FHA and VA loans particularly can be tough to complete on Condo projects because of the (often) tight requirements laid down to get the Condo project to be acceptable. So it’s often a relief to Seller, Buyer and Realtors when a property is found to be a PUD instead.
PUD stands for “Planned Unit Development” and here’s the kicker . . . a property can have the architectural design of, and look just like a Condo unit . . and yet not be a Condo. In fact, many properties in PUDs even have recorded title documents which incorrectly depict them as Condos when they are in fact, homes in a PUD.
So in a nutshell here’s a very simplified definition of what a Condo is versus a PUD:
CONDO: The buyer owns the unit entirely, and a percentage or “fractional” ownership of common areas divided amongst all owners in the complex. Buyer does NOT own the lot the unit sits on.
PUD: The Buyer owns the entire lot and the structure sitting on the lot, – they then receive rights & privileges to use common areas, (which are typically owned by an HOA consisting of individual lot owners who are members of that HOA).
A quick-fix way to tell the difference is to ask for a copy of the Plat Map from a title company. If you see clearly defined lot dimensions and lot-outlines, you are most likely looking at a PUD.
Here’s a very informative video put together by an Appraiser in the Sacramento area: