HOA Does Not Necessarily Equal PUD

NOTE: The following blog post was written and then I learned some additional information from the feedback (below). I am so appreciative for appraisers across the country who are willing to teach me new things. I believe most of that is said in this post is still correct. However, that is only using one definition of “PUD.”  As you can see from the comments below, there is another definition of PUD that comes from Fannie Mae.  In layman’s terms, it is that a neighborhood is considered a PUD if the HOA fees are required (the exact opposite of this post).  Since many of us do appraisals for Fannie, please keep this in mind.  Now, on to the blog…



It happened again this week.  An appraisal was done, the report was turned into the AMC, and this was the revision request:  “A preliminary review of your appraisal indicates that the HOA fee was filled out, but the PUD box and PUD section was left blank.  Please fill out the PUD information and resend the report at your earliest convenience.”  Ugh!  I opened up the report and wrote a quick sentence or two in the Additional Comments section explaining that the subject has HOA fees for the private road maintenance, but it was not located in a Planned Unit Development.  An hour later, the following revision request was received:  “A secondary review of your appraisal indicates that the HOA fee was filled out, but the PUD box and PUD section was left blank.  Please fill out the PUD information and resend the report at your earliest convenience.  This is the second request!”  Double Ugh!


At this point, I emailed the AMC directly and did my best to explain to them that the presence of Home Owner Association fees does not always mean that the house is in a Planned Unit Development.  After a very long, cumbersome back and forth, I was finally transferred to a ‘senior appraiser’ who was able to speak English and listen to reason.  An override code was issued, and I was able to upload the report with HOA fees entered, but the PUD section left blank.


If this was a one-time, unique situation, it would not have been a big deal.  However, this issue has come up enough that it gets a bit frustrating.  As appraisers, we are often dealing with clients who employ non-appraisers.  They do not speak appraiser-eeze, they are not trained in the art of appraisal, and they only know how to punch their boxes and get their job (however innate it might be) done.


appraisalPUDThe fact is, there is a very specific definition for what a Planned Unit Development is.  From the Dictionary of Real Estate Appraisal (vol 4 pg 214), it says a PUD is “a type of residential, commercial, and/or industrial land development in which buildings are clustered or set on lots that are smaller than usual, and large, open, park-like areas are included within the development.”  There is more to it, of course, but this is the gist of the explanation.  If I know my real estate development history correctly, PUDs were originally intended for subdivisions with stand alone amenities.  They might even have their own park, grocery store, and post office.  For all intents and purposes, they were originally intended to be almost a stand-alone town.  In my appraisal area, there is a development that very much fits this bill.  When it was developed, Star Valley Ranch was the epitome of a Planned Unit Development.  It had private roads, its own sewer system, a maintenance department, parks, a golf course, a post office, and even an administration building.  In recent years, this development has incorporated and is now a municipality, but it still assesses HOA fees.  Try explaining that one to an underpaid AMC receptionist.


My father lives in a neighborhood where there is a Home Owners Association and even a park, but it still is not a PUD.  Why?  The roads are all publicly maintained, there is no common area, and the park is owned by the county.  The HOA fees are for the purpose of the shared, community well only.  HOA fees, but no PUD?  You bet!


I live in a neighborhood where annual HOA fees are assessed.  The roads are public, and we have our own septic tanks and wells.  The fees take care of the entry-way and fencing.  Again, we have HOA fees, but do not seem to fit the textbook definition of a PUD.


AMCs (and other clients) are trying to do their job.  They are trying to be as efficient as possible, but sometimes that comes at a cost.  I understand writing a computer program that looks for the HOA fees to be filled out and then does a check to also see if the PUD section was addressed.  That may work for a majority of appraisals, but it does not work for all.  It is quite possible to have HOA fees but not be in a PUD.


