Are you thinking about buying a home soon? 

Buying a home is a huge accomplishment, and the home buying process can be a lot of fun. However, it can also be very overwhelming. There are all kinds of legalities and real estate-related terms you need to wrap your head around. 

One of the biggest things you need to understand when buying a home is the different types of properties for sale. Even though some property types may seem very similar, they have significant differences that are important to note. 

One type of home that people don’t know a lot about is PUDs. PUD stands for planned unit development. What is a planned development unit? How does it differ from other property types?

Read on to learn everything you need to know about PUDs. 

Related: Alta Land Surveying

What is a PUD?

planned housing development

First things first, what exactly is a PUD? Planned unit developments are a community of homes. These may be condos, single-family homes, commercial properties, or retail spaces. 

To most people, a PUD looks a lot like a single-family home. For example, many PUDs are detached houses with garages and yards- basically, everything you’d look for in a single-family home. 

However, even though it looks like a single-family home, the legal structure of a PUD is more like that of a condo. Like a condo, a PUD is operated by a homeowner’s association. This means that every homeowner will contribute a monthly or quarterly fee based on the percentage of ownership in the total project. 

Much like condos, the HOA fees for PUDs go toward amenities and maintenance that serve all of the homeowners. These amenities may include things like gyms, pools, parks, playgrounds, hiking trails, basketball courts, gated communities, landscaping, security, or street cleaning. 

All of the amenities that you pay for through a PUD are exclusively for the community. In other words, strangers can’t come to use the facilities. 

Related: Property Rezoning: What You Need to Know

PUD Rules 

It’s important to keep in mind that there isn’t a federal set of rules that govern PUDs. Therefore, it’s essential to read the HOA documents that are included with the PUD to make sure you have an understanding of:

  • Bylaws
  • Budget
  • Conditions, covenants, and restrictions
  • Articles of incorporation

There may be other things related to the PUD noted on the title report, so this is why you need to read it over thoroughly. 

How Does a PUD Affect Your Mortgage? 

making a mortgage payment

When reviewing the PUD rules on the HOA documents, it’s vital to understand the budget, as this will help you figure out the full cost structure of the PUD. This way, you can decide if a PUD is right for you and your budget. 

Getting approved for a mortgage for a PUD is only slightly harder than getting approved for a mortgage for any other type of property. 

Your lender will want to take a look at the HOA finances as well as the covenants, conditions, and restrictions of the PUD. In some cases, it can be beneficial to hire a real estate attorney to go over the costs with you, so you understand just what you’re agreeing to and how well the homeowner’s association runs. Some things you want to keep in mind concerning finances include:

  • How much the HOA has in reserves to pay for maintenance and major repairs
  • Whether the HOA is involved in any litigation issues 
  • The percentage of homeowners who are delinquent on their monthly dues

If you or your lender doesn’t like how the community appears to run, you can easily back out as long as you haven’t signed any paperwork. While you can’t opt-out of the HOA in a PUD, you can keep searching for a home that’s right for you. 

PUDs and Lenders 

If your lender needs to foreclose on your PUD because you can’t pay the fees, the lender will then become the property owner. 

If the PUD’s HOA isn’t in good shape, it can be difficult for the lender to resell the property to new buyers. You should also care about this because if you want to sell your home one day, your PUD will need to be desirable. 

Luckily, your real estate agent can help you put together the information your lender will want to look over. They’ll want to review the financial statements, budgets, and reserve studies. They’ll also want to take a look at the insurance policies for common area amenities. 

Are you wondering if you can improve housing affordability? Click here to find out! 

Benefits and Drawbacks of PUDs

So, why do people choose PUDs over traditional single-family homes or other property types? 

Perhaps the biggest benefit of living in a PUD is the convenience. In many PUDs, the amenities go well beyond what’s traditionally offered. Some even include restaurants, drug stores, 24/7 security, privately-owned roads, and various other services. Additionally, all common area maintenance is usually taken care of, which sometimes includes yards and home exteriors. 

PUDs are great for homeowners who want to have everything in one place so that they can come home and hardly ever have to leave. 

However, it’s important to keep in mind that PUDs aren’t for everyone. Some people may find the rules of the PUD to be too strict. But, rules can vary greatly from PUD to PUD. Also, although you’ll own the title to the home and the property, you won’t have full autonomy over your property in the way you would with some other homes. 

Additionally, PUD homes are generally closer together than traditional homes, so they may not be the best option for those who want extra privacy. 

Related: Can You Build a House on Agricultural Land? 

Final Word

Now that you’ve read this guide, it’s time to decide if a PUD is right for you. While PUDs aren’t for everyone, they’re a great option for those who want the convenience of luxurious amenities

If you’ve decided to purchase a PUD, the next step is to decide where. After some careful research, you should be able to find the PUD that is right for you. 

Are you looking to learn more about PUDs? If so, contact us today.