Safety in Numbers? The Positives (and Negatives) of Planned Unit Developments
While buying in a Planned Unit Development isn’t for everyone, there are certain benefits to this lifestyle. Having specific guidelines (non-negotiable rules) about parking, landscaping and the color of your home can help maintain a certain standard in the area. All of these rules typically help with the resale value of your home. The intent of CC&R’s (covenants, conditions and restrictions) is to protect, preserve and enhance the value in the community. If you like rules and conformity, you’re probably a good candidate for these type of communities.
In comparison, neighborhoods without CC&R’s can fall victim to homeowners or renters who don’t have the same pride of ownership that you do. Without the rules to ensure a minimum standard of care and these homes can effect your home’s value. Most rules are common sense, but some may surprise you. It’s important that you read these rules thoroughly when you receive them — remember, they’re not optional. They’re a requirement of the community. Failure to adhere to the rules could result in a fine.
What are PUDs and HOAs?
PUDs (Planned Unit Developments) are communities, which can include single-family homes, condos, and even commercial property like retail stores. The HOA (Home Owners Association) is an organization of home owners who live in the community. The difference between a PUD townhome and a condominium townhome is that in a PUD, you actually own the land the townhome sits on. In a condominium, you don’t own the land. Ownership consists of everything within the walls of the unit. Everything outside of the walls such as common areas, are owned by all of the owners in an undivided interest.
What are HOA dues?
In some neighborhoods or in a Planned Unit Development there can be monthly dues that each homeowner is required to pay. These dues pay for things such as roofs, landscaping, road maintenance, security, maintenance of commonly owned land or buildings, maintain services, etc. There is no ‘typical’ when it comes to dues so be sure to find out what is and isn’t covered as part of the bill. From time to time, an HOA may run out of money if there was an unexpected expense or if the funds were mismanaged. Be sure to have your accountant review the HOA budget documents that you’ll receive from the seller prior to removing your contingency.
HOA dues are different than Mello Roos
If a neighborhood has Mello Roos bonds, these fees are to pay for public improvements such as parks, schools, lighting and public services. Most times these bonds are for 20-30 years from the initiation date and don’t fluctuate, but they’re also not optional so be sure your lender knows about these, as well. Most older neighborhoods won’t have Mello Roos, but always confirm. You’ll find information about specific tax assessments on the county tax assessor’s website.
If you do purchase a home in a more structured community, be sure to read the rules before you commit. They tend to be lengthy and strictly enforced. Home Owners Associations can insist that you not park in your driveway or may dictate the size and breed of your dog. The more common rules would regulate the color of your home or improvements that you’d like to make. Most HOA’s have an architectural review committee that determines whether or not your ideas will be approved. Equally as important to the list of rules is the financial status of the community. Does the HOA collect enough money monthly to successfully run the community? Are there reserves in the account to cover the unexpected expenses that may come along? As a homeowner, you will be sharing equally in the financial commitment of the budget.
What HOA documents should you receive as part of your transaction?
- Covenants, Conditions and Restrictions (sometimes called CC&Rs or declarations)
- Articles of Incorporation
- Minutes of Meetings
If you are obtaining financing, your lender will need to know that you’re planning to purchase a home in a PUD. The lending guidelines vary when it comes to PUD versus condo. Not only will they have to factor in those dues payments as part of your mortgage, but the HOA documents need to be reviewed. Some communities, for instance, don’t allow for FHA financing. Before you find the perfect home, you’ll want to be sure it’s on the HUD approved list.
Who maintains the road beyond the gate?
From time to time, builders will purchase a large piece of land in an established neighborhood and build a small infill project. They may also gate the new homes, adding privacy to the community. One thing to keep in mind is that when this happens, the road may not be maintained by the county, not to mention who will maintain the gate. Why do you care? Well, when it comes time for repairs, hopefully there’s a road maintenance agreement recorded to indicate who is responsible for sharing the cost of resurfacing and maintaining that stretch of pavement. If not, it could become much like a ‘good neighbor fence’, where you learn who your good neighbors really are. Bottom line is that if there’s no agreement, there’s no commitment or obligation on the part of each home owner. Be sure to read the recorded documents and if it’s not mentioned, ask.
Do you qualify to live in a Senior Community?
Once you turn 55 years old, living in a Senior Community is now an option. Either you or your partner need to be 55 to qualify. It’s a growing sector of our market and for ‘active seniors’, it fits the lifestyle. There’s an abundance of activities including golf, tennis and many outdoor sports. Homes are all one-story and include low maintenance landscaping. These communities come in a variety of price ranges and have something for almost every active adult. They are called “Planned Communities” for a reason, some are structured to include everything that one needs within a convenient walking distance from the neighborhood.
There are pros and cons to living in a Planned Unit Development, but for those looking for a sense of community, this may be a good option. They bring a sense of security and predictability to one’s lifestyle; which as we get older is a welcome environment. For those who don’t like conformity and a rule book, it may not be the neighborhood for you.