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The Difference between a Condo, HOA, and Co-op

December 26, 2017


Maybe you’ve heard of all of these, maybe you haven’t. These words are often used interchangeably, and it’s probably because people are confused about them! The bottom line is that a condominium, homeowner’s association (HOA), and co-operative are each different forms of home ownership and/or governance. And, they all charge you fees.



Here’s a break down of each form:


Condo/condominium: When you live in a condo, you are the sole owner of your unit, AND you are a joint owner of the rest of the condo building and grounds. You, along with all the other joint owners, are responsible for the care and upkeep of the building and common areas. Now, unless it’s a very small, self-managed condo association, that doesn’t mean you will be the one vacuuming the hallway carpet or cleaning the pool. But it does mean you, along with other owners, are financially responsible for all the maintenance and service deemed necessary by the condo board (a group of condo owners that you get to help elect). Most likely, the condo board will hire a management company to care for the building and grounds, using the funds from your condo fees. The board also makes rules (with the input of all the owners) about what is and isn’t acceptable inside the community. Those can refer to renovations, exterior décor, pets, quiet hours, etc.


Condos in our market usually take the form of multilevel buildings, but sometimes you will find townhouse-style-condos. In fact, single-family homes can technically be condos, too! (As you can imagine, those are incredibly rare.)



HOA/home owner’s association: Living in an HOA feels very similar to living in a condo. The major difference is that you don’t legally own any share of the common areas; you only own your home and your lot. But, together with the rest of the homeowners in your HOA, you are still responsible for common areas and have to follow HOA rules. However, these rules are usually less stringent than the rules in a condo association… and that is one of the key differences between a condo and an HOA.


Another difference is the amount and kind of property a homebuyer is responsible for, in the eyes of the mortgage lender. For a condo, your mortgage lender must also take into account the risk of lending on all the common areas included in your condo ownership, as opposed to just one piece of residential property.


HOAs will usually be a community of single-family homes or townhouses (and they can include both at the same time). In fact, a given property can be in both a condo and an HOA, at the same time! *gasp!*



Co-op/co-operative: Co-ops are always multi-unit buildings, not townhouses or single-family homes. They are not very common in Virginia, but they are in DC. That’s because the co-op structure of home ownership existed before condos were created.


If you buy in a co-op building, instead of owning your unit by yourself and jointly owning everything else, all the co-op residents own everything! The unit owners are all shareholders in a corporation together. For all intents and purposes, the unit you buy is yours. But, legally, it looks more like an assignment to (or lease on) that specific unit. There are three main practical differences between a co-op and a condo or HOA:


(1) The fees might be higher for a co-op than in a similar building that is a condo. This is mostly because co-op owners pay their real estate taxes and hazard insurance through their co-op fees, instead of on their own. (This means you don’t have to include them in your monthly mortgage payment.)


The fees might also be higher if there is an underlying mortgage on the co-op building. That means the co-op is still repaying the loan it took out a loan to buy the building in the first place. (Wait, say what?!)


I know this part is complicated. Think about it this way: There are two layers of purchases. First, the co-op made the original purchase of the land and building. It’s possible the co-op is still paying off the loan from this purchase. Second, the residents/owners in the co-op individually purchased their “share” of the co-op, either at the creation of the co-op or from a previous shareholder.


(2) Not all mortgage lenders are equipped to give you a mortgage loan for buying in a co-op. So, it might be more difficult for you to get a loan.


(3) When you buy in a co-op, the existing co-op board has a chance to interview you, and decide if they want you to be a fellow shareholder in the co-op (and therefore if you get to buy the property).



So what’s with the fees?


The fees will usually be charged on a monthly basis, and they cover expenses such as: Staff salaries (cleaning staff, front office staff, security, building engineer, manager), maintenance (pool, parking garage, interior paint and carpet, landscaping), and reserve funds (for future roof replacement, damage from natural disaster, savings in case any residents default on future fees).


The fees can increase over time, if the board decides this is necessary (with input from all owners). And, there can be special assessments, which means the board realized it needs more money to cover something specific: for example, window replacements for the building and all of the units.



Do I have to pay them?


Yes, you have to pay them. You are contractually obligated to pay these fees, forever… until you no longer own the property. If you don’t pay them, you are in default, and the board will take steps to get the money it is owed. They may impose extra fees, turn off your access to amenities, send debt collectors after you, and even sue you.



Don’t let this scare you out of buying in a condo, HOA, or co-op. Virginia, DC, and Maryland, you will always have a chance to look at the condo/HOA/co-op documents before you officially own the property. You will typically have a 3-day “right of rescission” once you receive the documents, and if you see something that is a deal-breaker (like weak finances), you have the right to walk away from the sale.


Since I haven’t mentioned them yet, remember that there are definitely perks to owning a unit in a condo, HOA, or co-op! You often have access to useful amenities, like a pool and a gym. You might have a security system built into the common grounds, a front office to collect your packages for you, and maintenance staff to take care of the lawn or shovel the sidewalks when it snows. You might also be off the hook for major expenses you would otherwise have to pay for on your own, like repairing structural damage after a natural disaster, or replacing the roof when it gets old.


No matter whether you decide to buy in a condo, HOA, co-op, or none of the above, there will always be pros and cons to consider. You have to understand your own priorities to determine what is the best decision for you. I hope this guide helps you do that!


Thanks for reading,





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Louisa Gilson Davis is licensed in Virginia, Washington, D.C., and Maryland


3001 Washington Blvd.

Arlington, VA 22201