Dustin Harris, Creating ‘Value’ for Real Estate Appraisers


73 thoughts on “HOA Does Not Necessarily Equal PUD”

    1. Ask the homeowner if they have any HOA and if they do, then ask them what this pays for. If the HOA maintains a common park area for kids, roads or a shared private beach; also if all the houses look similar on similar lot sizes and the zoning either does not comply with current zoning requirements or the neighborhood has special zoning, then more than likely you’re looking at a pud. Also, check with the town hall and they should tell you. Also, check the deed, there is normally language about some shared land where the subject owns an undivided percentage of this shared land and the legal name of the pud

  1. First of all thank you for the article, I get the same request and I have made the same push back based on my understanding of a PUD. I did actually have a knowledgeable appraiser from an AMC reference this HUD document (4150.2) section 9 that is copied below. This document applies a very broad brush to the definition of a PUD and directs the reader to “process” a residential development as a PUD if it meets the criteria listed.


    A PUD is defined as a mixed-use residential development of
    single-family dwellings in conjunction with rental, condominium,
    cooperative or town house properties. A residential development
    should be processed as a PUD if it has these minimum

    – a homeowner association that holds either title in fee or a
    lease of prescribed length on the common area
    – mandatory membership of all unit owners (or units) in the
    – the right of all unit owners to participate by vote in the
    operation of the association
    – lien supported assessment of the members to meet the
    association’s budgeted operating costs (special assessments
    may be handled differently)”

    The majority of new subdivisions in my area of the country have common area that is owned or leased by the HOA, mandatory fees, and the ability to place a lien on a property if the fees are not paid. The older (20 years or more) subdivisions in my area have smaller fees that are not mandatory which disqualifies them according to the above criteria.

  2. This is only 1 of the many frustrating limitations that have surfaced since the implementation of the UAD format. The main problem for me anyway, is trying to explain issues to a person who has no background in real estate or appraising practices. The form itself is flawed and the AMC’s practice of hiring inexperienced people only adds the to problem.

    1. Exactly, Rosemary. Not only is the UAD flawed, the flow of the form is not user friendly to say the least. I find myself re-reading C2 and C3 definitions on a constant basis trying to decide where the subject fits in when it’s somewhere in between. How many drop down boxes are too many? I think it’s safe to say the UAD fills that quota before your out of the neighborhood section. I hope someday to meet the clever mind or minds that developed this fantastically restrictive form.

  3. Your comments regarding PUD’s hit the mark and more importantly your comments regarding non-appraiser employees of AMC’s also hits the mark. I’ve been appraiser for over 20 years and find a very frustrating when minimum wage processors feel they know more about the appraisal process USPAP Standards and that Fannie Mae/FHA, etc. Guidelines are requirements, even though they might put the appraiser in the position of violating USPAP.

  4. Fannie Mae’s definition of a PUD says that each units membership in the HOA must be automatic and non-severable. The presence of the HOA is an indicator that there may be a PUD but it is not a PUD if the unit owner can “opt out” of the HOA. Respectfully….in your examples, if the unit owner is required to pay HOA fees, Fannie says it is a PUD.

    1. Yes, Mike Albrecht is correct. It comes down to the definition of PUD for Fannie, Freddie, or FHA when we are doing assignments for them. Each have a different definition of PUD, but each requires that it is a PUD if fees are required.

      Fannie Mae 2012 Selling Guide B4-2.3-01 states:

      “A PUD is a project or subdivision that consists of common property and improvements that are owned and maintained by an HOA for the benefit and use of the individual PUD units. In order for a project to qualify as a PUD, each unit owner’s membership in the HOA must be automatic and nonseverable, and the payment of assessments related to the unit must be mandatory. Zoning is not a basis for classifying a project or subdivision as a PUD.”

      Freddie Mac 2013 Selling Guide Glossary states:

      “A Planned Unit Development is a real estate project in which each unit owner holds title to a lot and the improvements on the lot, and the homeowners association holds title to the Common Elements. The unit owners have a right to the use of the Common Elements, and pay a fee to the homeowners association to maintain the Common Elements for their benefit.”

      The key words in the Freddie Mac definition are, “and pay a fee to the homeowners association.”

      HUD 4150.2 9-0 states:

      “A PUD is defined as a mixed-use residential development of single-family dwellings in conjunction with rental, condominium, cooperative or town house properties. A residential development should be processed as a PUD if it has these minimum characteristics:

      o a homeowner association that holds either title in fee or a lease of prescribed length on the common area
      o mandatory membership of all unit owners (or units) in the association
      o the right of all unit owners to participate by vote in the operation of the association
      o lien supported assessment of the members to meet the association’s budgeted operating costs (special assessments may be handled differently)”

      All of these definitions require mandatory dues, something that the subject does not have. Therefore, no PUD is indicated for the subject.

