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What-is-an-HOA-and-a-PUD

When you are looking to buy a home, condominium or townhome that shares common ownership, common areas and has governing documents, it is very important that you understand the difference between condominium and planned unit development (PUD).  

You should also carefully read all the Covenants, Conditions & Restrictions (CC&Rs) and Bylaws that you will receive from the title company.  CC&Rs and Bylaws have limits and rules placed on a group of homes or condominium complex.  These documents are the rules and regulations of the community that you as a buyer are agreeing to live by.

Buyers should be aware that CC&Rs and Bylaws may be written so as to restrict not only property use, but also to restrict owners’ lifestyles, for instance, spelling out hours during which entertainment, such as parties, may be hosted; how many pets you can have; your rights to rent your home and more.  CC&Rs and Bylaws are very important and should be thoroughly examined and understood prior to purchase.   

As part of the escrow process, you will be asked to acknowledge receipt in writing of the CC&Rs and Bylaws so be sure to read them before you release your inspection contingencies!  Any specific questions regarding the CC&Rs should be answered by a real estate lawyer.

CONDOMINIUMS AND PUD’S common characteristics

  1. Common ownership of private residential property;
  2. Mandatory membership of all owners in an association which controls use of the common property;
  3. Governing documents which establish the procedures for governing the association, the rules which the owners must follow in the use of their individual lots or units as well as the common properties; and a means by which owners are assessed to finance the operation of the association and maintenance of the common properties.

CONDOMINIUMS AND PUD’S differences

The owner(s) of a unit within a typical Condominium project owns 100% of the unit, as defined by a recorded Condominium Plan. As well, they will own a fractional or percentage interest in all common areas of the Condominium project.

The owner(s) of a lot within a PUD own the lot which has been conveyed to them-as shown in the recorded Tract Map or Parcel Map-and the structure and improvements thereon. In addition, they receive rights and easements to use in common areas owned by another-frequently a homeowner’s association-of which the individual lot owners are members.  

Also a buyer can get a better interest rate on an PUD compared to an HOA subject to the buyer’s credit.  The above are basic descriptions and should not be considered legal definitions.

TOWNHOMES

The terms Condominium and PUD refer to types of interests in land, not to physical styles of dwellings.  Though the townhouse is the most common style of structure found in common interest developments in California, a townhouse might legally be a Condominium, a unit or lot in a Planned Development, or a single family detached residence. Article Source: clta.org