Reader Questions - Condo or Planned Development, Earthquake Insurance

Dear Kelly,

I own and live in a unit which I thought all along was a condominium, but I just recently found out that it’s actually a PUD. What is a PUD and are there any advantages/disadvantages associated with one over a condominium? 

Thank you,

E.F., Corona

Dear E.F.,

Of the four varieties of common interest development recognized by California law, the two most common are the condominium and the planned development. [The term “planned UNIT development,” while often used, is not recognized by state law.]

The common assumption is that condominiums are attached, while planned developments are detached homes. However, this is not always the case, and homebuyers and their REALTORs® should not be fooled by a project’s appearance – what matters is not its appearance, but what the governing documents say. There are many condominiums in which the homes are detached, and many planned developments in which the homes are attached.

The CC&Rs and a map (subdivision map or condominium plan) will indicate which type of property you have, and will define its boundaries.

Planned developments normally have less common area than condominium projects, so the condominium association usually has more responsibility to maintain and repair. However this is not always true, as sometimes an association of detached homes is set up as a condominium because the subdivider did not have enough land to satisfy zoning setback or lot size requirements –in such condominiums, the “unit” is the entire building and perhaps even the yards around it.

The other significance of the condominium compared to planned development is that under Civil Code 4780, unless the governing documents say otherwise, termite treatment is the condominium association responsibility but not the planned development association responsibility. This can be a major problem for attached planned developments, because the association needs the power to tent an entire building – but usually must amend its CC&Rs to add that power.

Unfortunately, most subdividers do not spend much time customizing the original CC&R document to the specifics of the project they are developing, so your governing documents, if original, may not accurately fit your association.

Thanks,
Kelly

Hello Mr. Richardson,

We had an annual meeting last week and were told by the HOA president that the HOA pays (many thousands) a year in earthquake insurance. He wants to cancel earthquake insurance and give that money back to the homeowners. Is that a wise decision?

Thank you for your help,

D.O., Goleta

Dear D. O.,

Earthquake insurance is a good idea if your association can afford it. Some governing documents require the board to keep such insurance in place- check yours to see if it does. If your association is a condominium, and has responsibility to maintain and repair the buildings, then your association might be in a financial disaster if major earthquake hit your project.

Because of the expense of such insurance, and on the other hand the potential consequence of not having it, this is one of those decisions on which the board should seek member input. However, again, to avoid having to potentially abandon the project in the event of major earthquake damage, such insurance is a good idea.

Thanks for your question (and hoping none of us need to use that insurance any time soon),
Kelly

Written by Kelly G. Richardson

Kelly G. Richardson Esq., CCAL, is a Fellow of the College of Community Association Lawyers and a Partner of Richardson | Ober | DeNichilo LLP, a California law firm known for community association advice. Submit questions to [email protected]. Past columns at www.hoahomefront.com. All rights reserved®.