      1. Why ruin an “opinion” from the author with the FACTS?

        It’s a shame when the “players” know more about the “rules” than the “coach”.

        Excellent job Gary!

      2. Gary Kristensen is absolutely correct. It’s not about a text book definition, it’s about if you’re using the copyrighted Fannie Mae form and what Fannie/Freddie’s definition and guidelines are as to a PUD. Nor does PUD zoning necessarily make it a de minimis PUD.

      3. Gary, may I steal your verbiage? I have a request to mark PUD, but the HOA has not yet become active and no dues are required…

  5. Richard J. Murray, SRA

    I fully agree with your explanation and definition of what constitutes a true PUD, and I also share your frustration with inexperienced AMC personnel. The real problem, however, lies in the fact that Fannie Mae (and by default, other GSE’s) defines a PUD differently than the rest of the world. FNMA considers a property to be in a PUD as follows: •There is common property (even if the common property is a private road, a catch basin, a community well, etc.); •there is an automatic and non-severable membership in a Homeowner’s Association; •there are MANDATORY dues; •and the property is NOT a Condominium unit — — It appears that it does not matter to FNMA if a municipality’s Zoning Ordinance has no provision for PUD’s or that a development was approved as a common “Open Space Subdivision”. If there is a mandatory association fee and any common element, lenders risk the dreaded “hard-stop” if the PUD box (and corresponding completion of the 1004 PUD section) is not included in an appraisal. As long as FNMA remains all powerful, competent appraisers may not often win such arguments, but we should never fail to try.

    1. I agree with Richard. Regardless of what the true definition of a PUD as taught to real estate professionals around the world, FNMA rules the roost and their definition varies. If the appraisal is being prepared for a secondary market lender, then the FNMA rules prevail.

    2. “”As long as FNMA remains all powerful, competent appraisers may not often win such arguments, but we should never fail to try:

      Actually, the “competent appraisers” don’t get all bent out of shape becaue the hallowed AI “definition” does not agree with The GSEs definition. If your client and/or intended user is AI go ahead with their definistion and dn’t check the boxes.

      If it is a GSE go ahead and abide by their RULES and REGs or dont accept their assignments.

      Amazing how some “designated” AI members get all full of themselves and their organization.

    3. Richard, I’m glad you pointed that out. In California, a PUD may or may NOT be FNMAs description. I can think of several known PUDs that do NOT fit Freddie’s guidelines.
      IF the project CCC&Rs do not describe it as a PUD; and the Owners Articles of Association do not describe it as a PUD, I am NOT going to play FNMAs game and create something on paper which does not exist legally. Perhaps our State Subdivision Map Act gives us a bit more clarity. Whenever I am unsure, I REQUIRE the lender to provide these documents AS THEY ARE SUPPOSED TO DO in the first place! In fairness, I rarely have to resort to that. Again, our data sources are pretty good in this regard.

      Before I accept ANY assignment, the very FIRST thing I do is to verify the ownership interest in real estate that I am being asked to appraise.

  6. Pierce Blitch, III, IFAS

    Richard and Dustin,
    While I agree with both of you, I have to pick my battles these days. This is not one of them because FNMA, FHA, and VA (The Omnipotent and All Powerful) do not agree.

    I’ll stick with fighting the Customary and Reasonable War and it looks like we may be winning a few battles there with more skirmishes in multiple States on the horizon!

  7. Not a mountain worth climbing. Just cite the definition and the source, comply and move on. You’ve been schooled this time around Coach! (grin).

  8. The definition of a PUD by the Appraisal Institute in the real estate appraisal dictionary is correct; however, the folks at FNMA have altered that definition to fit their needs and they expect every appraiser working for them to understand their assignment conditions well enough to follow their definition. Unfortunate, but true… Great topic, but it fails to address the difference between identifying a PUD for non-GSE assignments and FNMA’s requirements for reporting a PUD when completing their form reports.

