Condo, townhouse, patio home definitions are varied

Q. Would you please clarify the differences among the following: condo, townhouse, patio home and carriage home? Can they be one- or two-story buildings?

A. You’re asking about different forms of co-ownership, and “condominium” is the only one with an exact legal definition.

Condominium involves ownership of one’s individual unit “from the plaster in” plus a share of everything else — the “common elements,” such as roofs, sidewalks, land, driveways, etc. While one usually thinks of condos as apartments, that form of ownership can be used for other real estate, including office buildings and strip malls.

Townhouse is an architectural term for what sometimes is called a row house, attached on one or both sides to another. It’s usually two stories high, with no one else above or below. Townhouse developments can be organized somewhat like condominiums, except that you often own your own roof and the land beneath your unit.

The term patio home usually refers to a one-story unit with no one above it, perhaps detached, perhaps not, possibly with its own bit of lawn or deck. It might be owned in a condominium or townhouse organization.

I suspect the term carriage home is one developer’s own designation that could mean just about anything.

Q. I would like to purchase the home I am renting. The owners are agreeable. What should I be considering in this process? They have not requested a down payment. They have proposed having two or three real estate agents come to assess the market value. From those numbers, they want to calculate a median value. This way, we avoid paying for this service by a professional, as we would have to pay for an appraiser before the closing.

A. First of all, how are you financing this purchase? If your landlords are taking back a mortgage, you won’t need a professional appraisal. And if you look for a loan from a regular lending institution, it isn’t likely you can do this with nothing down (unless you qualify for a VA mortgage).

In either case, you should have a real estate lawyer’s help to make sure you’re receiving clear title. You don’t want to buy unexpected problems, such as an old mortgage debt that might come with the property, unpaid taxes or some other complication.

Setting the price by an average of agents’ suggestions is a good idea, and it’s fair to everyone — except, of course, to the brokers, who should be paid something for their informal opinions on value.

Q. Now that our home will be paid off this coming April, are there any precautions we need to take? My son told me there is a scam where somehow someone can steal your home if it’s paid off. That, of course, is scary. Is there something people should do when they finally have paid off their houses — besides throw a party?!

A. It’s true a lot of mortgage scams these days prey on homeowners who are in trouble with their loans. Perhaps that’s what your son heard about, but it doesn’t apply to your situation.

Have a great party! Sometimes the high point of the celebration is a ceremonial burning of the mortgage.

Q. Why would a buyer or seller do an arm’s length sale? What are the benefits of this type of sale?

A. An arm’s length sale is simply a deal between two strangers, each trying to do the best for himself. Most real estate sales are arm’s length.

What wouldn’t be arm’s length is, for example, a sale from mother to son or boss to employee. There, the price might not reflect true market value because the relationship could make a difference.

Q. When does the phrase “time is of the essence” come up? Is it in a listing, a deed or a contract?

A. “Time is of the essence” in a contract means that both parties must meet specific deadlines or the whole deal is off. “Be there on this exact date with the purchase money. We’ll be there with the deed, and if you don’t show up, watch out!” It’s sometimes called a “drop-dead clause.”

It is not often included in a simple real estate sales contract. Usually, if the target date for closing comes and goes, the contract remains in effect. Should either buyer or seller later want to make time of the essence, that can be done — in writing, of course: “Enough fooling around. Now come through or else!”

The phrase is powerful legal ammunition, and it can backfire. It should be used only under the guidance of an attorney.

Ÿ Edith Lank will respond to questions sent to her at 240 Hemingway Drive, Rochester, N.Y. 14620 (include a stamped return envelope), or readers may email her through askedith.com.

© 2013, Creators Syndicate Inc.