How do you identify a PUD

[RSW]

Fannie Mae defines a PUD as follows:

Planned Unit Development (PUD) – General Definition.A real estate project in which each unit owner has title to a residential lot and building and a nonexclusive easement on the common areas of the project (for example, a clubhouse, pool, playground, entrance/exit, etc). The owner may also have an exclusive easement over some parts of the common areas (for example, a parking space). (See, FNMA Seller/Servicer Guide, Chapter 3, Glossary).
Planned Unit Development (PUD) – Specific Requirements for Classification as a PUD.(See, FNMA Seller/Servicer Guide, Chapter 2, Section B4-2.3-01) A Planned Unit Development (PUD) is a project or subdivision that consists of common property and improvements that are owned and maintained by a homeowner’s association for the benefit and use of the individual PUD units. In order for a project to qualify as a PUD, the following elements must be met:
There is common property for the project; and
Each unit owner’s membership interest in the homeowner’s association must be automatic and non-severable; and
The payment of assessments related to the units must be mandatory; and
The project must not be a Condominium.

A lot of lenders and underwriters have different ideas of what defines a PUD. Its probably the single biggest source of back and forth tags I deal with.

The highlighted areas above are the first two things I look for.

 

[Peter LeQuire]

The highlighted areas above are the first two things I look for.

Following the example of TSA, I ask for two forms of ID, one with a picture, and a boarding pass.

 

[Mike Garrett RAA]

Fannie speak..."PUD means MANDATORY HOA dues) End of discussion.

Well, not really...Planned Unit Development (PUD), to everyone else, means a form of zoning which typically allows for something not normally covered by another form of zoning such as residential (R, R1, R-1-6) etc. It can be applied to various types of residential properties such single family detached, single family attached, town home, or condo. It could even apply to property types other than residential. This is the zoning context of PUD. IN MY MARKET, it was typically used to allow for smaller than typical residential lots.

A PUD subdivision may or may not have other amenities. It may or may not have a Home Owners Association (HOA). It may or may not have dues, either mandatory or voluntary.

The box on the top of page 1 of the 1004 should be checked IF there are mandatory HOA dues. The reason is...an HOA can lien a property and that lien could take priority over the mortgage. The secondary market needs to know this prior to making the loan and there will be additional documents which will spell out what the mortgage holder can do in the event the property owner fails to pay the HOA dues.

I concur, it's confusing and should be better explained on the form. Maybe that will happen on the next revision and maybe not. The deed may or may not give the appraiser the answer to the question so be careful. It's best to look for HOA dues on a listing if the appraisal is being used for a purchase. If you are appraising the property for a refinance you might be able to find out about the HOA from the listings of the properties you are using as comparable. I would also suggest you ALWAYS ask a home owner..."Is there an HOA? Do you pay dues? How much are the dues? Is it monthly, quarterly, annually?"

One last time...IF THERE ARE MANDATORY HOA DUES IT IS CONSIDERED A PUD. Check the box and indicate the amount of the dues.

Just because there is an HOA and dues does not mean the zoning will automatically be Planned Unit Development. Check the records.

 

[Mountain Man]

Simple answer, ask the owner if they pay dues?
Then ask if the dues are mandatory?
If not mandatory, is just a guys poker club or lady's wine club, then no PUD.

 

[Mr Rex]

Simple answer, ask the owner if they pay dues.

and at worse case if he's not a PUD, he's F'ed annually,even if he doesn't admit to being a HOA. Not that there's anything wrong with a HOA.

 

[Mile High Trout]

That link I posted earlier says it all, to underwriters.

I've gotten out of a dozen pointless PUD checkbox 'correction' requests, simply by forwarding that article link.

If they don't pay dues, or have shared ownership or interest issues, it's not pud.
_________

here is how it works;

Subject has pud in title. That's only title, and no interest, dues, or shared ownership is of concern.

You do not check pud box.

You get a correction from a halfwit underwriter.

You forward the link.

Correction request mysteriously goes away.

It's that easy.