HOA Does Not Necessarily Equal PUD

HOA not equal to PUD

HOA Fees but no PUD?

It happened again this week. An appraisal was done, the report was turned into the AMC, and this was the revision request:

“A preliminary review of your appraisal indicates that the HOA fee was filled out, but the PUD box and PUD section was left blank. Please fill out the PUD information and resend the report at your earliest convenience.”

Ugh! I opened up the report and wrote a quick sentence or two in the Additional Comments section explaining that the subject has HOA fees for the private road maintenance, but it was not located in a Planned Unit Development. An hour later, the following revision request was received:

“A secondary review of your appraisal indicates that the HOA fee was filled out, but the PUD box and PUD section was left blank. Please fill out the PUD information and resend the report at your earliest convenience. This is the second request!”

Double Ugh!

At this point, I emailed the AMC directly and did my best to explain to them that the presence of Home Owner Association fees does not always mean that the house is in a Planned Unit Development. After a very long, cumbersome back and forth, I was finally transferred to a ‘senior appraiser’ who was able to speak English and listen to reason. An override code was issued, and I was able to upload the report with HOA fees entered, but the PUD section left blank.

If this was a one-time, unique situation, it would not have been a big deal. However, this issue has come up enough that it gets a bit frustrating. As appraisers, we are often dealing with clients who employ non-appraisers. They do not speak appraiser-eeze, they are not trained in the art of appraisal, and they only know how to punch their boxes and get their job (however innate it might be) done.

The fact is, there is a very specific definition for what a Planned Unit Development is. From the Dictionary of Real Estate Appraisal (vol 4 pg 214), it says a PUD is

“a type of residential, commercial, and/or industrial land development in which buildings are clustered or set on lots that are smaller than usual, and large, open, park-like areas are included within the development.”

There is more to it, of course, but this is the gist of the explanation. If I know my real estate development history correctly, PUDs were originally intended for subdivisions with stand alone amenities. They might even have their own park, grocery store, and post office. For all intents and purposes, they were originally intended to be almost a stand-alone town. In my appraisal area, there is a development that very much fits this bill. When it was developed, Star Valley Ranch was the epitome of a Planned Unit Development. It had private roads, its own sewer system, a maintenance department, parks, a golf course, a post office, and even an administration building. In recent years, this development has incorporated and is now a municipality, but it still assesses HOA fees. Try explaining that one to an underpaid AMC receptionist.

My father lives in a neighborhood where there is a Home Owners Association and even a park, but it still is not a PUD. Why? The roads are all publicly maintained, there is no common area, and the park is owned by the county. The HOA fees are for the purpose of the shared, community well only. HOA fees, but no PUD? You bet!

I live in a neighborhood where annual HOA fees are assessed. The roads are public, and we have our own septic tanks and wells. The fees take care of the entry-way and fencing. Again, we have HOA fees, but do not seem to fit the textbook definition of a PUD.

AMCs (and other clients) are trying to do their job. They are trying to be as efficient as possible, but sometimes that comes at a cost. I understand writing a computer program that looks for the HOA fees to be filled out and then does a check to also see if the PUD section was addressed. That may work for a majority of appraisals, but it does not work for all. It is quite possible to have HOA fees but not be in a PUD.

Dustin Harris
Latest posts by Dustin Harris (see all)
Dustin Harris

Dustin Harris

A multi-business owner and residential real estate appraiser. He has been appraising for nearly two decades. He is the owner and President of Appraisal Precision and Consulting Group, Inc. He owns and operates The Appraiser Coach where he personally advises and mentors other appraisers. His principles and methodologies are also taught in an online, Mastermind group. He and his wife reside in Idaho with their four children. Dustin Harris on e-AppraisersDirectory.com

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3 Responses

  1. Avatar Tom says:

    THANK YOU! I thought I was all by myself on this one. I use this comment with great success: HOA fees are collected for road maintenance (or what the minimal effect case may be) only. Subject’s subdivision is not a full PUD. Leave the box unchecked with $ amount and they leave me alone.

  2. Avatar Bryan says:

    Per our state board (IL) Fannie and Freddie don’t care what you think, what the zoning is and so on – if there is an HOA they consider it a PUD and the PUD section must be filled out.

  3. Avatar Mike says:

    I agree, its frustrating. The lender doesn’t care what the Dictionary says. They’re going to refer to Fannie Mae Selling Guide B4-2.3-01.


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HOA Does Not Necessarily Equal PUD

by Dustin Harris time to read: 3 min