PA Legislature Increases Condo and Planned Community Conversion Period from 7 to 10 Years
Among the procedures governed by the Uniform Condominium Act (68 Pa.C.S.A. 3101 – “UCA”) and the Uniform Planned Community Act (68 Pa.C.S.A. 5101- “UPCA”), are time limitations for phasing of development, and turnover of control to unit owner governance. Very generally and until recently, the UCA and UPCA limited the time period for conversion, addition, and withdrawal of real estate to seven (7) years from recording of the declaration.
While real estate markets were booming or at least steady, these limitations and processes proved mostly unproblematic. However, crash of the banking, mortgage, and lending industries essentially halted construction and development. Developers lost financial backing and were unable to continue building; potential purchasers could not obtain mortgages and thus could not buy homes. Meanwhile, the seven (7) year clock on conversion kept ticking. Declarant rights to convert or add real estate were thus continuing to move toward expiration – areas not converted into units might thus become common element by operation of time.
On July 4, 2010, the Pennsylvania Legislature enacted what is known as the “Permit Extension Act” (72 P.S. Section 1602), the intent of which is to halt expiration of certain “government approvals” such as subdivision plans and building or construction permits. Although many developers took the position that the Permit Extension Act also suspended the seven (7) year clocks which were running pursuant to the UCA and UPCA, a Pennsylvania appellate court recently disagreed. In Logan Greens Community Association, Inc. v. Church Reserve, LLC, No 1819 C.D. 2012, the Commonwealth Court, on September 20, 2013, held that the Permit Extension Act did NOT apply to conversion or withdrawal of real estate, as those processes do not require “approval by a government agency”.
Perhaps insecure in its reliance on the Permit Extension Act (prior to release of the decision in Logan Greens), the Pennsylvania Legislature adopted HB1122, which was signed by the Governor on July 2, 2013. HB1122 specifically amends Sections 3205(12) and (13), 3206(2), 3219(A) and 3414(C) of the UCA, and Sections 5205 (13) and (14), 5206(2) and 5219(A)(3) of the UPCA. Without quoting HB1122 in its entirety, the Bill essentially extends the time period during which a developer may:
• create units, limited common elements (or both) within convertible real estate, or
• add additional real estate, or
• withdraw additional real estate,
from seven (7) to ten (10) years. The Bill also expressly permits a developer to amend the declaration to “conform the maximum time limit for exercising declarant options” without a vote of the unit owners.
HB1122 applies, and is retroactive to “all condominiums and planned communities, respectively, created by declarations recorded less than seven years prior to the effective date of this act”. This means that as long as the applicable seven (7) year time period for a particular development has not expired by July 2, 2013, it is extended from seven (7) to ten (10) years (through a declarant amendment to the declaration). HB1122 does not appear to “save” condominiums or communities for which the seven (7) year time periods had expired before July 2, 2013. In addition, HB1122 expressly “shall not affect any other provision of Title 68”. Accordingly, HB1122 does not amend Section 3303 of the UCA and Section 5303 of the UPCA, which require that declarant control terminate within seven (7) years of the date of conveyance of the first unit. Therefore, while declarant options to add or withdraw real estate were extended, transition from declarant to unit owner control must still take place within the seven (7) year periods provided in the UCA and UPCA.
This article is not legal advice and is provided for informational purposes only. Actual legal advice can only be provided after consultation by an attorney licensed in your jurisdiction.
