Title Tuesday: A Geometry Lesson in Title Insurance

What’s the difference between PUDs and HOAs? And what are they anyway?

From a lender’s perspective a property is typically considered to be a PUD a Planned Unit Development, if there is a homeowner’s association where annual fees are collected and generally the property is not a condo.  In actuality a true PUD, is a mostly self-contained community that typically consist of either single-family homes, or townhomes/rowhomes and the biggest difference is that they are built and operate with a plan. 

Imagine a large piece of property where a lot of owners can build whatever structures they want without common planning for things like roads, land use or the size or type of houses.  The opposite of that in terms of land use is a PUD.  They have an overall plan in place for roads, the type of houses/structures to be built and sometimes even going so far as defining how tall a fence is allowed to be or the color a house is allowed to be painted.

A Homeowners Association (HOA), is an organization that enforces and often creates the rules for the allowed uses of the property. HOAs are used in PUDs as well as condominium buildings and subdivisions.

But wait! There’s more: Despite owning the title to the house and the property, residents of PUDs must pay into the HOA (Homeowners Association) – these fees go to the upkeep of amenities and services. Residents must abide by bylaws set by the HOA. Essentially, they don’t have full autonomy to use the property any way they want.

To use an analogy from geometry class, try remembering it like this: a square is a rectangle, but a rectangle is not necessarily a square. In this case, a PUD is governed by an HOA, but an HOA doesn’t necessarily indicate a PUD. Class dismissed!