PUD or Not PUD? Does anyone really know?

[Deleted member 130081]

Background:
1004 assignment. I have a lender who is stating their property is not a PUD. I have a PUD zoning overlay, legal description indentifiying an undivided interest but does not specify a PUD, recorded docs tranferring the builder ownership to the homeowners with no PUD identified, homeowner confirmation of dues, confirmed shared ammenities, no access to Village planners in a normal course of business (it could take weeks to get an answer).

Fannie defintions are:

A PUD is a project or subdivision that consists of common property and improvements that are owned and maintained by an owners’ association for the benefit and use of the individual units within the project.​

For a project to qualify as a PUD, the owners’ association must:

require automatic, nonseverable membership for each individual unit owner​

provide for mandatory assessments

A condominium project is one in which individual owners hold title to units in the project along with an undivided interest in the real estate that is designated as the common area for the project.​

A cooperative project is a multi-unit property in which those who purchase units are actually buying shares in the ownership of the project as a whole. When a cooperative unit is appraised, an opinion of the market value of the cooperative interest, or the shares, of that area assigned to the individual unit is determined.​

Where I am stuck:
I am getting stuck on the definitions here. While my subdivision certainly meets the qualifications of a PUD, the definition states the sudivision or project "consists" of common property instead of "contains". Looking at the definitions of a co-op and condo, where distinctions are made for ownership rights, I am starting to lean towards thinking my subdivison is more representitive of a Condo definition than a PUD definition, as my parcel has ownership of their parcel and an undivided interest in other parcels, not a shared ownership of all by the homeowner association, etc. I can see where the lender may have a point.

I have never had a problem with this before. I have always simply checked the PUD box if there were HOA dues and moved on, no stips ever. I have scoured the Selling Guide and Guidance Handbook and neither state this is a big issue for the lender so long as the project is detached.

If there is anyone out there who has some definitive clarification or an additional resources etc., I would really appreciate it.

 

[cjski]

Sounds like a PUD to me...

Tell the lender you want a copy of the preliminary title statement. See what that says.

 

[residentialguy]

Keep it simple: if there is an home owner association with a mandatory HOA fee....it's a PUD. A condo has it's own form...the condo typically deals with a CIC and unit.

 

[BOCK FOLKEN]

We have similar projects here all over the place. Single family zoning (not PUD) but there is also a homeowner assn. and dues and significant "common areas" including pools and rec areas. Just did one this morning.

Around here the developer typically has deed restrictions which outline the HOA and reference the HOA as a legal entity whereby membership is required by the owners. Then the HOA has a seperate legal document outlining the organization, duties and requirements of the Board etc.

When I run into this, I check PUD on the form because most of the idiot AMC's computer checkers cant deal with it if the HOA dues are filled in and PUD is not checked. Make sure the actual zoning (RS-1, SFR or whatever) is correct on the form. I then explain it in the addendum. A little misleading, I know, but once I started doing it that way, I don't get stipped any more. You could just put the HOA fees in the addendum, but that would force the AMC to read the report to find the HOA dues or they will miss them altogether and then blame you. Really hate that.

 

[Jo Ann Meyer Stratton]

For lending purposes, zoning has absolutely nothing to do with whether a subdivision is a PUD or not. If there are mandatory home owner's association dues that would become a lien on the properties if not paid, then for lending purposes it is a PUD. If those HOA fees are mandatory then the upper part of the form is checked PUD and then enter either the monthly or yearly dues amount. That is the only question for the top part of the form. The home owner's association is a private restriction.

Then when you get to the site area of the form, you start investigate and report the zoning--the local police action that affects the property. In this section only public restrictions are reported.

Top part of the form---private restrictions that would create a lien if not paid are reported.

Site section of the form---public restrictions that "polices" the neighborhood.

 

[hglenbetts]

What Jo Ann said.

If there are mandatory dues that can create a lien, it's a PUD, in Fannie's eyes.

Read what you posted...

Fannie definitions are:

A PUD is a project or subdivision that consists of common property and improvements that are owned and maintained by an owners’ association for the benefit and use of the individual units within the project.​

For a project to qualify as a PUD, the owners’ association must:
require automatic, nonseverable membership for each individual unit owner provide for mandatory assessments

In their "MUST" definition, is nothing about common property (although in the general definition). I've seen deed restricted subdivisions, where there are NO common elements, but do have MANDATORY association membership along with the dues. In one instance, they hire people to plow the public streets from snow, because the municipality doesn't do it.

And like other said, they are not looking at zoning with this question, although, most every project zoned as a PUD will also qualify under the Fannie definition.​

 

[PropertyEconomics]

I agree with the majority of the posters ... it sure sounds like its a PUD and were I doing the appraisal thats how I would identify it.

 

[Walter Kirk]

PUD's (planned unit developments) have different definitions for different purposes. To a planner or zoning official a PUD is a development which is planned to include facilities not normally associated with land develpment ie parks, common space, mixed use, etc. PUD's do not necessarially require associations or fees. An example of such a PUD would be a Levittown type development which includes mixed uses, parks, schools, etc all built to serve the development with no fees or membership requirement.

PUD's to a mortgage lender are developments which require or can require payment of fees to an association. These PUD's are encumberances on the title to the land and can threaten ownership since unpaid PUD fees can become a lien on the property.

Some PUD's are established to maintain drainage or minimal open space.

To further complicate matters some PUD's contain condominium property, in fact there are condominium properties which require the payment of both Condo and PUD (HOA) fees.

For your purposes, if the property has manditory fees its a PUD.

 

[BOCK FOLKEN]

In an effort to further confuse this, in my local area, they have a recognized zoning district definition of of PD which stands for Planned Development. It is a contraction of PUD and it used to be called PUD years ago. From a developers perspective, there were advantages for utilizing a PUD versus other single family zoning...mainly to increase the intensity of development (units per acre). Since the PD zoning was in heavy use at one time, they have since continued to "upgrade" their zoning regulations to the point where there is no longer any significant benefit for using the PUD (PD) designation. Most of the newer developments have retained their old zoning (RSF-1, 2, 3) instead of applying for PD zoning. Not a huge issue since there is very little development going on anyway.

 

[Deleted member 130081]

I think you all missed my point (except maybe for cjski), but thanks anyways, I truly appreciate your time and feedback.

I am questioning the wording of the Fannie Mae definition of a PUD per the Sellers Guide. The definition uses the word "consists". Why would they use that word? Why not "contains" or "includes". Read literally, I interpret that to mean the entire subdivision or project within the context of the sentence and the context of the other definitions of Condos and Co-ops. (I think my lender is reading it that way too.) For instance, the Condo definition talks about owning title to the unit and in addition owning an undivided interest in the common, why is the PUD definition not worded in the same manner? Is this a mistake or did they mean to write it that way?

My question is does anyone really know for sure and if you do, what is your source?