Four Kinds of Property Ownership

Different types real estate, four types business ownership

There are different kinds of buildings and different ways of owning a property. If you are buying a home, it is a good idea to be clear about your various options as far as the type of building and the way you could own it are concerned.

Types of Buildings and Property owners

Very few people are clear about the different kinds of property and of ownership. For instance, how many know that condos, far from being one of the newest kinds of urban housing, is a type of common interest development, which has been around in Napoleon’s time, and even in early Roman civilization?

In the United States of America, residential units are basically categorized into single family or multi family units. Residential buildings that house only one family can be owned in four different ways, depending on the amount of common interest that is shared with the people who live nearest. This interest refers to rights of legal ownership. Each type of property ownership has its own characteristics and comes with its own duties and rights, monthly charges and so on.

A simple way of understanding the four types of property ownership is to examine this common interest continuum.

The Common Interest Continuum
Four Degrees of Separation with Increasing Levels of Common Interest

Detached Single Family Residence-----------------Planned Unit Development----------------------Condominium----------------Co-operative

Detached Houses and Co-ops: Two Ends of the Spectrum

Detached houses are much more common than co-operative housing. You will find the former in every part of the country, while co-ops are generally located in the District of Columbia and New York City.

Detached Single Family Homes

The name of this kind of building is self-explanatory – a detached single family home is a separate residence meant for a single family unit. All liability for utilities costs, taxes and mortgage payments lies with the owner of a detached single family home. As far as rights are concerned, the owner may do anything he or she pleases with the building as long as no laws or construction codes are contravened. The owner is free to suit him or herself whether it is a question of pets, renting the property to someone else, or interior décor.

The owner of a detached single family home has complete freedom when it comes to the property, within legal limits. Privacy is also an advantage with this kind of housing.

All expenses are borne by the owner alone and the responsibility for fixing problems is also entirely the owner’s.

Co-ops

When it comes to a co-op, or co-operative, the whole building, which generally consists of several flats on many floors, is owned by an organized group called a co-operative corporation. The co-op corporation is formed by the owners of the individual apartments, each of whom owns shares in the corporation, rather than the apartment itself. So if you buy shares in a co-op, you will not actually own the dwelling unit you will occupy, but you have the right to live there. You will have to sign a co-operative ownership contract, and follow the co-op’s rules and agree to pay monthly fees to meet running and maintenance costs, and taxes as applicable.

A co-op is managed by a board of directors chosen by vote from among the owners of the various dwelling units. This team has various functions including the primary one of vetting prospective newcomers for membership in the co-op corporation – this is routing in a co-op building. You may find someone willing to sell you their shares in a co-op, but the board will have to approve of your inclusion in the co-op corporation before the sale can be completed.

In addition, every co-op will have certain rules with regard to the common amenities and areas of the co-op and to permitted activities.

In urban areas, co-ops are often much sought after,. There is a culture of control over who may and may not live in the co-op. co-ops often cost less on the whole, since usually state real estate transfer taxes and title searches are not required when you are buying a co-op.

Vending and purchasing of the property in question can be difficult; and you may find the rules of the co-op governing your behaviour and activities too restrictive.