PA Commonwealth Court Holds Owners are Prohibited from Withholding Payment of Common Expense Assessments
On January 4, 2017, the Pennsylvania Commonwealth Court confirmed that the Uniform Planned Community Act (68 PA.C.S.A. Section 5101 et seq) does NOT permit owners to withhold assessments where they are dissatisfied with the association’s performance.
In Logan’s Reserve Homeowners’ Association v. McCabe, the association instituted suit (first in the Magisterial District Court and then in the York County Court of Common Pleas) against property owners Jeffrey and Jennifer McCabe for failure to pay assessments. The McCabes filed a counterclaim, alleging that the association had “failed and continues to fail to maintain the common area behind [their] back lawn [a common area]”. This “failure”, they argued, constituted a breach of the governing documents by the association, and thus entitled the McCabes to reimbursement of expenses (and to withhold assessments). The association responded with a motion for partial summary judgment on the counterclaim, maintaining that as a matter of law, the McCabes were “prohibited from withholding payment of common expense assessments as self-help to address their dissatisfaction with the association’s alleged failure to maintain the Common Area”. After the court entered partial summary judgment in favor of the association and against the McCabes on the assessment claim, the counterclaim proceeded to arbitration.
At arbitration, the McCabes were awarded the sum of $2,711.06; however, absent an award of attorneys’ fees, the McCabes appealed to the trial court. The trial court held in favor of the Association on the counterclaim, and this appeal followed. Relying heavily on Rivers Edge Condominium Association v. Rere, the Commonwealth Court held that in the same manner as the Uniform Condominium Act (68 PA.C.S.A. Section 3101 et seq), the Uniform Planned Community Act does NOT support self-help in the form of an owner withholding assessments. “Had the Legislature intended to allow owners to withhold assessments where owners believe that their … association is not performing its obligations properly, we believe the Legislature would have explicitly so provided”. The Court further wrote:
As a matter of law, the McCabes were required to pay the Association’s assessments regardless of any alleged inadequacies in the Association’s performance. Therefore, since any such breach of the Association’s Declaration would not relieve the McCabes of their obligation to pay their assessments, the question of whether the Association breached them does not involve a material fact. Thus, the trial court properly granted the Association’s partial summary judgment motion.
In reaching this conclusion, the opinion included the following footnote:
The McCabes focus on the contractual nature of their obligation to pay assessments, and the Association’s purported failure to meet its obligations thereunder. However, the McCabes’ duty to pay assessments was triggered by their purchase of the Property. The Association’s imposition of assessments and the McCabes’ obligations were created by the Act, and thus do not arise by contract.
Logan’s Reserve accordingly confirms that the obligation to pay assessments is NOT conditioned upon an owner’s satisfaction with the manner in which an association is performing its responsibilities. The obligation to pay assessments might thus be said to be absolute, an argument practitioners have successfully made for decades. Logan’s Reserve is significant in that it is the first appellate case deciding this issue under the Uniform Planned Community Act. Previously, associations had to rely on Rivers Edge and analogize its holding under the Uniform Condominium Act, to planned communities.