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PUD vs PD what's the difference?

Discussion in 'General Appraisal Discussion' started by Sandy Ward, Oct 21, 2009.

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  1. Sandy Ward

    Sandy Ward New Member

    0
    Jun 27, 2006
    Professional Status:
    Certified Residential Appraiser
    State:
    Tennessee
    Tha lady at HUD says "If they can take your house if you don't pay your HOA fees...it's a PUD!" OK, so what's the difference between a PUD and a PD.
     
  2. Doug DeMars

    Doug DeMars Senior Member

    1
    Mar 20, 2009
    Professional Status:
    Certified Residential Appraiser
    State:
    California
    U are the difference.

    I seriously doubt a HOA could get away with that and have it hold up in a lawsuit.

    No difference between a PD or PUD or a CID for that matter. But, if you don't pay your taxes...the gov't will take ownership. Of course, if there is a lien and you're not paying...the lienholder may have something to say about it.

    I had a "over-educated" RE agent tell me that there is no such thing as a PUD...only CID (common interest developments).

    Whatever makes your boat float is what I told her.
     
  3. Doug DeMars

    Doug DeMars Senior Member

    1
    Mar 20, 2009
    Professional Status:
    Certified Residential Appraiser
    State:
    California
    I live in an area where some zoning shows PD-xxx, but it only designates Planned Development. Some of these areas do have HOA dues...but most don't. Not that it amounts to much. I'm guessing the difference may be some additional CC&Rs. Of course, a municipality can enforce other mandates to layer on top of general zoning within their jurisdiction.

    (Why am I replying to this...I've got other things to do.)
     
  4. Ken B

    Ken B Elite Member

    95
    Feb 18, 2004
    Professional Status:
    Certified General Appraiser
    State:
    Florida
    The term "PUD" has different meanings for use in different contexts.

    There is the definition of the term as it pertains to land development code and zoning districts.

    There is the definition of the term as it pertains to use in an appraisal report.

    While we may report the subject's zoning district as "PUD", that does not mean the property is located in a "PUD" as it pertains to the concerns of the secondary market.

    The secondary market (HUD, GSEs, etc.) define a "PUD" development as a development where membership in a HOA/POA is mandatory and where there is a mandatory fee paid by the property owner to that association. The zoning district is irrelevant. In the context of the secondary market definition, a "PUD" could exist in any zoning district.

    The concern is that failure to pay that fee could result in a lien on the property and, if the lien remains unpaid, the association could initiate a foreclosure action against the property.
     
  5. CANative

    CANative Elite Member

    168
    Jun 18, 2003
    Professional Status:
    Certified Residential Appraiser
    State:
    California
    You can have a PUD in a PD but you can't have a PD in a PUD.
     
  6. jeanwillick

    jeanwillick Junior Member

    0
    Jun 2, 2003
    Professional Status:
    Licensed Appraiser
    State:
    Michigan
    This was originally posted by Mike Kennedy - 9/15/2007 in Appraiser's Forum

    This is Freddie's definition: (Following at the bottom of this posting, see the HUD definition from 4150.2)

    FREDDIE 2003 PUD - GUIDELINES
    PUD Requirements:
    •Please submit all PUDs through proper channels to obtain PUD approval.
    •All projects must meet FHLMC requirements as follows:

    -
    The individual unit owners own a parcel of land improved with a dwelling. This ownership is not in common with other unit owners.

    -
    The development is administered by a homeowners association that owns and is obligated to maintain property and improvements within the development (for example, greenbelts, recreation facilities and parking areas) for the common use and benefit of the unit owners.

    The unit owners have an automatic, nonseverable interest in the homeowners association and pay mandatory assessments.

    Freddie Mac Underwriting Guidelines 12 July 24, 2003

    __________________________________________________ __________________________________________________ _______________
    PUD Requirements (continued):


    •Insurance requirements:
    -
    If the individual units are covered by insurance purchased by their respective owners, the PUD homeowners’ association must maintain “all risk” coverage for common areas and property for 100% of their insurable value and providing for loss or damage settlement on a replacement cost basis. The association must also obtain any additional coverage commonly required by private mortgage investors for developments similar in construction, location and use, including the following where applicable and available:

    Agreed amount

    Demolition cost

    Increased cost of construction

    Boiler and machinery
    -
    The PUD homeowners’ association must maintain coverage on common areas and property for 100% of their insurable value. Deductibles may not exceed the lower of $5,000 or 1% of the applicable amount of coverage.

