act-1996-0-180•Pennsylvania Act 1996-180 — REAL AND PERSONAL PROPERTY (68 PA.C.S.) - AMEND PLANNED COMMUNITIES
Pennsylvania Act 1996-180 — REAL AND PERSONAL PROPERTY (68 PA.C.S.) - AMEND PLANNED COMMUNITIES
act-1996-0-1801996 Pa. Act 180Law
Act text part 1
REAL AND PERSONAL PROPERTY (68 PA.C.S.) - AMEND PLANNED COMMUNITIES
Act of Dec. 19, 1996, P.L. 1336, No. 180 Cl. 68
Session of 1996
No. 1996-180
HB 1757
AN ACT
Amending Title 68 (Real and Personal Property) of the
Pennsylvania Consolidated Statutes, adding provisions
relating to planned communities.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Part II of Title 68 of the Pennsylvania
Consolidated Statutes is amended by adding a subpart to read:
PART II
REAL PROPERTY
* * *
SUBPART D
PLANNED COMMUNITIES
Chapter
51. General Provisions
52. Creation, Alteration and Termination of Planned
Communities
53. Management of Planned Community
54. Protection of Purchasers
CHAPTER 51
GENERAL PROVISIONS
Sec.
5101. Short title of subpart.
5102. Applicability.
5103. Definitions.
5104. Variation by agreement.
5105. Separate titles and taxation.
5106. Applicability of local ordinances, regulations and
building codes.
5107. Eminent domain.
5108. Supplemental general principles of law applicable.
5109. Construction against implicit repeal.
5110. Uniformity of application and construction.
5111. Severability.
5112. Unconscionable agreement or term of contract.
5113. Obligation of good faith.
5114. Remedies to be liberally administered.
§ 5101. Short title of subpart.
This subpart shall be known and may be cited as the Uniform
Planned Community Act.
§ 5102. Applicability.
(a) General rule.--This subpart applies to all planned
communities created within this Commonwealth after the effective
date of this subpart; but, if such a planned community contains
no more than 12 units and is not subject to any rights under
section 5215 (relating to subdivision or conversion of units) to
subdivide units or to convert into common elements or under
section 5211 (relating to conversion and expansion of flexible
planned communities) to add additional real estate, create units
or limited common elements within convertible real estate or
withdraw real estate, it is subject only to sections 5105
(relating to separate titles and taxation), 5106 (relating to
applicability of local ordinances, regulations and building
codes), 5107 (relating to eminent domain) and 5218 (relating to
easement to facilitate completion, conversion and expansion)
unless the declaration provides that the entire subpart is
applicable.
(b) Retroactivity.--Except as provided in subsection (c),
sections 5105, 5106, 5107, 5203 (relating to construction and
validity of declaration and bylaws), 5204 (relating to
description of units), 5218, 5219 (relating to amendment of
declaration), 5223 (relating to merger or consolidation of
planned community), 5302(a) (1) through (6) and (11) through
(15) (relating to power of unit owners' association), 5311
(relating to tort and contract liability), 5315 (relating to
lien for assessments), 5316 (relating to association records),
5407 (relating to resales of units) and 5412 (relating to effect
of violations on rights of action) and section 5103 (relating to
definitions), to the extent necessary in construing any of those
sections, apply to all planned communities created in this
Commonwealth before the effective date of this subpart; but
those sections apply only with respect to events and
circumstances occurring after the effective date of this subpart
and do not invalidate existing provisions of the declaration,
bylaws or plats and plans of those planned communities.
(c) Nonflexible planned communities.--If a planned community
created within this Commonwealth before the effective date of
this subpart contains no more than 12 units and is not a
flexible planned community, it is subject only to sections 5105,
5106, 5107 and 5218 unless the declaration is amended in
conformity with applicable law and with the procedures and
requirements of the declaration to take advantage of the
provisions of subsection (d), in which case all the sections
enumerated in subsection (b) apply to that planned community.
(d) Amendments to declarations, bylaws, plats and plans.--
(1) In the case of amendments to the declaration, bylaws
and plats and plans of any planned community created before
the effective date of this subpart:
(i) If the result accomplished by the amendment was
permitted by law prior to this subpart, the amendment may
be made either in accordance with that law, in which case
that law applies to that amendment, or may be made under
this subpart.
