By Deborah Goonan, Independent American Communities
Buyer beware of real estate industry news releases that only present part of the story about affordability of townhouses. Here’s an example.
…lots of people also need an affordable price tag to be able to buy.
Enter the townhouse. These attached single-family homes account for about 12 percent of all new single-family construction starts, according to the NAHB. The share is expected to rise.
When zoning prohibits a single-family detached home from being constructed on a small lot, townhomes, which average about 12 percent less per square foot, are prevalent, says Tracy Cross of consulting firm Tracy Cross & Associates, Schaumburg, Illinois.
Take note of the expert consulted for the article: Tracy Cross & Associates , a consulting firm serving the residential development industry – home builders.
So you need to take any information that follows with a grain of salt. Be consumer savvy and have some healthy skepticism.
The article linked above barely touches the surface when it comes to factors to consider when purchasing a townhouse, among them, whether or not homeownership is structured as a condominium or as part of a homeowners association, and concerns about firewalls and shared roof surfaces.
Because the majority of real estate articles are written for the home building industry, issues of importance to consumers are often glossed over.
Here’s a list of seven factors for consumers to consider.
1. How are the walls constructed, especially the walls that are shared with neighboring townhouses?
Ask about the existence of firewalls – what materials are used to prevent the spread of smoke and fire from one townhouse to another? Metal? Concrete blocks? How are joints sealed to prevent smoke from seeping in between concrete blocks or wall board? Do the walls extend all the way into the attic and down to the foundation? Does construction meet current local fire safety codes?
If not, will you be required to pay for expensive fire safety modifications after you purchase the house?
A reputable home inspector should be able to investigate the presence or absence of firewalls that meet code requirements. Keep in mind that your home insurance rates will also vary based on the level of fire protection. The less firewall protection you have, the higher your insurance rates.
Find out about soundproofing between townhouses. Is insulating material used to reduce sound transmission? Are plumbing supply and waste lines securely strapped to prevent vibration? Or will you hear your neighbors talking, their dog barking, the sound of running water every time someone takes a shower or flushes the toilet?
2. How much do you really own?
It’s critical to understand whether the townhouse is part of a condominium association, a homeowners association, or no mandatory owners association. The latter will likely only apply to older townhouses constructed prior to the 1990s.
In a condominium association, you generally own from the interior walls inward. You do not own the front and back yard, the driveway, or the exterior of the house. You have limited ownership of patios, decks, and porches, with exclusive rights to use these spaces, but limited control over precisely how you can use, decorate and modify these spaces. You have no direct control over the design and maintenance of landscape, driveways, and walkways attached to your townhouse.
As a buyer you may be enticed by the sales pitch that you won’t have to maintain exterior siding, mow the lawn, or remove snow in the winter. However, if the association fails to maintain according to your expected standards, there is little you can do. And you may still be legally responsible for maintaining and even replacing portions of the exterior, such as doors and windows. That’s usually in the fine print of the Declaration of Condominium, the meat of governing documents that define the agreement between condo owners and the association.
Single family townhouses with HOA
In a homeowners association (HOA), you own the exterior of your home and the lot attached to it. That gives you somewhat more control than in a condo association, but not as much as you think.
In an HOA, you will be legally obliged to adhere to Covenants, Conditions, and Restrictions (CC&Rs). These will determine if, when, and how you can maintain or improve any exterior portions of your home, as well as the attached lot. Because the homes are attached, CC&Rs for townhouses tend to be more restrictive than they are for detached single family homes.
Also common in townhouse HOAs – mandatory shared maintenance agreements for lawn and tree care and snow removal. If the HOA hires competent contractors, you may find this convenient. But if the HOA chosen contractor’s work is unsatisfactory – or unreasonably expensive – you will not have the ability to opt out, even though you technically own the property that is being maintained.
Older townhouses with no HOA
You have separate utilities and you are completely responsible for exterior and landscape maintenance, but you are in control of when and how to take care of your home, so long as your action or inaction does not directly impact your neighbors.
You may have to work with neighbors of attached homes for certain exterior improvements, depending on the construction of the homes. You will have to comply with local building codes and obtain permits for any improvements to shared structural walls. Depending on the age and location of the townhouse, you may also be subject to requirements of a historical or community improvement district.
Find out about sidewalks and public right of way maintenance requirements, especially in urban locations. Also consider if the home has adequate and effective rain gutters and storm drainage, which can be especially tricky with attached homes.
The remaining considerations apply to townhouses that are part of a mandatory ownership association.
3. How much privacy will you have in exterior spaces?
Are there dividing walls, shared privacy screens, fences, or nothing at all? Will you be staring directly at your neighbors from your rear deck? Or will your rear yard abut a busy road, a drainage ditch, or a wooded area? Is the area screened off for safety and noise reduction?
In a condo association, you must be willing to live with conditions as is.
In an HOA, if there’s not enough privacy for your tastes, will the association allow you to add a fence or hedge or other landscape improvements? Make sure you get the answer to this request in writing, as associations sometimes change their minds by the time you close on the sale of the home!
4. What else will you share with your neighbors?
Find out about plumbing for the townhouse. Does each unit have its own supply and waste lines leading from the home out to the curb? Or are there shared supply and waste lines behind the walls that are maintained by the association? Will you have your own water meter?
Are heating and cooling systems separate for each townhouse, or are there shared components? Is exterior electrical supply for lighting and outlets wired to each unit separately, or to a common circuit? These are questions you need to ask and the verify with your home inspector.
If you share any part of utility lines, you will be sharing costs with your neighbors, and this will also be reflected in your assessment payments.
Does the association have a contract with a particular telecommunications and internet service provider? If you prefer a satellite service, will you still have to pay for your share of that service, even if you do not use it? Will the association give you a hard time about where you can locate the satellite dish? (They cannot forbid you to have one, but the association can somewhat limit where you place it.)
5. Your legal obligations to pay for common maintenance
In many townhouse associations – regardless of the form of association ownership – you will also be responsible for paying for maintenance of private roads, parking areas, and common green spaces or recreational amenities (such as a playground or a pool), whether you use them or not. All of this expense is rolled up into your mandatory assessments.
Be aware that, if your association won’t attend to maintenance issues, you do not have the same remedies as a tenant. Specifically, you cannot withhold payment of assessments or hire your own maintenance contractors and then reduce assessment payments to offset your costs.
If you opt to withhold payment of assessments, the association can and will place a lien on your property, and it can collect on that lien with a financial judgment or even foreclosure of your home. The HOA foreclosure process in many states is rapid – often within 90-120 days.
6. Is each townhouse physically separated from neighboring townhouses?
In a condominium association, there is usually no physical separation along the roofline or exterior siding. But the same can be true for townhouses in a homeowners association, even though you may be responsible for portions of exterior maintenance.
When it comes time to replace the roof, clean out the rain gutters, or repaint siding – if that’s your individual responsibility – are there clear demarcations of the boundaries of your townhouse, all the way from the foundation to the roof? What about the driveway? Is it shared with your neighbor, or is there a grassy island in between? Or is there a shared concrete curb? If there is no clear boundary, you could have a maintenance headache – or even nightmare – on your hands in the future.
7. Is the townhouse really more affordable than a detached home?
When you add up property taxes and insurance, plus assessments for common maintenance, you may find that owning a detached single family home – especially one with an HOA – is more affordable than you think. Be sure to add in costs for desired townhouse improvements and long-term maintenance of exterior maintenance that is not paid for by your assessments.
Do the math! In a side by side comparison. Is the townhouse really more affordable?