Freddie Mac Single-Family Seller/Servicer Guide 5702.1 — Requirements for Planned Unit Developments (PUDs)

Freddie Mac Single-Family Seller/Servicer Guide 5702.1 — Requirements for Planned Unit Developments (PUDs)

Effective 2025-02-05 · Freddie Mac's stamp for this section

This section contains requirements related to: ■ Glossary definitions ■ Planned Unit Developments (PUDs) and homeowners association ■ Condominium Units in PUDs ■ Leasehold estates ■ Manufactured Homes in PUDs ■ Insurance Freddie Mac requires the Seller to identify if a unit is located in a PUD. Freddie Mac defines a PUD as a real estate project in which: ■ Each unit owner holds title to the lot and the improvements on the lot ■ The homeowners association holds title to the Common Elements ■ The unit owners have a right to the use of the Common Elements, and ■ The unit owners pay a fee to the homeowners association to maintain the Common Elements for their benefit Note: Zoning is not a basis for classifying a project or subdivision as a PUD. To be classified as a PUD, units in projects or subdivisions must meet all the requirements above. (a) Glossary definitions Sellers should be familiar with the following Glossary terms: Glossary definitions for PUDs A Amenities Amenities are natural features or constructed improvements that enhance property or project attractiveness and owner or Shareholder enjoyment but are not essential to the property’s or project’s use by the owners or Shareholders. C Common Elements Common Elements are all portions of a project other than the units or individual lots within: (1) a Condominium Project which are owned as tenants in common by the unit owners, (2) a Planned Unit Development which are owned by the homeowners association and (3) a Cooperative Project which are owned by the Cooperative Corporation but not subject to a proprietary lease or occupancy agreement. Common Elements are typically used by unit owners or Shareholders who share in the cost of maintenance and operation. Common Elements are defined in the Project Document, and may include but are not limited to parking, walkways, lighting, elevators, boilers, hallways, foyers and legal ingress and egress to individual units. The term includes common areas and Limited Common Elements. L Limited Common Elements Limited Common Elements are portions of Common Elements reserved for use by one or more unit owners but not all unit owners. Limited Common Elements are defined in the Project Documents and may include, but are not limited to, balconies or patios serving a single unit, assigned parking spaces or storage bins. M Master Association An association that governs (1) multiple affiliated projects, (2) a mixeduse development, (3) sub-associations within the same condominium project, such as residential and commercial units’ sub-associations, or (4) a Planned Unit Development (PUD). It typically manages the affairs that affect the entire planned community or development, whereas the subassociations handle the affairs pertaining to their specific project(s) or areas of the larger development. P Project Documents The term Project Documents for a project and any Master Association refers to any and all documents that pertain to the following: ■ Formation of the project ■ Rights of the developer and limitations on the actions of the developer ■ Mortgagee rights ■ Operation and governance of the homeowners association ■ Assessments, voting rights of unit owners and insurance coverage The Project Documents include but are not limited to the condominium declaration or master deed, by-laws, articles of incorporation (if any), governing documents, covenants, conditions and restrictions, and other recorded agreements applicable to the project, as well as any documents of the Master Association or overall project, and applicable rules and regulations, public offering statement or offering plan, purchase agreement and similar documents. The provisions of the Project Documents are legally enforceable by the homeowners association. (b) PUDs and homeowners association When reviewing a PUD to determine if it meets the requirement in this section, Sellers must consider all units and spaces that the homeowners association holds title to or has insured. In PUDs, the homeowners association owns the Common Elements and maintains them for the benefit of the unit owners. (c) Condominium Units in PUDs If a Condominium Unit is located in a PUD, the Seller must comply with the Condominium requirements and warranties in Chapter 5701 and the PUD requirements and warranties in this chapter. (d) Leasehold estates If the PUD unit or any PUD Common Element is on a leasehold estate, the Seller must comply with the leasehold estate requirements in Chapter 5704 and the PUD requirements and warranties in this chapter. (e) Manufactured Homes in PUDs If a Manufactured Home is located in a PUD, the Seller must comply with the Manufactured Home requirements and warranties in Chapter 5703 and the PUD requirements and warranties in this chapter. (f) Insurance The Seller must represent and warrant that the property insurance requirements in Chapter 4703 have been met.

Source: Freddie Mac Single-Family Seller/Servicer Guide 5702.1 — Requirements for Planned Unit Developments (PUDs) · source URL · snapshot 4c94f67729042dd6