What is the Difference Between Apartments and Condos?

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The HOA (Homeowners Association) can affect home ownership in numerous ways—mainly through monthly dues and rules, but also through important benefits like shared maintenance and insurance. First we will discuss what the difference is between an apartment and a condominium (condo) and then we will explain how the HOA is involved.

An apartment and a condo are very similar, but primarily vary in terms of ownership and use restrictions. While both are usually units within a larger building, the primary difference is that a condo will have an individual owner per unit, whereas the whole apartment building will all be owned by one entity such as a person or a corporation. Another simple way to remember it is: a condo is a form of ownership, while an apartment is typically a rental (even if the buildings look identical).

For a renter, there is not much of a difference, but for those looking to purchase a property, a condominium may be an affordable stepping-stone to a larger, detached home. Day-to-day renting can feel similar, but condo rentals often come with HOA rules (parking, pets, noise, move-in procedures) and the experience can vary depending on the individual owner and the association.

And while an apartment building has rules written into the lease that are set by the owner/manager, a condominium complex has an HOA with rules set by agreement between the homeowners of each condominium. Those rules are typically laid out in the community’s governing documents and enforced by the board/management on behalf of the owners.

An HOA, or Homeowners Association, is a small housing “government” that sets the rules and restrictions allowed in the community in which you live. As mentioned, it’s made up of the owners of the individual units so each person has a say at the HOA meetings, and an opportunity to become part of the Board that oversees the HOA. (Being on the Board is not always fun and games—many times you will have to settle complaints between other homeowners and act as a referee between two angry neighbors.)

HOAs are not only in condominiums—some single-family communities have them as well—but they are very common in condo buildings and typically handle shared responsibilities like common-area maintenance, long-term planning, and building-wide decisions (exact responsibilities depend on the governing documents).

Unlike a detached home, a condo owner cannot just paint the outside of his or her home—all units must be painted and upgraded together to ensure a common, cohesive look.

Also, upgrades to amenities—like a pool or a gym—have to be agreed upon by all homeowners of the complex, both for aesthetics and for cost. In practice, many upgrades run through a budgeting process and board approval, and owners may vote on major projects depending on the community’s rules.

Another aspect of HOAs that can’t be overlooked is the monthly cost, which must be factored into total ownership costs of the home. For example, if a monthly mortgage payment is a stretch, HOA dues can really make or break a sale. Fees can be much lower or much higher depending on the community. Recent national survey data shows a wide range, with many households paying under $50 per month and many others paying over $500.

Though there are benefits to HOAs, the fees are usually the least pleasant part of the experience.

Some Associations even have fees over $1,000 per month. These are often communities with extensive amenities, staffing, higher insurance costs, or major maintenance obligations, and they can definitely make or break a sale if the buyer is stretching to afford the monthly mortgage payments.

However, an expensive and important aspect of HOAs is their insurance for the building, common spaces, and any incidents that may arise in the common spaces. For example, if a guest of one of your neighbors falls in the back courtyard, the HOA should carry liability insurance to cover the guest’s medical bills. If a fire starts in one condo and burns down the entire building, the HOA should carry insurance to help defray the costs of rebuilding the entire complex.

Condo communities often carry a master insurance policy that covers the building structure and common areas, while unit owners commonly need their own condo policy (often called HO-6) to cover personal belongings, liability, and certain interior items. Coverage depends on the master policy type and what the HOA is responsible for versus what the unit owner is responsible for.

One more practical point for buyers: lenders may review the condo’s finances, insurance, repairs, and special assessments. Projects with major deferred maintenance or ongoing special assessments can affect financing and buyer demand.

As you can see, these differences are important to keep in mind when renting an apartment or condo, and it’s very important to review all the rules of an HOA before buying a condo. In addition to the rules, it’s smart to review the budget, reserves, insurance summary, and any pending special assessments so buyers understand the true monthly cost and risk.

As always, do your research thoroughly and keep everything in mind when buying your own home.