by Barbara Strapp Nelson, Esq.

Condos, co-ops, PUDs, townhouses, duplexes. What’s the difference? Sometimes various forms of ownership can become a bit confusing. But once you sort through them, they are readily understandable.

Condominiums and cooperatives are distinct forms of home ownership. Planned Unit Developments (PUDs for short) involve independent homes which happen to share some common facilities. Townhouses and duplexes are merely the physical structure of a home. Except for co-ops, all involve holding title in fee simple.

Condominiums – or condos for short – are a common form of home ownership in New Jersey. According to State law (NJSA 46:8B-3), a “Condominium” is a “form of ownership of real property under a master deed providing for ownership by one or more owners of units of improvements together with an undivided interest in common elements appurtenant to each such unit.” This means that each individual unit owner owns his/her independent living unit as well as an interest in the underlying land, the exterior of the building in which the unit is situated, and other improvements, areas, equipment and facilities intended for the common use of all the other unit owners. In effect, each condo owner holds title to his/her individual unit and shares title with the other owners of the remaining shared land and facilities. All of this is set forth in a Master Deed which describes and identifies these areas and is recorded to establish the condominium development.

Co-operatives, on the other hand, are similar to long term leases. In fact, each “unit owner” acquires a long term leasehold interest (a proprietary lease) in their particular unit. The underlying land and the structure containing the units are owned by a co-operative housing corporation. The “unit owner” acquires shares of stock in the Co-op along with his lease. The lease and stock are non-severable. One cannot be owned without the other.

Condo owners hold title as fee simple, and their unit is separately assessed for real estate tax purposes. Co-op owners do not acquire fee simple interest and the unit is not assessed separately. Rather, the co-operative corporation is assessed and pays the real estate taxes. The co-op owners are then charged for their share of such taxes.

Planned Unit Developments, or PUDs, involve fee simple ownership of a home, situated within a group of houses or townhouses, which share some common land and/or facilities. The common ownership may apply to detention basins, recreational facilities, a clubhouse, etc. The way in which the common facilities are administered is usually set forth in a Declaration of Covenants and Restrictions, which is recorded and establishes the PUD.

Condos, co-ops and PUDs, all involve common or shared elements and facilities. As a result, each involves a homeowner or unit owner association which are generally comprised of the homeowners to provide for the management of those common areas and facilities.

Townhouses and duplexes, while they can be part of a condominium or PUD, are constructed to be self-contained independent living units which may involve a shared or common wall. Clearly this is the case with duplexes. In such instances, each side of the duplex is independently owned with either cross-easements to share the common wall with a boundary line running through it.

Whether you are considering purchasing a condo, co-op or PUD, each has its benefits. What’s important is that you are aware of what type of ownership you are acquiring.

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