Condo or PUD? Why does it matter?

L.C. from New Haven County, Connecticut writes:

Dear Mister Condo,

I have purchased a “condo” within a PUD that is 6 separate cabins that were built in 1995. There is no active HOA and no dues collected. I cannot get FHA financing nor conventional financing on the cabin/condo. Should I try to get the owners to agree to dissolve the condo or should I try to form the HOA and get the condo FHA approved? Which would be the easiest and less expensive route?

Mister Condo replies:

L.C., I think we need to add a little clarity to your question before I answer. A Planned Unit Development, or PUD, is not a condo, and, as such, does not require FHA certification. There may still be other factors that prohibit the unit within the PUD to be eligible for FHA financing but that is out of your control. If the “condo” is truly a condo, then you would need to seek FHA certification for the entire complex before any of the individual units were FHA financing eligible. You may need to visit Town Hall and check out the land records to clarify which type of common interest property the condo or PUD is. Once you know for sure, you can take the appropriate action. If it is a PUD, you simply need to demonstrate that to the lender. That shouldn’t cost you anything. If it is a condo, you will likely have to convene the homeowners and discuss what your options are. That process can be drawn out and expensive so don’t be surprised if you experience pushback from the other owners. Best wishes!