    FNMA’s definition:
    “Section 302 – Units in PUD Projects
    A planned unit development (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, and provide for
    mandatory assessments. Zoning should not be the basis for
    classifying a project as a PUD.
    Appraisals for PUD units should be documented on the Uniform
    Residential Appraisal Report (Form 1004). It may be necessary to
    use an addendum to Form 1004 to provide this information for
    appraisals related to attached units in new PUD projects (particularly
    when the developer is still in control of the owners’ association) in
    order to assure that all the specific eligibility criteria for this type of
    project are adequately addressed.
    The appraisal of an individual unit in a PUD requires the appraiser to
    analyze the PUD project as well as the individual unit. The appraiser
    must pay special attention to the location of the individual unit within
    the project, the project’s amenities, and the amount and purpose of
    the owners’ association assessment since the marketability and value
    of the individual units in a project generally depend on the
    marketability and appeal of the project itself.”

  9. Coach,

    Those who indicated Fannie has her own definitions are correct when it comes to “PUD.” It might be interesting to learn how Fannie got it so screwed up, but most of us don’t really care. Way back in the day when I believed appraisers could command some respect in the secondary mortgage market I tried my with everything I could muster to explain to AMC phone jockeys and even some Fannie personnel that there was a very specific definition of a PUD and that HOAs simply are not PUDs. Indeed, I tried to tell them that seldom, if ever, were any of the subdivisions involved Planned Unit Developments.

    Guess what? That was at least 15 years ago and here you are making the same arguments and citing the same respected authorities. You are absolutely correct, but I can guarantee you that having worked in the secondary mortgage market has convinced me that a Harry Potter novel or the movie Avatar are closer to reality than Fannie Mae is or ever will be.

    Mike is right in my opinion. Do 1004s Fannie’s way and use whatever definitions Fannie has concocted or do something else. Secondary mortgage market appraisal work is a parallel universe that is intended to be frustrating and confusing, but a substitute for reality.

    Just hurry up, put something in every blank on the form and get it done cheap.

  10. we are at the point where we just give them what they want. Almost every subdivision has an HOA for snow and entrance maintenance. All they ask for is the number of units, number sold. Michigan “LARA” has a nice web site where you can find HOA filings for every year. All you do is plug in the subdivision or condo complex, it tells you the name of association and gives a contact number. This holds true for detached and attached, subdivisions and condo complexes. Even being right cost you time. Why spend more time arguing and less time working? We are nothing more than Drones anyway.
    JDM – 30 years + as an appraiser!

  11. Far and away the great majority of residential appraisals ordered by AMCs are aimed at the GSEs and are screened to determine their compliance with their guidelines. This isn’t the only term they (the GSEs have modified/rewritten to their own peculiarities.

    Heed the 500 pound gorilla – (and you may want to walk through FNMAs recently-issues tutorial on the Collateral Underwriter – you can find it in yesterday’s Lender Letter).

  12. Although I feel your pain – I get this a lot in rural Maine where there are no PUDs, just subdivisions with common factors – there is a REASON and a credible basis for this FNMA requirements, as the purpose of those reports is assessment of financing risk. Many HOA fees are non-severable from property ownership. Liens can be imposed and in some states, foreclosure actions are possible should fees be not paid. If as an appraiser you do not perform due diligence in ascertaining exactly what powers the HOA has, or does not have, in relation to any given property for a lender client – PUD or no – you are in fact violating USPAP as you may not be properly identifying certain ownership conditions, risks and costs related to ownership or financing of the property. It’s pretty simple, your lender client runs the risk of being sucked into extra charges, fees, liens and potential foreclosure actions should they acquire title through non-payment of the mortgage by the borrower. They need to know what they are “getting into.” Even if the answer is in the negative, as it is in most parts where I practice, the lender client has a real need to have that issue clarified.

    1. @TMackenzie,

      You are drinking the cool-aide if you believe the banks are using value to mitigate risk? Congress seems to think there still is a direct relationship between collateral value and risk, but the banks originating residential mortgages abandoned that thinking long ago and just collect origination fees, nickle and dime charges and default insurance proceeds. The risk is sold by Fannie to the retirement funds and other unsuspecting long term investors by phony ratings.

