homeowners insurance since you own the land and the structure.
A condo and townhouse are essentially the same thing, in terms of legal ownership there is no difference. Generally, the differences between these two terms refer to the architectural style in which they are built. Often, a condo is more of an apartment style building whereas a townhouse looks like an independent home that may or may not have attached walls to the rest of the townhouses in the community. However, in terms of legal ownership they are the same. When you purchase a condo or townhouse what you are purchasing is cubic airspace of a specific unit with an undivided interest in the common elements of the property. The common elements referring to the lobby, swimming pool, recreation area, land, etc. What you technically own is airspace, you dont actually own any land or building for that matter.
Every condo and townhouse community has a homeowners’ association and that association is responsible for maintaining the grounds, structures and systems of the community. That is the reason the association fees are pretty high. You wont need homeowners insurance though because this is part of what is covered by your association. Unlike owning a house where you may have a huge repair to do every five years, you pay monthly and the money accumulates with the association and then is used when needed to maintain the community and all of the structures. If you are looking into purchasing a condo or townhouse it is important to find out about the association. If the association is bankrupt you will have problems in the future with the value of your condo and with any repairs that the community may need.
Co-Op is short for Cooperative and is called an Own-Your-Own also. Structurally similar to a condo, like an apartment you own. A co-op is when the structrure itself is a corporation that holds title to real estate. As an owner, you own stock in that corporation and you are granted the right to occupy as a shareholder in that corporation. Co-ops like condos have a homeowners’ association that handles the community structure and grounds. The association has a monthly association fee to maintain the complex. As a shareholder (owner) of a co-op you wont need homeowners’ insurances since the association covers it. Cooperatives are common on the east coast and sometimes getting a loan for this type of real estate can be challenging in an area like Los Angeles where cooperatives are rare.
A house also called a single family home or single family residence is the simplest type of ownership. Legally called fee simple or fee simple estate. As the owner of a home you own the structure and land beneath it and have all legal rights to the property. You are responsible for all repairs since you own it all! You need to have homeowners insurance and pay for repairs the house may need. There is no larger community you are a part of and consequently no homeowners’ association to handle problems or cause problems.
When you are shopping for a home, condo, co-op or PUD know that there are FOUR costs you need to factor into your monthly overhead: mortgage payment, property taxes, homeowners’ insurance and association fee. Your mortgage payment is only the beginning!