(ii) If the result accomplished by the amendment is
permitted by this subpart and was not permitted by law
prior to this subpart, the amendment may be made under
this subpart.
(2) An amendment to the declaration, bylaws or plats and
plans authorized by this subsection to be made under this
subpart must be adopted in conformity with applicable law and
with the procedures and requirements specified by the
document being amended. If any such amendment grants to any
person any rights, powers or privileges permitted by this
subpart, all correlative obligations, liabilities and
restrictions in this subpart also apply to that person.
(e) Nonresidential units.--This subpart does not apply to a
planned community in which all units are restricted exclusively
to nonresidential use unless the declaration provides that the
subpart does apply to that planned community. This subpart
applies to a planned community containing both units which are
restricted exclusively to nonresidential use and other units
which are not so restricted only if the declaration so provides
or if the real estate comprising the units which may be used for
residential purposes would be a planned community in the absence
of the units which may not be used for residential purposes.
(f) Planned communities outside Commonwealth.--This subpart
does not apply to planned communities or units located outside
this Commonwealth, but the public offering statement provisions
under sections 5402 (relating to public offering statement;
general provisions) through 5405 (relating to public offering
statement; planned community securities) shall apply to all
contracts for the disposition thereof signed in this
Commonwealth by any party unless exempt under section 5401(b)(2)
(relating to applicability; waiver).
§ 5103. Definitions.
The following words and phrases when used in this subpart and
in the declaration and bylaws shall have the meanings given to
them in this section unless specifically provided otherwise or
unless the context clearly indicates otherwise:
"Additional real estate." Real estate that may be added to a
planned community.
"Affiliate of a declarant." Any person who controls, is
controlled by or is under common control with a declarant.
(1) A person "controls" a declarant if the person:
(i) is a general partner, officer, director or
employer of the declarant;
(ii) directly or indirectly or acting in concert
with one or more other persons or through one or more
subsidiaries owns, controls, holds with power to vote or
holds proxies representing more than 20% of the voting
interest in the declarant;
(iii) controls in any manner the election of a
majority of the directors of the declarant; or
(iv) has contributed more than 20% of the capital of
the declarant.
(2) A person "is controlled by" a declarant if the
declarant:
(i) is a general partner, officer, director or
employer of the person;
(ii) directly or indirectly or acting in concert
with one or more other persons or through one or more
subsidiaries owns, controls, holds with power to vote or
holds proxies representing more than 20% of the voting
interest in the person;
(iii) controls in any manner the election of a
majority of the directors of the person; or
(iv) has contributed more than 20% of the capital of
the person.
(3) Control does not exist if the powers described in
paragraphs (1) and (2) are held solely as security for an
obligation and are not exercised.
"Allocated interests." The common expense liability and
votes in the association allocated to each unit.
"Association" or "unit owners' association." The unit owners
association organized under section 5301 (relating to
organization of unit owners' association).
"Common elements." Common facilities or controlled
facilities.
"Common expense liability." The liability for common
expenses allocated to each unit under section 5208 (relating to
allocation of votes and common expense liabilities).
"Common expenses." Expenditures made by or financial
liabilities of the association, together with any allocations to
reserves. The term includes general common expenses and limited
common expenses.
"Common facilities." Any real estate within a planned
community which is owned by the association or leased to the
association. The term does not include a unit.
"Condominium." Real estate, portions of which are designated
for separate ownership and the remainder of which is designated
for common ownership solely by the owners of those portions.
Real estate is not a condominium unless the undivided interests
in the portions of the real estate designated for common
ownership are vested in the unit owners.
"Controlled facilities." Any real estate within a planned
community, whether or not a part of a unit, that is not a common
facility but is maintained, improved, repaired, replaced,
regulated, managed, insured or controlled by the association.
"Conversion building." A building that, at any time before
the conversion notice date with respect to the planned community
in which the building is located, was occupied wholly or
partially by persons other than purchasers and persons who
occupy with the consent of purchasers.
"Conversion notice." The notice required to be given to
tenants and subtenants by the terms of section 5410(a) (relating
to planned communities containing conversion buildings).
"Conversion notice date." The date on which the conversion
notice is placed in the United States mail, in the case of
mailed notices, or is delivered to the unit leased by the
recipient, in the case of hand-delivered notices.
