There are many types of residential buildings on the market, from single-family homes and townhomes to condominiums and cooperatives. One lesser known type is planning unit development (PUD). And the line between condominiums, townhomes, cooperatives and planned unit development (PUD) is blurred.
This Redfin article defines what planned unit development (PUD) is and why we are considering it. Whether you’re looking at the NE Omaha, El Paso, Texas home, or not, here’s what you need to know before purchasing a PUD property.
What is Planned Unit Development (PUD)?
A planned unit development (PUD) is a community of homes that look like a single family home, townhome, or condominium. It can include both residential and commercial units, but on paper it is most similar to a condominium. When you shop your home and look at the types of ownership listed as “condominiums,” the house looks like a typical home or townhome, but it’s probably a PUD.
What is the difference between PUD and HOA?
The PUD includes ownership of a “lot” with a common area owned by the Homeowner’s Association (HOA). If you are purchasing a home within a planned unit development, you will need to pay the homeowner’s membership fee. PUDs often have amenities that go beyond the scope of most condos, such as private tennis courts and outdoor play areas that maintain HOA fees and are open to homeowners only. In some communities, monthly membership fees can be very high, so it’s important to include them in your monthly budget when deciding whether to buy PUDs.
Planned units development also involves rules and regulations set by the HOA. This will help you know exactly what you can and cannot do with your property, as you would want to ask for before purchasing. Real estate agents often advise clients to meet with the HOA president, review meeting notes for the past six months and understand how the association will make decisions before making an offer.
Mortgage lenders review home loans with PUDs, just like condos. PUDs must meet certain requirements, such as saving adequate reserves, receiving appropriate insurance coverage, and reputation for collecting membership fees on time. If your PUD does not meet the requirements, you may be denied for the loan.
Demand for Puds is growing. Because they offer incredible convenience and restaurants and dental clinics are often downstairs. Also, thanks to sharing amenities with the homeowner association, PUDs can enhance the sense of community, allowing neighbors to get to know each other better. However, HOA membership fees can be turned off for some buyers.
If you are in the housing market and are thinking about buying a home with a planned unit development, make sure to talk to your real estate agent about the extra steps you should take before purchasing and what that means for your home’s value to go down the road.
