What Is a Planned Unit Development Rider?
A planned unit development rider is component of a regulatory process associated with the purchase of a condominium unit. It is an attachment to the ownership document that is mandatory to finalize the closing when the unit in question is part of a condominium or homeowner association.
A planned unit development rider affirms the borrower’s promises to satisfy all payments and fees as expressed in the condominium contract. The rider fortifies the contract between the buyer and the condominium or homeowner association and provides the community with the right to notify the underlying financial institution if the buyer fails to meet the payment obligations expressed in the ownership agreement.
When a buyer stops paying his condo fees, the planned unit development rider shifts the payment obligation from the owner to the bank holding the unit’s mortgage. The bank, after reviewing the matter, can then add the owed dues onto the existing loan. The rider thus allows the community’s ownership to step in and notify the owner’s lender of a default. The immediate inclusion of the community eliminates the delays commonly associated with the debt-collection process. As a result, planned unit development riders are typically used to speed up the collection process for units in default of their ownership agreements.
