Whether you already have absolute clarity about which types of buildings and ownership do and don't work for you, or you remain open until the end of your house hunt, you should at least know what these various designations mean. It might save you from summarily rejecting -- or not even looking at -- the property of your dreams because you weren't clear on the difference between a detached home and a planned unit development.

Building & Ownership Types: Four Degrees of Separation

When you think of a condominium, you might think of an uber-modern, metropolitan high-rise a la Trump Towers. However, the common interest development (of which condos are one sort) was one of the first forms of property ownership respected in ancient Roman civilization, and was even written into the Napoleonic Code of 1804.

In all of America, all housing units are classified as either single family or multi-family, and there are only four different ownership boxes into which single family residences can be classified. These are based on the degree of "common interest" you share with your neighbours, if any. (Not interest as in hobbies, but interest as in legal ownership rights.) Every building you run into will fall into one of these four boxes, and the classification of the unit you choose will have a major impact on your rights and obligations, as well as your monthly budget. Once you understand the degrees of separation -- or common interest -- the building types make a lot more sense.

The Common Interest Continuum
Four Degrees of Separation

INCREASING SHARED OWNERSHIP INTERESTS
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Detached Single Family Residence * Planned Unit Development * Condominium * Co-operative

The Two Extremes: Detached and Co-Ops

At the far ends of the continuum are detached single family residences and co-operatives. Consistent with their extreme natures, detached homes are found everywhere and co-ops are found infrequently except in NYC and the District of Columbia.

Detached Single Family Home
A detached single family home is exactly what it sounds like -- a single building with everything within the four exterior walls intended for one family on a lot separate from other homes. When you purchase a detached home, you are solely responsible for paying your mortgage, property taxes, and utilities. You also bear all responsibility for insuring, maintaining and repairing your property -- the home and the lot and everything on it. Other than local laws and building codes, nothing stops you from doing whatever you want to your place, inside and out. If you want to paint your home fluorescent green with purple stars, nothing but the boundaries of good taste (and the cries of outrage from your neighbours) will stop you. Same with having pets and renting your place out to a roommate or a tenant -- you are the mistress of the entire domain, so you may do as you please.

Pros: It's all you. You have the freedom to do as you choose with your property and have more privacy and fewer neighbour issues than if you shared walls with someone.

Cons: It's all you. If the pipes burst, the roof leaks, or the tree's roots grow into your septic system, there is no property manager or association to which you can turn for help. (There are inexpensive home warranty plans, though, that can minimize some of the risks of big repair costs.)

Co-operatives
In a co-operative, or "co-op," a corporation owns the entire property, which is usually a building of apartments (also called "co-op"s) and the land beneath them. (Co-ops can actually be made up of any type of building, but nine times out of ten, a co-op is a high-rise building.) This corporation's members are the owners of the individual apartments or units, hence, the company is known as a "co-operative corporation" and the building and units are called co-operatives. Instead of "buying" a residential unit in the "co-op," an individual must buy shares of stock or membership shares in the corporation. When you buy shares in a co-op, you obtain the exclusive right to use your particular living unit through a co-operative ownership contract. This contract -- between the buyer and the corporation -- binds the owner to comply with the bylaws of the co-operative, to pay the co-op's monthly fees for operating and maintaining the building, and to pay the buyer's proportional share of the building's property taxes.

Each co-op has an elected board of directors, comprised of owners who reside in the building. The board is responsible for managing the affairs of the co-operative, supervising the property management company and, most importantly, for reviewing the applications of new owner/residents. The requirement of board or owner approval is one of the most unique characteristics of a co-operative. Even if the seller has agreed to sell you the unit, the board must review and approve your application and your financial ability to handle the responsibilities of membership in the co-operative in order for you to be allowed to buy a co-op unit.

Also, co-ops generally have rules governing uses of common areas like elevators and hallways, and governing your ability to do things which might affect your neighbors, like playing music, altering your unit, keeping pets, and renting out your unit.

Pros: Many of the most coveted, classic buildings in urban locales are co-ops. Think Fifth Avenue, NYC. This is a remnant of the owners' desire, historically, to have control over who can and can't buy and live in the building. Closing costs are usually lower than for the sale of other forms of property, because co-op sales don't generally incur government real estate transfer taxes or require full title searches of the public records.

Cons: The Board approval requirement can restrict your ability to buy and sell. Less privacy and a somewhat communal living atmosphere with rules and regulations impact how you live and use your property.

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