  13. Coach, I’ll mirror the other comments. I have spent a large majority of my time educating people over the phone trying to explain to them the difference between a true PUD and a residential development. I thought I was the only one…..lol

  14. Did you charge enough money on that one? Between the automated review, a non appraiser reviewer and then a phone call to a “Senior reviewer”, just adds to my belief, that too many cooks spoil the broth.
    You earn NO MONEY while answering the NON Revision.
    But the folks dealing with this everyday continue to do these reports for $300+/-.
    I call it the STUPID FEE! If you have to deal with non revisions everyday, you have to charge higher fees..
    Just think how dumb we have become, excepting low fees for constant badgering, doing more work than ever, and wasting more time than ever! I hope all appraisers are charging at least $400+ for this kind of harassment.

  15. Cool…everybody seems to be on the same page with the PUD definition. I’m just trying to figure out why you didn’t put the amount in the special assessments field and avoid the hassle?


      1. It’s a special assessment for road maintenance, put the amount in that box, explain what it is, and avoid the whole mess.

  16. Reading Carl Hensleys article says it all. ESPECIALLY the line “– mandatory membership of all unit owners (or units) in the
    association”. I have several areas near me that require homeowner to contribute to the maintenance of a common ground area. Even though the development has no ‘boundary markers’ – it is a PUD.

  17. A fight not worth having. I learnt a long time ago to figure out which battles are worth fighting and which ones are not. If there’s HOA but the house is not located in a PUD, then I’ll leave the HOA blank since when I fill this out, everyone (AMC, lender, underwritter, state board, etc) will expect the PUD section to be filled out. I’ll put this HOA in the addendum and I won’t even call it HOA, I’ll call it a maintenance fee for a private road or whatever it maintains. Because that’s what it really is, a maintenance fee. HOA is typically for projects that are legally organized, with the legal name of the project written into the deed of each house or unit, which indicates a PUD or condo. Therefore, am very confident that am not being misleading by calling it maintenance fee and not HOA. I’ve done this several times and I’ve never had anyone ask any questions. However, if the house is in a PUD, I’ll fill out the HOA on page 1 of URAR and PUD info on page 3.

  18. Annemieke Roell

    My understanding of Fannie’s desire to know about a PUD is primarily whether or not the HOA can put a lien on the property if mandatory HOA dues are not paid. Around here PUD has more to do with zoning than HOAs.

    I am going to try the “not a PUD” on my next voluntary HOA report.

  19. I’m paid for my opinion. My opinion is that the PUD check box has been used in the industry to include true PUD from whatever dictionary you wish to believe in as well as simple home owners dues. This is why we have neighborhood descriptions, as well as the PUD section below the sales grid, to clarify just what is being valued.

    As far as I can recall the lenders laid this to rest many moons ago. Been doing this 30 years and can’t recall when the PUD section first appeared but it’s clear as time passes that aspect of the form has become increasing less important in the overall scheme of things.

    I had to educate a reviewer on why the final value of a Small Income Property didn’t exactly match the indicated Sales Comparison Value on a report just this week. I am surely not going to spend time with anyone on something as trivial as a PUD box. Yes, it’s screwed up but so is a lot of the rest of the form. Reviewed a report this week where the 1004MC had 6 sales in a quarter and that minimal data was utilized to define a near 4% value increase for the comps….

    Form inadequacies should be handled from the top down in form revision processes not the bottom up.

  20. Even if it’s in a PUD, you don’t have to fill out the block of info at the bottom of page below the cost approach. It very specifically states to ONLY fill it out if the builder/developer is in control of the HOA AND it’s an attached dwelling unit. Pretty much 99.9% of the stuff I do is located in a PUD’s but the developer is long gone and they are single family detached. No need to fill it out.

  21. What I love is when there isn’t even a HOA or mandatory or even voluntary fees and they argue it is in a PUD! The city government says it isn’t a PUD either. It is a small waterfront development that is a municipality and even the reviewer isn’t competent geographically and gives you a fail score when it is actually a good appraisal but they can’t wrap their minds around something that is not a cookie cutter!

  22. Dustin,
    I used to try to educate my clients when these conditions came back all of the time. I gave up, it was an uphill battle, so now I just fill out the pud area with info about what the hoa includes. Interestingly, I was fighting the battle on the HOA vs PUD before HVCC.

