There are many types of residential buildings on the market, from single-family homes and townhomes to condos and co-ops. One of the lesser-known types is a Planned Unit Development (PUD). It’s common to confuse condos, townhomes, co-ops, and planned unit developments (PUDs) because they all look similar.
In this Redfin article, we’ll define what a Planned Unit Development (PUD) is and why you might be considering one. Whether you’re looking at houses in Omaha, NE, or in El Paso, TX, here’s what you need to know before you buy a PUD.
What is a planned unit development (PUD)?
A Planned Unit Development (PUD) is a community of homes that look like single-family residences, townhomes, or condos. They may include residential and commercial units, but on paper, they’re most similar to condos. If you’re looking at a single-family home or townhouse and it’s listed as a “condominium,” then it’s most likely a PUD.
What’s the difference between a PUD and an HOA?
A PUD and HOA may seem similar, but are different.
- A homeowner’s association (HOA) is an organization that oversees rules and regulations in a neighborhood or group of condos or townhomes. You pay HOA fees each month to cover the cost of certain maintenance and amenities.
- A PUD includes ownership of a “lot,” with common areas either owned by a homeowner’s association or collectively by all invested parties. If you buy a home within a planned unit development, you’ll typically have to pay HOA dues.
Pros and cons of PUDs
Pros of owning a PUD
- Amenities: PUDs often have more amenities than condos or townhouses, like tennis courts and outdoor playgrounds, and are only open to homeowners.
- More ownership: Unlike condos, you own the building and land the PUD is built on. This may give you more freedom and a sense of ownership.
- Convenient: Many PUDs have private roads, parks or trails, private amenities, and sometimes even stores or cafes nearby.
Cons of owning a PUD
- HOA fees and rules: There may be higher monthly dues, so it’s important to include them in your monthly budget. Additionally, the HOA’s rules may dictate what you can and cannot do with your property.
- Less privacy: Homes are often close together, with less space between properties compared to other condos or single-family homes.
- Additional challenges to sell: Not everyone is interested in a PUD, which may make it more difficult to sell.
What to know before buying a PUD
Planned unit developments come with rules and regulations set by the HOA. You’ll want to ask about these before buying so you know exactly what you can and can’t do with your property. Before making an offer, your real estate agent may advise you to meet with the HOA president and review recent HOA meeting notes to understand how the association makes decisions.
Mortgage lenders review a loan for a home in a PUD the same way as they would a condo. The PUD needs to meet certain requirements, like having enough reserves saved up, proper insurance coverage, and a history of collecting dues on time. If the PUD does not meet their requirements, your loan may be rejected.
PUDs can be a popular choice because they offer incredible convenience, with restaurants and amenities often located below the units or nearby. With shared amenities and an HOA, PUDs may offer you a greater sense of community with your neighbors.
If you’re looking at your local housing market and thinking about buying a home in a planned unit development, be sure to talk to a real estate agent about the extra steps you should take.