One issue that has cropped-up often throughout the time I’ve been a Mortgage Lender (and continues to do so routinely) surrounds the question …
Is the property I’m purchasing really a Condominium … or is it a Townhome?
Just last night, the question came up one more time. My client, who had been told they were purchasing a Townhome, is in fact buying a Condominium.
The Legal Description of the property proves it is a Condominium. The tax Permanent Index Number (PIN) shows the property is a Condominium. Note: They signed their Sales Contract before they talked to me.
As you can guess, my Borrower is not very happy …
Calls and emails flew back and forth all night between my Borrower and myself regarding this issue. Question after question was raised.
But no amount of talk, frustration, or wishing things were different will change fact. The Borrower has contracted to buy a Condominium … even if they thought differently. Facts and legal documentation don’t lie. (For additional info, please read my post: How to Determine if You’re Viewing a Condominium or a Townhome)
When the Developer platted the property they have contracted for, they legally platted the development as a Condominium Project. Within a Condominium Project the land is “common land”. The land on which the Condominium is built is NOT OWNED by the individual Condo owner.
What distinguishes a Condominium from a Townhome is not building design.
Let me say that again …
What distinguishes a Condominium from a Townhome is NOT the design of the building. Rather, it is the ownership rights of the land found underneath the building.
In a true Townhome, the land underneath the building is separately divided and owned by each individual Townhome Unit owner. Pretty much the opposite of Condominium ownership.
I strongly suggest: Everyone considering the purchase of a Chicago-area Condominium or Townhome should personally take the time to:
- Obtain and Read the Legal Description of the property they are thinking of buying
- Thoroughly investigate the type of ownership that will be received via the purchase of the property they are considering
- Do so PRIOR to signing a Contract
Why does it matter? Condominium Associations can be, and usually are, more restrictive on rules and regulations as they pertain to use of the property. Restrictive to the point that a property’s marketability and “lendability” can be affected.
So it’s very important that you take the time to perform this research. Get the facts you need to make an educated and informed choice regarding your property purchase. You don’t want unwelcome surprises when you go to finance your Chicago-area purchase …
* Hoping to Buy, Construct, or Refinance a Condominium, Townhome or Single-Family Home in Will County or elsewhere in the Chicago area? Contact Me today! I’ll put my 37 years of Mortgage experience and expertise hard to work on your behalf.
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