Freehold vs condo townhouses, explained

What you own

With a freehold townhouse you own the home and the lot it sits on, the same as a detached house, and there is no monthly condo fee. With a condo townhouse you own your unit, and a condominium corporation owns and looks after the common elements: usually the grounds, the roads and often the outside of the homes. Every owner shares the cost through a monthly maintenance fee.

What the monthly fee covers on a condo townhouse

It varies from one complex to the next. The fee often covers the roof, windows and exterior, landscaping, snow clearing, the corporation's insurance, management and a contribution to the reserve fund that pays for major repairs. Some complexes include water as well. Stacked townhouses are usually condo townhouses, and their fee can also cover an underground garage.

POTL and common-element fees on freehold townhouses

Some freehold townhouses sit on a private road. The home is still freehold, a parcel of tied land or POTL, but it is tied to a share of a common elements condominium that owns the road. You pay a smaller monthly fee, usually for the road, snow clearing, visitor parking and garbage pickup. Ask exactly what it covers, because it does not pay for your roof or windows.

Who looks after what

• Roof and windows: you on a freehold, POTL included. On a condo townhouse it is often the corporation, but check the declaration
• Driveway: you on a freehold. Usually the corporation on a condo townhouse
• Snow: you clear your own driveway and walk on a freehold. A POTL fee normally covers the private road only. Many condo townhouse complexes clear the roads, and some do driveways and walkways too
• Lawn: you on a freehold. Often the corporation on a condo townhouse, at least for the common areas

How the fee affects your mortgage

Lenders count a monthly condo fee when they qualify you, typically half of it, so a higher fee can lower the amount you are approved for. A freehold with no fee leaves more room on paper, but you carry the cost of repairs yourself. Set money aside for the roof, the furnace and the driveway.

Resale

Freehold townhouses appeal to buyers who want no monthly fee and full control over their home. Condo townhouses often cost less to buy and suit buyers who would rather not handle exterior upkeep. Both resell well when the fee is reasonable for what it covers and the complex is well kept.

What to check before you buy

• Whether the home is freehold, a POTL or a condo townhouse
• The monthly fee, exactly what it covers, and how it has changed over the last few years
• Who is responsible for the roof, windows, doors, driveway, snow and lawn
• On a condo townhouse, the reserve fund balance and any special assessment, planned or recently charged
• On a freehold, the age of the roof, furnace and windows
• Parking: the garage, the driveway and visitor parking

For a condo townhouse, and for the shared road on a POTL, most of this is in the status certificate, which your lawyer reviews before your offer goes firm.

Think in monthly cost, not just price

A cheaper townhouse with a high fee can cost more each month than a pricier one with no fee. Our monthly cost calculator adds the mortgage, any fee and property tax together so you can compare homes fairly.