    Funds for such deductibles must be included in the association’s reserves and must be so designated.


    Liability Insurance:


    - The PUD owners’ association must carry comprehensive general liability insurance covering all common areas, common elements, commercial spaces and public ways in the PUD project.
    If not already included in the terms of the coverage, there must be a “severability of interest” endorsement precluding the insurer’s denial of a unit owner’s claim because of negligent acts by the association or other unit owners.

    The association must carry any additional coverage commonly required by private mortgage investors for developments similar in construction, location and use, including the following where applicable and available:

    Comprehensive automobile liability

    Bailee’s liability

    Elevator collision liability

    Garage keeper’s liability

    Host liquor liability

    Worker’s compensation and employer’s liability

    Contractual liability


    The insurer’s limit of liability per occurrence for personal injury, bodily injury or property damage under the terms of the above coverage’s must be at least $1Million
    ______________________________

    http://rds.yahoo.com/_ylt=A0geu9R0v8...Guidelines.pdf

    PAGE 11.
    ** Poster Recommendation: compare subject's HOA structure, Individual Property Owners' ownership of both the HOA and common area lot ownership, etc. with the ABOVE requirements for PUD underwriting to determine IF the subject's "HOA" MEETS Freddies Criteria for a PUD.

    ---------------------------------------------------------------------------------------------------------------------------------------

    Per Cont. Ed Class we took Oct 18, 2005 at the NMU Genoa Woods Center (see booklet “Professional’s Guide to the Uniform Residential Appraisal Report” Student Handbook. Written by Richard Heyn. And class by Richard Borges II. See below excerpt I took from that book:

    “This section of URAR to be completed only if subject uit is in a PUD. There are four key elements in FNMA’s definition of a PUD:
    1. Common Property
    2. Automatic, nonseverable membership in a homeowner’s assoc.
    3. Not a condo development

    A PUD may look like a traditional sub development, although it will often have a private road and perhaps some other “Common” elements. Residents of detached single family dwellings enjoy fee-simple ownership of their individual sites, but the road and any other “common” elements are controlled by the property owners association, at least after a certain time. A PUD developer will generally record deed restrictions or bldg covenants to which purchasers must agree as part of the initial sales agreement. The developer will generally be responsible for enforcement of restrictions and covenants until a certain percentage of sites (often 50%) are sold. After that, the homeowner’s assoc. becomes the enforcing authority and controls the common elements.




    4150.2

    9 PLANNED UNIT DEVELOPMENTS AND CONDOMINIUMS

    9-0 PLANNED UNIT DEVELOPMENT (PUD)
    A PUD is defined as a mixed-use residential development of
    single-family dwellings in conjunction with rental, condominium,
    cooperative or town house properties. A residential development
    should be processed as a PUD if it has these minimum
    characteristics:

    o a homeowner association that holds either title in fee or a
    lease of prescribed length on the common area
    o mandatory membership of all unit owners (or units) in the
    association
    o the right of all unit owners to participate by vote in the
    operation of the association
    o lien supported assessment of the members to meet the
    association's budgeted operating costs (special assessments
    may be handled differently)

    To be eligible for insurance endorsement, PUDs must be approved
    by HUD. The lender is responsible for obtaining a case number
    from HUD to ensure that the PUD is already approved. The
    appraiser should note whether there is a case number.

    A. APPROACH TO VALUE
    The approach to value for a PUD is the same as the approach
    to value for other types of developments (see Chapter 4 of
    this Handbook). Frequently, however, no valid comparisons
    are available that estimate market value. In these
    instances, appraisers should use the replacement cost
    estimate in valuation. Estimate the replacement cost of
    improvements, miscellaneous allowable costs and marketing
    expenses the same as any Section 203(b) case. If properties
    in similar developments in the area have been sold, then
    direct comparisons are possible and the Comparative Approach
    would be valid and should be used.

    B. ESTIMATE OF MARKET PRICE
    Estimating the market price of an equivalent site requires
    consideration of these factors not usually encountered in
    ordinary appraisals:

    o Consider the size of individual sites when approaching
    the use of common areas and recreational facilities.

    o If there are similar developments in the neighborhood,
    consider a comparison of common areas, including
    recreational amenities.

    o If there are no similar developments, place more
    emphasis on the cost to produce a similar site with
    similar facilities and benefits.

    o Distribute the pro rata supportable cost to maintain
    the common improvements, facilities and land owned by
    the homeowner's association to each site in the
    development (subdivision) and add it to the estimated
    value.

