There are two common types of Common Interest Developments in California: Condominiums and Planned Unit Developments (PUDs). These terms refer to the type of ownership, not the style of the home. For instance, a townhouse style of dwelling may legally be considered a condo, or a single-family detached residence may legally be considered a PUD.
So, what’s the difference between a condo and a PUD?
Condo: When you own a condo, you own everything inside of the walls of your unit, also known as the “air space.” You share ownership of the structure and common areas with everyone else in the development. Specific ownership rights are documented in the Covenants, Conditions and Restrictions (CC&R’s). Many people think of condos as high-rise buildings or apartments, but there are some townhouses, halfplexes, and row houses that are actually considered condominiums in the way they are owned.
PUD: When you own a PUD, you own the structure and the land that your home sits on, according to the recorded parcel map. Common areas are typically owned by the Homeowner’s Association (HOA), of which the homeowners are members and are granted rights and easements to use the common area space and amenities. A townhouse, halfplex, row house, or a single-family detached home can be considered a PUD.
In both cases, you will most likely pay HOA dues, which cover common area maintenance like landscaping, pool upkeep, etc. In a condo, the HOA dues may also cover repairs and insurance on the common walls, roof, and amenities. In a PUD, homeowners are responsible for their own repairs and insurance. The CC&R’s will also spell out what the HOA covers versus what the homeowner is responsible for.
As a buyer, you will have a chance to review the Preliminary Title Report and the HOA documents (CC&R’s, Bylaws, and Budget) either before or during escrow. The Preliminary Title Report will specify the ownership type and include a parcel map. Using the HOA documents, you can calculate how much you can expect to spend on insurance and maintenance. It is important to read and understand these documents so you know exactly what you own, and how you can use the land, common areas, and amenities. Condos and PUDs can be confusing, so if you have any questions, you can always consult your Realtor.