What is a Planned Unit Development (PUD)?

An illustration around the word mortgage with lots of different terms such as rates, interest, home, refinance, house, charges, loan, purcahse, taxes, bank, lender, debt, payments, finance, amortization and a lot more.When you’re on the hunt for a place to live, you might be surprised at all of the different types of properties on the market. One such property type that many people are unfamiliar with is a planned unit development (PUD).

If you were driving around in your car looking at houses, you would almost definitely not be able to distinguish a regular single-family home from a PUD. And that’s because structurally, there really isn’t a difference; both are free-standing residential buildings, possibly with a garage, and maybe even a driveway and a yard (it’s possible for a PUD to be made up of condos or retail stores, but the majority of PUDs consist of single-family homes).

So what makes them different?

The main difference between a single-family home and a planned unit development is the legal structure. With a single-family home, you’re on your own. Mowing your lawn, shoveling snow, and any other type of maintenance or repair will fall squarely on your shoulders.

A PUD, on the other hand, is structured much like a Home Owners Association (HOA), with certain maintenance and repair jobs being taken care of by a hired party.

Of course, that doesn’t happen for free. Just as you would with an HOA, you’ll have to pay dues (usually monthly) while living in a PUD. Aside from maintenance and repairs, there might be certain amenities such as pools, playgrounds, tennis/basketball courts, and a common green area.

What you need to know

When you’re considering a PUD or any other type of contracted community, it’s important to find out exactly what you’re getting into. This means getting out your favorite magnifying glass and reading the fine print. Specifically, you’re going to want to focus on two things: cost and restrictions.

Knowing how the budget is structured in a PUD is extremely important because it gives you the opportunity to figure out if you’re getting your money’s worth. Will you be paying for amenities that you won’t use? Or are you actually getting a good deal on services and facilities that would otherwise be costly or a hassle?

Being aware of what the PUD’s bylaws allow and restrict is equally important. Your best course of action is to make a list of all the things you couldn’t live without and see if they’re allowed. After all, you wouldn’t want to show up with your dog, cat, and cockatoo only to find out that pets aren’t allowed.

Does a PUD affect my mortgage?

Typically, there are few requirements when getting a mortgage for a planned unit development, so the mortgage process shouldn’t be much different than usual. However, you definitely want to make sure that your lender knows the property is a PUD.

Bottom Line

When thinking about purchasing a PUD, it’s important to have a clear grasp on your lifestyle, and if it will be compatible with the community. If it is, and if the fees go towards amenities you would be paying for otherwise, then a PUD could be worth it.