Is it a condo or a townhouse? Sometimes it can be hard to tell but if it’s not described correctly, someone could pay.

Here’s the story…

There was a townhouse that had some damage from a storm in High Point. The home was improperly insured as a condo. Apparently, someone had some bad information and didn’t take the time to verify what type of home it actually was. And unfortunately in this case, there is a huge difference in how this property should have been insured.

What amazes me is that it got past so many people. Surely, the previous owner should have known. The REALTOR could have found out. The closing attorney must not have read the restrictions, and the lender usually requires proof of what type of home it is. I guess someone must have stated what it is and everyone else just took their word for it and the home buyer suffered. Since they had a condo policy, there was NO COVERAGE AT ALL for the damage done.

So, what’s the difference?

You already know what the typical townhouse and condo physically looks like. And 95% of the time you know what it is when you see it. But it’s the other 5% that can get you in trouble.

The only way to tell the difference is by checking the legal documents that show exactly what it was defined as when it was built. The restrictive covenants will state whether it is a townhouse or a condo. Usually, the closing attorney will pull a copy of these when they do their title search but, that may be a day before closing and you need insurance prepared well in advance. So, you may want to call the homeowners association president to get a copy or verification. Don’t trust the seller! They could have been misinformed when they bought it.

What’s the big deal? Condos and townhouses are insured by two different kinds of policies.

Since a condo owner only owns the space within the unit and its contents, that’s all a condo policy covers. The association’s master policy covers the walls, roof, and sometimes the deck, porch, etc.. And most condo association policies cover the interior cabinets and floor coverings as they were originally installed. There could be a problem if a unit has been upgraded from the original. Most times, the association policy will not cover any upgrades in cabinets, light fixtures, etc.. The buyer will have to increase this coverage. It’s called “alterations and improvements” coverage.

A townhouse is insured with a standard homeowners policy, just like a single family home.Since the townhouse owner owns everything from the ground up, they must be insured from the ground up, including the walls, roof, contents, lights,cabinets, etc.. So, the next time you list or sell a townhouse, do your due diligence and make sure it’s defined properly. It could save someone and/or yourself a huge headache and possibly a lawsuit!

I hope this information helps you with your business. If you have any questions about this topic or other insurance related topics, please don’t hesitate to call my office at 336-869-3335 or email us at

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