What is the correct classification of a multi-unit dwelling ownership type where each owner has a separate interest in their unit?

The classification of a multi-unit dwelling ownership type where each owner has a separate interest in their unit is a condominium. In a condominium, individual owners possess their specific units, which can be sold, mortgaged, or leased independently of one another. Additionally, owners share ownership of common areas, such as hallways, pools, and recreational facilities, which are managed by a homeowners' association (HOA).

In contrast, a cooperative involves a different ownership structure where residents own shares in a corporation that owns the entire property, and they do not hold title to their specific units. An apartment generally refers to rented spaces within a building, with no ownership interest by the tenants. The term "castle" is not relevant in the context of property ownership types and does not apply to this classification scenario.

Thus, the correct choice underscores the individual ownership rights characteristic of condominium units within a multi-unit dwelling.