PUD vs HOA

Our HOA is made up of several townhomes. All utilities, electrical, gas, water, sewer serve each unit independently. We share only a common area behind the homes. Some homes have balconies, some have decks, others have small enclosed back yards. We are getting ready to redo our CC&Rs. I have heard discussion that our HOA "looks like" a PUD, not an HOA. I have some questions:

1. Is a PUD simply a type of HOA (which makes me think we are currently defined as a CID)?

2. What are the advantages to our HOA to be redefined as a PUD?

3. Is redefining us as a PUD possible? Realistic?

Thanks.

PUD = Planned Unit Development
A Planned Unit Development (PUD) is a community of homes that could look like single family residences, townhomes or condos, and can include both residential and commercial units

CID = Common Interest Development
A type of housing, composed of individually owned units, such as condominiums, townhouses, or single-family homes, that share ownership of common areas, such as swimming pools, landscaping, and parking

Since you are in California, you may find the following helpful:

CID Menu page from Davis-Stirling website

Section 4200 of D-S states: "This act applies and a common interest development is created whenever a separate interest coupled with an interest in the common area or membership in the association is, or has been, conveyed, provided all of the following are recorded:
(a) A declaration.
(b) A condominium plan, if any exists.
(c) A final map or parcel map, if Division 2 (commencing with Section 66410) of Title 7 of the Government Code requires the
recording of either a final map or parcel map for the common interest development."

So under CA law, a CID was formed when your docs were recorded. Makes no difference if you call it a PUD or anything else.

The Homeowners Association (HOA) manages the CID. The CID covers all varieties of ownership, including PUDs.

So IMO, no real value in trying to redefine anything. Just follow the statute.

Patricia

There are many what-a-be- attorneys on this site. It does matter that the right set of CCRs were enacted for your type of property. I have seen cases where there are mismatches..

But, don't take my word for it.

The most important aspect of re-stating your governing docs, especially the CCRs is that the responsibilities of both the Association and the homeowner are clearly and properly defined. More importantly, that the insurance requirements are clearly and properly defined.

Common interest is not only defined as swimming pools, rec rooms, private roads, but something important like common walls, common roofs, and common plumbing, etc.

PUD designation really means nothing. One size does not fit all.

Yes, Richard. This is the pint NpS is making to Patricia, at t least the way I read him.

Liability, responsibility, these are some of the reasons I wanted to understand the difference.

For example, our homes have balconies, some on the third floor. The HOA is responsible for those balconies. Yet they can be impossible to reach without getting scaffolding, etc. and that would be just to inspect, let alone replace, repair or maintain.

Another thing is the sewer systems. They are getting older and beginning to fail, one by one. As they only serve on unit it just seemed to me that they should be the responsibility of the homeowner, rather than the HOA.

I was under the impression that as a PUD more things would fall onto the homeowner, and since so many of these things serve on unit alone it made sense to me that it would be that way. If this is the case, then it would make a significant difference.

In addition our budget is small enough that it will be impossible to fix very many balconies and / or sewers per year. Everything is getting older, everything needs just a little more work. Would I rather pay higher dues in the hopes that the HOA might get to my balcony this year - or - pay less, save my money and fix my balcony on my own?

Yes, we do share sidewalks, interior landscaping and lighting, and a six car parking lot. But no swimming pool, no tennis court, no gym, rec room, no security, no extra amenities.

Thank you.

It won't matter if your classified as a PUD or a CID.
The language in the CC&Rs will be what matters as this is the contract everyone agreed to abide by.


When was your last Reserve Study done?
Are the reserve funds fully funded or partially funded (based on that study)?

If you're not setting enough money aside in Reserves, expect special assessments, deferred maintenance/repairs or a combination of both in your future.

In your rewrite of your docs, you could transfer responsibility for the balconies to the individual owners.

In our townhouse community, our HOA is responsible for sewer lines under the street. The individual owners are responsible for the sewer lines from the curb to the house. If your current docs don't have that kind of distinction, you could change those responsibilities in the re-write.

As all have said, it's not the PUD or CID designation that matters. If you want to make changes, you need to make changes in the details.

Patricia

It sounds like what you want to do is ignore Reserves, keep assessments low, and put more responsibility on individual owners. Cheap is as cheap does.

Patricia

I am assuming you have 150 units in your townhome community. I also hope you have a management company running the day-to-day affairs of the community. In your situation, a good management company would be worth their weight in gold and money well spent.

Here are just a few reasons:

1) You mentioned that you were painting only a portion each year and you felt it was better to do them all at once, or maybe half. Financially, it may make perfect sense to do a portion each year. This would/should also be included in your reserve study. A good manager should be able to put together a workable financial plan to pay for the long term projects within your association.

2) You need either your manager (if any) to closely review your expenses to see where costs can be trimmed and redistributed to reserves. Hopefully your Accounts Receivable (delinquencies) are well managed and under control. Can monies be saved with your utilities, vendor contracts, security (if any).

3) An outsider should review your governing docs to make sure they work for you TODAY. Realize that making some of the changes you have mentioned will require approval of the mortgage holders. There are proper ways to do this. If working with a legal firm to rewrite your docs, MAKE SURE they have a proven and verifiable track record of getting them approved. Also realize that it will take approximately $10K to have them completely done. This would include legal fees and printing and postage costs, as well as election material costs.

4) While trying to turn certain things over to homeowners to pay, it will have stiff opposition from owners, especially long time owners that have been paying into reserves and not seeing the benefits. In turning over certain items, such as balconies, you may slowly lose the continuity that attracted people to the complex in the first place.

5) Are your dues in line with comparable neighboring communities.

Just a couple of things to consider.

We are only 50 units - (some have 3 and four balconies - some balconies are decorative, not even accessible by the resident)

We have a good management company. Our PM is quite involved, and this is a change. The previously mentioned Board member would not allow her to have any input, ran things the way he wanted. The new Board insisting that we get her involved, "do things the right way" was partially the cause of his resignation. No guilt here.

With our PM involved the new Board has reviewed all contracts, utilities, delinquencies, etc. We have managed to save tremendous amounts of money. So we are on the right track. But I have been hearing that historically money was not well spent and that is why the homes were relatively neglected. Not enough was left in the reserves to do all the painting, or even half, so units were painted 4 - 6 per year. Seven years later, several remain unpainted. I think we can dip into our reserves a bit, use some of the money we saved elsewhere and finish off the rest of the units - save up the money - and then do at least half the units at one time in a few years. And so on with other maintenance items.

I think our governing documents don't work in today's world. For example, issues like mold, solar panels, are not even addressed. Twenty years since the last update makes this a perfect time to redo them and make them fit our current needs. Great idea of checking the make sure the legal firm has a proven and verifiable record of getting them approved. Thank you for that! (We anticipated at least $10K)

Changing responsibilities will definitely be an uphill battle - perhaps a break in dues will help. Our dues are not exorbitant, but they are high. Other communities with the same sues offer many amenities - pools, security, water, cable, rec rooms, gyms, none of which we have. Some homeowners have told me they would like glass fronts on their balconies (something our budget would never be able to afford) while other's of course have argued against any changes. Not sure where the majority lies. A survey before CC&R redo will probably help guide.

Not an easy position. But definitely one worth exploring.

Thanks