Michigan - Site Condo in a PUD

[Jon O'Connor]

I recently completed an appraisal of a site condominium (Unit XX, Sunflower Ridge, a Site Condominium according to the Master Deed).

This assignment was completed on the 1004 and the PUD box has been checked. The subject property owns it land unit which contains a detached single family dwelling. The development has a HOA which owns 55 acres of common areas and nature trails. The HOA requires membership of all owners in the development.

The multiple UW's the bank have been trying to get me to "uncheck" the PUD box as they do not believe that a "site condo" can be a PUD. The also want me to fill in the condo section of the 1004MC however want the report to remain on the 1004, as it should be.

I have provided them them the HUD and Fannie information regarding PUD's and had several conversations with them explaining why the subject is considered to be PUD even though they insist a site condo cannot be a PUD.

I have asked for them to provide me with documentation as to why a site condo cannot be in a PUD, which they told me they do not have any they can provide.

Today the UW told me I have two options, I can uncheck the box and re-submit the report or I will not be receiving any additional work from them. I asked him if he can send that to me in an email which he said he would do but have not yet received.

I am at a loss of what to do next?

Jon

 

[Michigander]

As the 1073 condo form does not include a check box for PUD (since all condos are technically considered PUDs since they have mandatory fees that are not severable), this is considered to be reasonable notice to the intended user that the property has mandatory fees and the subject is considered a condominium, which is also a PUD per the definition in the Fannie Mae selling guide.

 

[Rich Heyn]

Jon,

Just curious, what is it about this site condo development that makes it a PUD?

 

[Joyce Potts]

Does the legal description convey the fee simple interest to the LOT underneath the improvements or does it convey the improvements/UNIT with a shared common interest in the land under the entire condo project?

 

[Lakefront boater]

What is it zoned as? Verify the zoning of the development.
do you have the zoning map from the local municipality?

 

[Jon O'Connor]

Email from the UW

Below is the language which I just received from the underwriter:


To be clear, condominium is a form of ownership and PUD is a project or property type. The subject is a condominium as it is condominium ownership—see title work. While a condominium project or condominium unit may be within a larger (oftentimes mixed-use) PUD project, it is not a PUD.

Further, if this were an FHA appraisal, HUD requires that the appraisal be done on the 1073 condominium form on which there is no PUD box to check. Does that speak to you at all?

By checking the PUD box, you are creating a misleading report. If you do not want to change it, I will be submitting it to our QA department who may subsequently report/submit it to the State of Michigan as a misleading report. You will also be removed from the Rels’ panel of appraisers. I guess it boils down to how confident you are in your position.

What I am even more confused about is the fact that they understand the acceptability of completing an appraisal for a site condominium on the 1004 however do not understand the Fannie definition of a PUD and the fact that the subject meets the established criteria.

 

[Jon O'Connor]

Subject is zoned PUD however the zoning does not matter as it relates to the subject satisfying the criteria established by Fannie for qualification as a PUD.

 

[Lakefront boater]

The AMC might not understand how "site condos" are used here in Michigan due to the complexity of the subdivision process and why "site condos" are used.

Out of state UW's probably don't understand this and you might want to provide some documentation from other appraisers, certified instructors and any other appraisal professionals here in Michigan that are willing to go to bat with you on this.

I usually don't work in the areas that have these site condo developments but if you need a few names of some people here in Michigan that are experts in this matter then PM me and I'll do my best to get you some contacts that could possibly help.

You should try to get them as much info as needed to get them on the same page and explain this to them looking at how they responded about this in their response from what you posted above.

From the email you posted it looks like they are mixing up condominum ownership with "site condo" in the legal description of the subject and they do not understand the difference here in Michigan and why "site condo" is used in developments.

 

[Rich Heyn]

From the glossary of the selling guide:

condominium (condo)
A unit in a condominium project. Each unit owner has title to his or her individual unit, an individual interest in the project’s common areas, and, in some cases, the exclusive use of certain limited common areas.

planned unit development (PUD)
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. The owner may have an exclusive easement over some parts of the common areas (for example, a parking space).

I developed a small site condo project in SW Michigan many years ago. I don't recall anything in the documentation that referenced easements. I believe that in Michigan, site condos fall under the same laws and regulations as traditional, common wall condominiums.

So I'll ask again, what is it that makes this particular project a PUD?

 

[Michigan123]

Can a site condominium be a PUD? ?

I have this definition of a PUD by FNMA hanging on the wall in my office.



The definition for PUD as described by FNMA is:


1. There is common property for the units
2. There is an automatic and non-severable membership in the home owner's Association
3. There are mandatory dues
4. And the property is NOT a condominium unit.


I wrestled with this a few weeks ago when completing a report on a site condominium. I then had a bright individual say to me "didn't you just say that the house was a site condominium?" I then read statement #4 above again. Although a site condominium is not a condominium that we typically think of it is still a type of condominium isn't it? What does the legal say for a site condominium? Unit #123. So I believe that a site condominium cannot be a PUD do to them being a condominium unit and therefore the box should not be checked.


I usually include the definition in the report along with a statement which explains what a site condominium is.