  23. We have that problem here all the time. One of my responses has been, “For it to be a legal PUD it must have a PUD permit from the County. If you (the lender) want to take the responsibility for calling it an illegal PUD, I can note it, per your requirement, that way in the appraisal.” They are amazingly fast to NOT take responsibility and cancel the request.

  24. Planned Unit Developments have changed over the years since the quoted definition was written. Maybe the definition needs revising. A lot of PUDs in my area do not have private streets or any parks or common areas. Some do not collect dues. Some HOAs that collect dues have public streets. The rubric for checking the UAD is if there are dues, then the box PUD has to be checked and what the dues are collected for has to be filled out on the bottom of page 3. In our office we put that information in all the time EVEN WHEN it is not really a PUD, because….. our client needs the information. That information is REQUIRED by the VA even if the other parts of the section do not apply.

    As appraisers we have to be flexible and provide what our clients need and be knowledgeable about how our reports are being scrutinized, by all that review them, be it machine, or untrained, ESL human.

    The real issue appraisers SHOULD address and have some say in with the FNMA FORM and UAD that we all are required to use by most clients. IF we could go back to real estate appraisers being in charge of their own PROFESSION, as other appraisers and other professionals are, then we could once again have control of the service we provide AND make respected, professional decisions.

    Just my two SENSE (no sic intended)

  25. I just went through a very similar issue and went round and round with the AMC and underwriter concerning what is and isn’t a PUD. As stated above by others, the problem is the Fannie Mae definition of PUD versus the Dictionary of Real Estate Appraisal’s definition. This along with uneducated underwriters and AMC reviewers makes this issue on-going. I had a very similar issue with another lender and after asking for clarification and providing them with the definition we use and Fannie Mae’s definition, they saw the light and did not require the PUD box be marked. As in many things in our industry there are too many entities out there making decisions about what we are supposed to do according to their own interpretations and we are left to guess each time what’s required of us. In an imaginary world, one body such as The Appraisal Foundation (just as an example) would make a set of rules for all of us to follow and no particular entity would have the authority to introduce additional requirements without the blessing of the over arching authority. Maybe if all of the states with an appraisal coalition could get together our voice would be loud enough to finally be heard and we might finally get to have some input about what we do. OK, I’ll wake up now, but what a nice dream.

  26. Simple solution. If the fees for the road are not in the title report, then it is a private agreement. Just make comments in your addendum about the private road, check box for private road, and explain. Do not fill out the subject information for special assessments or hoa fees. Most gravel roads in my area are maintained with no written agreement. The road is repaired/maintained on an “as needed basis” by neighbors. There are bigger battles!!
    Jerry Parsons

    1. Amen Jerry!! I’ve done the same thing over and over and have never had anyone question me. This is a very simple issue, can’t figure out why anyone is getting worked up over such a trivial thing. To me, this is a fight not worth having.

  27. In my area (NW WA State) another aggravating issue occurs: Legal description for the SFR on its own lot in the subdivision says “Condo.”
    These developments are actually a variant on a PUD, because the only reason for the ‘condo’ designation is to establish a HOA to collect dues to pay for the playgrounds, entry signage and drainage pond maintenance, and sometimes, the street lights power bill. The HOA does not maintain any part of the individual properties. Streets are public.

    Because the word ‘condo’ is used, FHA ‘demands’ that these be put on the 1073 form. For GSE type loans, sometimes the U/W will back off and agree the 1004 is OK……but even for those, some U/W departments also demand the 1073 form. They get scared about the word ‘condo’ and don’t believe we appraisers understand the actual situation as it exists.

  28. Lots of responses on this one. I think the coach is a bit off the mark on this one and I think a few posters have hit it on the head, LOL, in my opinion.

