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Condo vs. Townhome vs. PUD

Condo vs. Townhome vs. PUD

This is another reminder that condos are not distinguishable from PUDs (Planned Unit Development units) by appearance alone.

Attached side-by-side two-story units that all touch the ground can be zoned “CONDO” or “PUD.” Complexes with units that “float” (that do not touch the ground) will almost always be zoned Condo (PUDs must touch the ground).

People often refer to PUDs as “townhomes,” but “townhome” is just a style and not a formal zoning designation.

With PUDs, the owner owns the actual lot or ground underneath the unit.

With Condos, the owner owns an equal and undivided interest in the entire condo project’s lot (and common areas).

The way to know the actual zoning is to look at the legal description; a PUD will have a separate lot # and/or a small lot size under it, i.e. 2,200 square feet.

A Condo will have the same lot # as all the other Condos, or NO lot # at all, and/or a very large lot size (such as “11 acres”) under it.


This of course matters for several reasons: (1) interest rates are often higher for condos than they are for PUDs; (2) condos are ineligible for FHA and VA financing unless the entire complex is approved; and (3) Appraisers use different forms for condo appraisals vs PUD appraisals; appraisals are invalid (worthless) if the wrong form is used. This is why lenders and our appraisers need to know the correct zoning/designation up front.

I have seen numerous transactions where the wrong type of appraisal was ordered and the wrong interest rate was quoted b/c the wrong designation was indicated in the MLS listing or in other documents/information sources.

Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 01524255, NMLS# 335646