B4-2.3-01, Eligibility Requirements for Units in PUD Projects (11/06/2024)

For a project to qualify as a PUD, all of the following requirements must be met:

• each unit owner’s membership in the HOA must be automatic and nonseverable,

• the payment of assessments related to the unit must be mandatory,

• common property and improvements must be owned and maintained by an HOA for the benefit and use of the unit owners, and

• the subject unit must not be legally created as part of a condo or co-op project.

Zoning is not a basis for classifying a project or subdivision as a PUD. Units in projects or subdivisions simply zoned as PUDs that include the following characteristics are not defined as PUD projects under Fannie Mae’s policies. These projects

• have no common property and improvements,

• do not require the establishment of and membership in an HOA, and

• do not require the payment of assessments.

Fannie Mae classifies PUD projects as either

• Type E—established PUD projects in which the developer has turned over voting control of the HOA to the unit purchasers.

• Type F—new PUD projects in which the developer has not turned over voting control of the HOA to the unit purchasers.

Certain PUD projects require submission to PERS. See  B4-2.2-06, Project Eligibility Review Service (PERS)B4-2.2-06, Project Eligibility Review Service (PERS) for additional information.

New or established PUD projects consisting of single-width and/or multi-width manufactured homes not subject to a community land trust, deed restriction, ground lease, or shared equity arrangement may be reviewed in accordance with B4-2.1-02, Waiver of Project ReviewB4-2.1-02, Waiver of Project Review.

Lenders must determine that the PUD project and subject unit meet the requirements described in Requirements Applicable to All Properties in a Condo, Co-op, or PUD Project in B4-2.1-01, General Information on Project StandardsB4-2.1-01, General Information on Project Standards.

Note: Any unit legally created as part of a condo or co-op project located within a larger PUD project or master association must meet the applicable requirements for condo or co-op projects.

For additional information applicable to PUD projects subject to a ground lease, see B2-3-03, Special Property Eligibility and Underwriting Considerations: Leasehold EstatesB2-3-03, Special Property Eligibility and Underwriting Considerations: Leasehold Estates.