On the surface there does not seem to be much difference. Both can have an association that manages the properties, they both have dues associated, and they both have common areas....in fact, many people in the real estate and lending industry commonly mistake one for the other.
A simple mistake, but it can have huge consequences! In the lending world, a condominium is a very unique animal, and is treated differently than a townhome. So much so, that the FHA has a separate list of approved condos. If the condo you are interested in purchasing is not on this list, it can take 60 days to get it added...a long time frame considering normally purchase agreements are 30 to 45 days in this market.
Alright, so what is the difference? The difference lies in the type of ownership:
A Condominium owner will own his or her personal unit, plus a percentage of the ground underneath, along with a percentage of the common grounds and amenities.
A Townhouse buyer will own his or her personal unit, plus it's roof and the ground underneath it.
So while both properties can have a HOA, and common areas, how the owner holds title to each unit is the key.
So if you have been looking around, and are interested in either of these types of properties, ask your lender and/or realtor to do a little research into the property before an offer goes in. The legal description will usually let you know what type of property you are looking at. We are always willing to share how we get this info if you need some help!