QUESTION: I have seen four different definitions of a PUD in four different publications. I have title attorneys and real estate attorneys arguing over what is and what is not a PUD and whether this form needs to completed. What is exactly is the definition of a PUD? What if the seller does not know if it is or is not a PUD?
ANSWER: The State of Tennessee recently passed a new law that went into effect on July 1, 2009, concerning planned unit developments, or PUDs. The new statute provides a definition of a PUD. It also requires that the seller disclose whether the property is located within a PUD:
(a) As used in this section, unless the context otherwise requires:
(1) “Bylaws” mean guidelines for the operation of a homeowner’s association which define the duties of the various offices of the board of directors, the terms of the directors, the membership’s voting rights, required meetings and notices of meetings, and the principal office of the association, as well as other specific items that are necessary to run the homeowner’s association as a business;
(2) “Planned unit development (PUD)” means an area of land, controlled by one (1) or more landowners, to be developed under unified control or unified plan of development for a number of dwelling units, commercial, educational, recreational or industrial uses, or any combination of the foregoing, the plan for which does not correspond in lot size, bulk or type of use, density, lot coverage, open space, or other restrictions to the existing land use regulations; and
(3) “Restrictive covenant” means any written provision that places limitations or conditions on some aspect of use of the property, such as size, location or height of structures, materials to be used in structure exterior, activities carried out on the property, or restrictions on future subdivision or land development.
(b) In addition to any other disclosures required in this part with regard to transfers described in 66-5-201, the owner of the residential property shall, prior to entering a contract with a buyer, disclose in the contract itself or in writing, including acknowledgement, if the property is located in a PUD, and make available to the buyer a copy of the development’s restrictive covenants, homeowner bylaws, and master deed upon request.
SECTION 2. This act shall take effect July 1, 2009, the public welfare requiring it.
The agent’s responsibility is to make the seller aware of this new law. It is NOT the agent’s responsibility to determine whether the seller’s home is in a PUD. This is for the seller to determine.
We would recommend that the seller consult with his own attorney. The new law is found at Public Chapter 112, Senate Bill 0324, and House Bill 0380.
[SOURCE: TAR's Legal & Ethics Hot Line Attorneys]