    There are many definitions out there of what a PUD is, from all sorts of sources. There are many definitions of lots of other things in the world too, so that in itself should not throw us off. I was pleased to see someone post the HUD definition and the Freddie Mac definition. I have always focused on the FNMA definition, as all my mortgage orders specify a 1004 (the Fannie, not Freddie form number); that just makes sense to me. I don’t try to argue other definitions on assignments that are on FNMA forms, I just stick to the FNMA definition and report accordingly. That said, there are cases when there are HOA dues, however the project would not be defined as a PUD by FNMA. In those cases, I report the HOA fees because it would misleading not to, then I fill out the PUD section as required because UAD makes me (because I entered dues and as UAD sees it, DUES=PUD), but then write a comment on how there are dues, but the project is not a PUD as defined by FNMA. I also do this in reverse on the rare occasion that the municipality has zoned the area as a PUD, but the project still doesn’t meet FNMAs definition. For me it comes down to who wants to know and how they define things. For a non-lender assignment, I stick to the definitions sourced by the Appraisal Institute and/or the local municipality.

    No one should fear this. If FNMA says its a PUD, then report it as a PUD. If the lender asks you to say it is not a PUD when FNMA says it is, don’t do it. Eligibility is not our problem.

  29. I whole-heartedly agree with you. And, I have been arguing this point for YEARS. In my area, the City of San Antonio even has a Zoning named PUD – Planned Unit Development, and is primarily for those subdivisions which are gated and the HOA owns and maintains the streets and walkways. However, FHA and HUD require that if there are mandatory HOA dues, then the PUD must be checked, and the PUD section must be completed.

    1. robert riordan

      I am an owner of 6 duplexes in San Antonio that I intend to sell. I sold two in 2014.
      I was informed at that time by a escrow company that in 2005, the developer who set up the 16 unit duplex project, which are all rentals, as an hoa condominium designation in error.
      (The hoa has two private driveways into the project and a fence but the driveways are not gated but no owners dues.)
      I have been in a dispute with my property manager for the past two years who insists the condo hoa must be converted to a pud hoa before any new buyers could obtain FNMA loans. A couple of the duplex owners haven’t agreed to sign the agreement so we are short the requisite 80% vote, so if my property manager is correct, my properties can’t be sold. That just doesn’t make sense to me.
      Can I Hire you as a consultant for this problem or could you refer me to someone in San Antonio who I could hire to consult with.
      Robert Riordan 925 518 7739

  30. GREAT article Dustin! I still ‘mentor’ a few fairly experienced (AR) appraisers and this comes up more frequently than most would imagine.

    Without fail, it ALWAYS comes back to the same thing. The very FIRST step in the appraisal process is to determine EXACTLY what the ownership (or other) interest in real estate is, that I am being asked to appraise. Then explain it!

    OK, so lets forget that deminimus PUDs ever existed, and that the easy answer to the type projects you have described, is no longer available to us.

    Lets even assume that, as in your case, you correctly reported what was there and filled out the form correctly.

    Too often, the SAME lender and title company that FAILED to provide us with a prelim; CCC&Rs, copies of Deed restrictions, and especially the HOA Articles of Association may ALSO have (erroneously) in the past “attached a PUD rider” to the existing policy of title insurance (which we also have no copy of), and subsequent title clerks or title officers down the road see it and ASSUME it is a PUD.

    In California, MOST PUDs are so described in the original DRE Commissioners Final Subdivision Reports (actually, ALL of them are-same as condos). IF the complete legal (from the deed Exhibit) does not tell me PUD; (or condo when that is the issue), then I do NOT make the change UNLESS the lender/client gives me the documents that they are supposed to give me in the first place!

    I can usually read the telltale signs from public records property data sheets and plat maps. When I cannot, then when the owner tells me there s an HOA I insist on enough information to fully understand the ownership interest(s) involved.

  31. I had this problem for years and even went back and forth once or twice. Like most of the comments I read they got it right. It’s Fannie’s convoluted concept how they view what PUD is for the purpose of making the loan package marketable. Even though the project physically or legally is not a bonafide PUD by zoning ordiance or by plat, most HOA residential developments are not PUD given the S/D was not established by the PUD ordiance requirements if they even have a PUD ordinance. Instead most HOA developments are like mini-versions sometimes known as PRD (planned residential development or something else. Once I had marked the appraisal subject section PUD and the developer got wind of it and called the lender saying my S/D is not a PUD. Builder’s thinking was right and then the lender wanted the PUD box to be unmarked even though this project met Fannie’s requirement as PUD.

