Sep 102005

A monthly fee paid by the homeowner in a planned unit development that is considered a significant obligation. In addition to paying for maintenance of green space and roads, the fee often pays for swimming pools, clubhouse, and other costly maintenance items. Typically, lenders use a 2 percent rule to distinguish between DeMinimus PUDS (DPUDS) and PUDs. If the costs of maintenance and the amortization of the cost of improvement items divided by the number of units are greater than 2 percent of the median home value, it is a PUD. PUDs must meet certain criteria to receive favorable financing, much like condominiums.