    9-1
    4150.2

    o To reflect additional amenities to the common areas,
    include an estimate on the Marshall and Swift Form
    1007. On line 32, cross out "landscaping cost" and
    enter additional amenities".

    o Consider maintenance charges regarding cluster
    arrangements. For example, note whether the advantages
    of cluster arrangements are negated by high maintenance
    charges.

    o Before performing the assignment, check with the lender
    to ascertain that the project is on an approved list
    maintained by the Home Ownership Center (HOC). Check
    the URAR item indicating that the property is within a
    PUD project.

    9-1 CONDOMINIUMS
    A condominium is a form of fee ownership or long-term leasehold
    of separate units or portions of multiunit buildings that
    provides for formal filing and recording of a divided interest in
    real property. In contrast to a PUD, a joint share in ownership
    of the common area is part of the mortgaged property, and
    therefore, constitutes a measure of the security backing the
    mortgage loan. FHA's interest is therefore more immediate and
    direct with respect to the common areas of condominiums than
    those of PUDS.

    Before performing the assignment, the appraiser must check with
    the lender to ascertain that the project is on an approved list
    maintained by the HOC or by a DE underwriter who has performed a
    spot condominium approval. The appraiser must check the URAR
    item indicating that the property is within a condominium
    project, and therefore, eligible for FHA endorsement.

    A. DEFINITIONS

    Mortgage: a lien covering a fee interest or eligible
    leasehold interest in a one-family unit in a project,
    together with an undivided interest in the common areas and
    facilities serving the project.

    Family Unit: a one-family unit including the undivided
    interest in the common areas and facilities and such
    restricted common areas and facilities as may be designated.

    Common Areas and Facilities: areas that are for the use and
    enjoyment of the owners of family units located in the
    project, including the land, roof, main walls, elevators,
    staircases, lobbies, halls, parking spaces and community and
    commercial facilities.

    Restricted or Limited Common Areas and Facilities: areas and
    facilities restricted for use by a particular family unit or
    number of family units.

    Project: a structure or structures containing four or more
    units.

    Conversion: the creation of the condominium as of the date
    when all of the documents necessary to create a condominium
    regime have been recorded under state and/or local law.

    9-2

    4150.2, CHG-1

    Bona fide Tenants' Organization: an association formed
    by the tenants to promote their interest in a
    particular project whose membership is open to each
    tenant and whose requirements apply equally to each
    tenant.

    Condominium Fee (Assessment): the apportionment of
    common expenses that are to be charged to a unit owner
    in a manner to be determined in the declaration or by-
    laws. The charge may include costs for utilities on
    individual units and on common use buildings, security
    requirements, salaries for employees of the association
    and repairs to common facilities.
    (9-1)

    B. APPROACH TO VALUE
    The approach to value for a single unit in a
    condominium project is similar to that for other home
    mortgage programs. As in other home mortgage
    appraisals, value indications from the Sales Comparison
    and Income Capitalization Approaches are developed and
    considered (see Chapter 4 of this Handbook). The cost
    approach can not be performed for a condominium unit.

    1. Sales Comparison Approach
    The appraiser should obtain sales data from any
    other units in the project and from other
    competitive condominium projects, including
    adjustments because of site factors, such as:

    o differences in views from the unit
    o proximity to recreation areas (swimming
    pools, clubhouses, tennis courts, etc.)
    o proximity to odors and the nuisance of
    incinerators proximity to garbage chutes or
    refuse areas proximity to noisy pumps or
    boiler rooms

    Adjustments must also be made for the following:

    o differences in physical improvements within
    the dwelling that have been made by the owner-
    occupant
    o differences in preferences of purchasers
    between upper and lower floors and all other
    site factors

    6/99 9-3
     
  7. CANative

    CANative Elite Member

    168
    Jun 18, 2003
    Professional Status:
    Certified Residential Appraiser
    State:
    California
    A Planned Unit Development is private restrictions. A Planned Development is government restrictions.
     
  8. Laughing Heir

    Laughing Heir Senior Member

    1
    Oct 16, 2007
    Professional Status:
    Certified General Appraiser
    State:
    Pennsylvania
  9. CANative

    CANative Elite Member

    168
    Jun 18, 2003
    Professional Status:
    Certified Residential Appraiser
    State:
    California
    Yeah, but I said it in one line. lol
     
  10. Ken B

    Ken B Elite Member

    95
    Feb 18, 2004
    Professional Status:
    Certified General Appraiser
    State:
    Florida

    I'm going to have to create a fan club.
     
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