  32. OK to add more fuel to the fire, we have some attached townhome complexes in our area that are NOT PUDs, do not collect dues, and do not have any covenents. Each owner does his own maintenance, the streets are public. We also have some single family manufactured home neighborhoods that are classified with recorded documents as “Condos” So, to each his own, just communicate what the client needs to know.

  33. Hi, you said: “My father lives in a neighborhood where there is a Home Owners Association and even a park, but it still is not a PUD. Why? The roads are all publicly maintained, there is no common area, and the park is owned by the county. The HOA fees are for the purpose of the shared, community well only. HOA fees, but no PUD? You bet!” I have a question about this. If they have a common well, community well who owns the property this is on? This would have to be a common area, wouldn’t it?
    Thank you.

  34. Robert T Tomlinson

    We just completed building our house and we were told that we would be members of the Fairway 18 Estates HOA. When the inspection was performed we were advised by the appraiser that there was no PUD designation on our lot and she was of the opinion that we fell out of the HOA when our lot [and our adjacent neighbor’s lot] were re-platted for a county flood control drainage system. It is important to note that our lot is not included inside the “gated” community and our road is maintained by the county and is not considered a private HOA road. Yet, we are charged a HOA fee that covers the maintenance costs for the roads inside of the “gated” community, the costs for the two gates that serve to define the gated area, and all of the landscaping that is contained therein. How can the HOA include us if we have been re-platted and have no PUD designation for our lot? I am thinking of filing a protest with the HOA.
    Any help would be appreciated.

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  43. Jo Ann Meyer Stratton, IFA, SRA

    With the Fannie Mae /Freddie Mac form the top of the form is for private restrictions that would affect the lender’s financial position. Mandatory HOA fees take precedence over mortgage liens. So they want to know about those. Public/police restrictions are reported in the site section of the form. Local zoning, etc are public restrictions and have nothing to do with the private restrictions that are reported at the top of the form.

  44. Aw, this was a really good post. Finding the time and actual effort to produce a good article… but what can I say… I put things off
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  45. I’m only a few months late to the party… Is that still considered fashionably late? 🙂 I used my Dictionary of Real Estate Appraisal to verify the “PUD” definition in your article. Get this… they changed it on us! Triple Ugh! The Dictionary of Real Estate Appraisal, 5e states: “Planned Unit Development: A type of building development designed as a grouping of complimentary land uses, such as housing, schools, recreation, retail, office, and industrial parks, contained within a single master development.” They must have changed it after FNMA. This is a B.S. definition. I MUCH preferred the 4e definition. It actually said something!!!! This one is fluff and basically describes every single zoning map I’ve ever seen. Quadruple Ugh!

  46. This PUD vs HOA matter is really about who rides on Title on the land unseen as rabbits in their wholes….Banks are the ghost riders here. Set-up as deeds of trust long ago……Wells Fargo and their mystery accounts that run on credit reporting opening accounts they never had claim to….selling it off to Fannie….Then it goes to Freddie….Then the big loss mitigation that really never took place with the owner but it went as deed into foreclosure having Freddie do modified mortgage payments the property owner never knew about….oops…away goes the Title to the fee simple land they thought they had! Freddie is the TRUSTEE TO THEIR TRUST….THEIR LAND….THE HOME IS AN EXPENSIVE HOME YET NOW AS A trailer IN A TRAILER PARK! keep close attention to Campgrounds and mergers from other HOA’S with Amenities formed before the plat map and has now come back to claim their prize….water lines….utility share….big dues….It is called a complete DEFECTIVE TITLE GAME….IT IS WHAT IS UNDER THE GROUND THEY WANT!!!!!! You are looking for “who is in charge?” THE DAMN PURCHASER putting up money for phony Owner’s Policies! Why don’t you ask the damn Title insurance companies to FIX it PUD-HOA! They don’t want to!!!!The LAWYERS are in town….The Title Abstract companies LOOK the other way for real estate investment! Isn’t that what it is all about FOLKS?

  47. Annie, can you please state the point and follow up with the facts? It sounds like you have something really interesting to say, but I can’t follow what the subject of your post was. I thought this was about PUDs, but your post seems to talk about title insurance. As I said, I would like to understand what you are trying to say.

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