What Is PUD in Real Estate?

When buying a home, the property's neighborhood, community, and overall land value are just as important as how many bedrooms and bathrooms it has.

Because many homeowners look for stellar communities to raise families, they might be interested in PUDs or planned unit developments.

Indeed, PUDs represent attractive homeownership opportunities for house hunters who don’t mind the regulations and fees that come with homeowners associations in exchange for community benefits.

Today, look at what a PUD is in real estate, its meaning, and how to identify PUD properties in your search.

Planned Unit Developments Explained

A PUD or planned unit development is, in a nutshell, a community of single-family homes (although some PUDs also include condos and townhomes).

The critical element of a PUD is that each homeowner belongs to a homeowners association or HOA.

Think of PUDs as, as their name suggests, planned, single-home communities. They are dedicated developments that prioritize organization, structured leadership, and community above other housing market elements.

Homeowners associations run PUDs. Since a home has to be owned by a homeowner who is a member of an HOA, all residents join the community’s HOA and contribute fees.

What Do PUDs Include?

PUDs are much more than “just” neighborhoods. They are often designed with interactivity and accessibility in mind.

Real estate developers will create planned unit developments with office buildings, shopping areas, recreational parks, and other real estate factors to accentuate or improve the single-family homes in the area.

Many PUDs are also recognizable because of their landscaping attractiveness and cohesion. A planned unit development might include several types of single-family homes with varying price points, but all homes may also share aesthetic elements or styles.

Depending on the local community's needs, some PUDs can include religious institutions like churches or industrial buildings like storage facilities and warehouses.

How To Identify a PUD in Real Estate Listings

As you look for the perfect home for your family, you may need to know how to identify a planned unit development compared to a single-family home in a “traditional” neighborhood.

Fortunately, identifying a PUD in real estate listings is relatively straightforward. If the home looks like a single-family home or townhome but is listed as a condominium on a real estate listing site, odds are, it’s part of a PUD.

If the house lists homeowners association fees, you can also determine whether a given property is part of a PUD. While homes, of course, can belong to HOAs without belonging to PUDs, this is another sign that you may need to do some more investigating. You don’t purchase a house that comes with more strings attached than you intend.

PUDs vs. HOAs

PUDs and HOAs aren’t that different. A PUD property is, as mentioned above, automatically part of a homeowners association.

However, only some homeowners associations oversee a planned unit development. Some homeowners associations handle and manage traditional residential neighborhoods.

Furthermore, many PUDs give homeowners more landowner rights than traditional homeowners associations. Homeowners in PUDs own both their homes, the lots that the properties sit on, and certain common areas.

In contrast, many HOAs only allow homeowners to own some of their property, not necessarily the lot or land that the house sits on. In this way, think of a PUD as an evolution of the standard HOA setup.

There are some similarities, as well. For example, in a PUD, the HOA owns and maintains any standard amenities that all the homeowners might use. Homeowners pay HOA dues to cover these expenses and ensure the community maintains specific standards. Shared amenities include tennis courts, parks, swimming pools, gyms, and playgrounds.

Furthermore, in a PUD, you may be restricted from certain activities that negatively affect the homeowners association.

Some examples include:

Being restricted from using your home as a short-term rental property.
Modifying your home in such a way that it doesn’t fit with the HOA’s aesthetic or style guidelines or failing upkeep standards.
Parking cars on the street overnight.
Putting up political or other signs in your yard.

Of course, any HOA can have rules like the above, not just homeowners associations that oversee PUDs. Still, it pays to know the property types, property values, and zoning rules associated with being a PUD community property owner before buying.

How Do PUDs Affect Home Loans?

If you’re considering purchasing a home that’s part of a planned unit development, remember that PUDs can affect home loans and approval rates.

Generally, getting approved for a PUD single-family home mortgage is a little more complex than getting a mortgage for a home that isn’t in a PUD.

That’s for two reasons: the PUD may have more terms and conditions regarding what loans are acceptable and impose higher lending restrictions to ensure that only certain homeowners can join the community.

Lenders often want to review the finances of the homeowners association, as well as the conditions, restrictions, and covenants included with the PUD in question (CC&Rs).

Sometimes, it may even be wise to hire a real estate attorney to review the paperwork for a PUD home mortgage so you know what rules you'll have to abide by and maximize your approval chances.

If you ever have to foreclose on the property, lenders care about whether a home is part of a PUD. If you foreclose on a home, your lender becomes the owner of the property by default.

It’s much harder to resell the property if the homeowners association for the PUD isn’t ideal, doesn’t have enough money, or doesn’t take care of the community.

Note that this concern is something you should think about, as well. If your PUD’s homeowners association is less than stellar, you'll have a harder time getting a reasonable sale price from someone who may wish to buy your home.

Given this possibility, it’s a good idea to research a planned unit development’s HOA before signing any dotted lines. If a PUD has an excellent homeowners association, consider that as just another point of value that could make a given property well worth your time and money.

The Benefits of PUDs in Real Estate

There are many advantages to living in or purchasing a property in a planned unit development. These include:

Access to private amenities and shared facilities, especially compared to typical homeowners associations. Many PUDs, for example, give you access to things like restaurants, private roads, and grocery stores.
Affordability for amenities. Compared to other communities, PUDs often provide convenient, affordable amenities at low costs. Residents may even pay less money for maintenance and utilities in some circumstances.
Land ownership rights. In a planned unit development, you, as the homeowner, get to own your building and your land compared to a standard homeowners association.
Convenience benefits. If you are a resident of a PUD, you can likely walk, drive, or ride your bicycle to many of the amenities offered by the homeowners association. Many PUDs even offer unique walkways or biking trails for just these purposes.

The Downsides of PUDs in Real Estate

Even though purchasing a property in a PUD could be wise, there are some potential downsides to keep in mind.

HOA fees. Naturally, if you live in a PUD, you must pay homeowners association fees no matter what. These can affect your closing costs when buying a home and affect your monthly mortgage rate.

HOA fees are typically a pain point for buyers and sellers. Some buyers don’t prioritize community amenities or prefer having more autonomy over their property or landscape.

Restrictive covenants. Some PUDs have very restrictive covenants on homeowners, limiting your autonomy and ability to adjust your home to your liking. Sometimes, these covenants even extend to things like pets, how public spaces can be used, and home additions.
House proximity. In a PUD, your single-family home might be closer to another single-family home than other traditional neighborhoods. If you don’t want to be right next to your neighbors, you may reconsider purchasing a property in a planned unit development.

Contact Vaster Today

Ultimately, a planned unit development is an evolution of the traditional homeowners association. These collective, cohesive neighborhoods are managed by HOAs and come with many benefits, including higher property valuations and improved community standards.

If you’re looking to buy a house in a safe, controlled space, a PUD could be just the ticket.

However, PUD properties can also be quite expensive. As you search for the right loan, Vaster may be able to help.

Our knowledgeable loan officers can assist if you’re looking to purchase a home for the first time, or they can help you refinance your home for better terms if your finances need a bit of stability.

Sources:

What Is a Homeowners Association (HOA) and How Does It Work? | Investopedia

The 2022 Florida Statutes (including Special Session A) | Florida Legislature

Florida Laws and Regulations Regarding HOAs and Condo Associations | Florida Realtors