Owning a Condo Versus Owning a Townhouse -
What's the Difference?
A question often asked by new owners of a unit within a common interest community in Pennsylvania is "What exactly do we own?" Since ownership within a common interest community is not the most traditional form of home ownership in Pennsylvania (i.e., owning a single-family home on a parcel of real estate not within or regulated by an association), this is not an uncommon question.
The purpose of this article is to outline and distinguish the difference in ownership interest in Pennsylvania from a unit within a condominium association created pursuant to the Uniform Condominium Act, 68 Pa.C.S. 3101, et seq. (herein after referred to as the "UCA"), and a unit within a planned community, otherwise known as a homeowners' association, created pursuant to the Uniform Planned Community Act, 68 Pa.C.S. 5101, et seq. (hereinafter referred to as the "UPCA").
From an historical perspective, the UCA and the UPCA were created to serve different purposes and functions. The UCA is geared to stacked or apartment-style units, whereas the UPCA is geared more to encompass a variety of mixed-use units, from single-family homes on parcels of real estate to attached units, such as a block of townhouses. While the UCA and the UPCA have identical wording in many of their provisions, which makes it difficult to distinguish the two Acts, one of the most fundamental differences concerns ownership interest.
Under the UCA, a “condominium” is defined as:
Real estate, portions of which are designated for separate ownership, and the remainder of which is designated for common ownership solely by the owners of those portions. Real estate is not a condominium unless the undivided interests in the common elements are vested in the unit owners.
Consequently, based upon the above, an owner of a unit within a condominium association owns fee simple title to his or her unit, together with an undivided percentage interest in the common elements, which are all of the portions of a condominium other than the individual units. With specific regard to the unit itself, the boundaries are generally the floors, ceilings and walls of the unit. Therefore, an owner of a unit within a condominium association owns the interior portion of his or her unit only and not the exterior portion of the unit, such as the parcel of real estate, roof, exterior walls, sidewalk, etc., etc.
By contrast, under the UPCA, a “planned community” is defined as:
Real estate with respect to which a person, by virtue of ownership of an interest in any portion of the real estate, is or may become obligated by covenant, easement or agreement imposed on the owner’s interest to pay any amount for real property taxes, insurance, maintenance, repair, improvement, management, administration or regulation of any part of the real estate other than the portion or interest owned solely by the person. The term excludes a cooperative and a condominium, but a condominium or cooperative may be part of a planned community. For purposes of this definition, “ownership” includes holding a leasehold interest of more than 20 years, including renewal options, in real estate. The terms include nonresidential campground communities.
Consequently, based upon the above, an owner of a unit within a homeowners' association owns fee simple title to his or her unit, together with a percentage membership interest in the entire homeowners’ association. The homeowners’ association, in turn, owns fee simple title to all of the common elements, which are all of the portions of the association other than the individual units. With specific regard to the unit itself, unlike a unit within a condominium association, the boundaries are generally the interior and exterior portions of the unit, including, but not limited to, the parcel of real estate. This is the most fundamental difference between owning a unit within a condominium association and owning a unit within a homeowners’ association.
If you would care to discuss the above in detail, please call me at 610-323-2800 or email me at email@example.com. Also, please watch OWM's December 2012 Legal Talk program regarding Rights and Responsibilities of Condo and Townhouse Unit Owners on our website here.
David A. Megay, Esq. speaking at SCORE Business Planning Seminars on 4/22/13, 9/9/13 and 11/4/13 (contact SCORE at 610-327-2673).
Kathleen M. Martin, Esq., and James C. Kovaleski, Esq., presenting at the Pennsylvania Bar Institute 14th Annual Estate and Elder Law Symposium on 2/20/13 (contact PBI at 1-800-247-4724).
Kathleen M. Martin, Esq., presenting at the Pennsylvania Bar Institute's “Understanding the Basics of Elder Law” on 3/14/13 (contact PBI at 1-800-247-4724).
Watch Legal Talk, brought to you by OWM, on PCTV, Tuesdays at 8:30 on Channel 28, and Thursdays at 9:30 p.m. on Channel 98, or on our website at www.owmlaw.com/legal_talk/legal_talk.php.
Read Legal Ease every first and third Sunday in the Pottstown Mercury.