Freehold Versus Condo Townhouse

What’s the difference between a freehold versus condo townhouse?

I get asked this question all the time and luckily it’s a fairly easy one to answer. The main difference between a freehold versus condo townhouse has to do with land ownership.

Freehold Townhouse

In a freehold townhouse, you own both the home itself and the plot of land it sits upon. You would take care of and be solely responsible for all improvements and maintenance of the property.

In this sense, a freehold townhouse is no different than the semi-detached or detached homes you’re used to and probably grew up in.

Traditional Condo Townhouse

Most people understand how a freehold townhouse works. The confusion lays with the condo townhouse and there are a couple of key differences and types of condo townhouses.

First, the more traditional condo townhouse is similar to a condo apartment. All of the homes (or “units”) are part of a condo corporation and owners pay monthly maintenance fees to upkeep the exterior of the homes (including the roof, windows, doors, garage doors etc).

There are also maintenance fees to maintain the roads, any amenities (like playgrounds for example), snow removal and landscaping.

These elements are referred to as “common elements” as they are things that are shared by everyone in the community.

Monthly maintenance fees in these types of condo townhouses typically range from ~$300-$700/mth depending on size and age of the complex.

The Common Element Condo

You might have come to this page because you saw a listing and the description read that it was a freehold townhome but it came with a maintenance fee. How is that possible? I thought freehold townhomes didn’t have maintenance fees!

They don’t, but builders and agents have marketed them as freehold because the maintenance fees are not for the home itself – it’s only for the common elements.

In these types of arrangements, the owner is responsible for all the upkeep and costs of the home itself, both inside and outside, but pays a much smaller monthly fee for the common elements I mentioned above (typically snow removal, landscaping, building insurance and any amenities on site like playgrounds).

In these condo townhouses, you’ll usually see the prices range from about ~$80-$250/mth depending again on age and size.

Freehold Versus Condo Townhomes Vs Common Element Condos – what’s better value?

With all other things equal, true freehold townhomes are still the best value. Simply put, it’s always more ideal to own the land.

After that, common element condos would be the next best option as maintenance fees will not climb as high as the more traditional condo townhomes.

The caveat is that the traditional condo townhome will be the easiest to qualify for in terms of a mortgage, so for a lot of people it’s a more attractive starter home option.

In the end, the main difference is land ownership and your preference on how to maintain the property. Condos have monthly fees that you consistently pay whereas freehold homes will see large payments at once to take care of improvement issues. Most people prefer to maintain full authority and ownership of their home, so if they can, they generally opt for the freehold option.

Am I Really Buying a Freehold Townhouse? 

I mentioned this briefly above but it’s important to keep in mind the difference between a true freehold property and one marketed as freehold.

New-home builders (and agents once the property is resale) generally market common element condo townhouses as freehold townhouses. Remember, it’s the home itself that is freehold but the condo is tied together by a common element – the land these homes sit upon.

When you go to make a purchase of a new build townhome, you will know if it’s freehold or not if there are any maintenance fees at all. If there are then you will receive a package to review that includes the by-laws and regulations of the condo corporation.

The 10-day cooling off period

The good news? As of June 2024, all new build homes, whether freehold or condo come with a 10-day cooling off period for buyers to review their agreements, arrange financing (if necessary) and conduct any due diligence before moving forward.

In the past, this was only available when you purchased a condo. Freehold townhomes, the moment you put pen to paper, meant you had purchased the home. This change came thanks to the Homeowner Protection Act of 2024.

Final Thought…A Word of Caution

Before purchasing a condo townhouse or common element townhouse, you really want to do your research on the property management company that has been contracted to manage maintenance (if resale). A bad property management company can send monthly maintenance fees soaring which can really hurt resale value for the unit owners.

As always feel free to leave a comment below or contact me directly if you still have questions.