"Convertible real estate." A portion of a flexible planned
community not within a building containing a unit, within which
additional units, limited common facilities or limited
controlled facilities or any combination thereof may be created.
"Cooperative." Real estate owned by a corporation, trust,
trustee, partnership or unincorporated association, if the
governing instruments of that organization provide that each of
the organization's members, partners, stockholders or
beneficiaries is entitled to exclusive occupancy of a designated
portion of that real estate.
"Declarant."
(1) If a planned community has been created, the term
means any of the following:
(i) Any person who has executed a declaration or an
amendment to a declaration to add additional real estate.
This subparagraph excludes a person holding interest in
the real estate solely as security for an obligation; a
person whose interest in the real estate will not be
conveyed to unit owners; and, in the case of a leasehold
planned community, a lessor who possesses no special
declarant rights and who is not an affiliate of a
declarant who possesses special declarant rights.
(ii) A person who succeeds under section 5304
(relating to transfer of special declarant rights) to any
special declarant rights.
(2) If the planned community has not yet been created,
the term means any person who offers to dispose of or
disposes of the person's interest in a unit to be created and
not previously disposed of.
(3) If a declaration is executed by a trustee of a land
trust, the term means the beneficiary of the trust.
"Declaration." Any instrument, however denominated, that
creates a planned community and any amendment to that
instrument.
"Development rights." Any right or combination of rights
reserved by a declarant in the declaration:
(1) to add real estate to a planned community;
(2) to create units, common facilities, limited common
facilities, controlled facilities or limited controlled
facilities within a planned community;
(3) to subdivide units to convert units into common
facilities or controlled facilities; or
(4) to withdraw real estate from a planned community.
"Disposition." A voluntary transfer to a purchaser of any
legal or equitable interest in a unit or a proposed unit. The
term does not include the transfer or release of a security
interest.
"Executive board." The body, regardless of name, designated
in the declaration to act on behalf of the association.
"Flexible planned community." A planned community containing
withdrawable or convertible real estate or a planned community
to which additional real estate may be added or a combination
thereof.
"General common expenses." All common expenses other than
limited common expenses.
"Identifying number." A symbol or address that identifies
only one unit in a planned community.
"Installment sale contract." An executory contract for the
purchase and sale of a unit or interest in a unit under which
the purchaser is obligated to make more than five installment
payments to the seller after execution of the contract and
before the time appointed for the conveyance of title to the
unit or interest in the unit.
"Interval estate." A combination of:
(1) an estate for years in a unit, during the term of
which title to the unit rotates among the time-share owners
thereof, vesting in each of them in turn for periods
established by a fixed recorded schedule, with the series
thus established recurring regularly until the term expires;
coupled with
(2) a vested undivided fee simple interest in the
remainder in that unit, the magnitude of that interest having
been established by the declaration or by the deed creating
the interval estate.
"Leasehold planned community." A planned community in which
all or a portion of the real estate is subject to a lease the
expiration or termination of which will terminate the planned
community or reduce its size.
"Limited common element." A limited common facility or a
limited controlled facility.
"Limited common expenses." All expenses identified as such
under section 5314(c) (relating to assessments for common
expenses).
"Limited common facility." A portion of the common
facilities allocated by or pursuant to the declaration or by the
operation of section 5202(2) or (3) (relating to unit
boundaries) for the exclusive use of one or more but fewer than
all of the units.
"Limited controlled facility." A portion of the controlled
facilities, other than controlled facilities which are
themselves part of a unit, allocated by or pursuant to the
declaration or by operation of section 5202(2) or (3) (relating
to unit boundaries) for the exclusive use of one or more but
fewer than all of the units.
"Master association." An organization described in section
5222 (relating to master associations), whether or not it is
also an association described in section 5301 (relating to
organization of unit owners' association).
"Offer" or "offering." Any advertisement, inducement,
solicitation or attempt to encourage any person to acquire any
interest in a unit other than as security for an obligation. The
term does not include an advertisement in a newspaper or other
periodical of general circulation or in a broadcast medium to
the general public of a planned community not located in this
Commonwealth if the advertisement states that an offer or
offering may be made only in compliance with the law of the
jurisdiction in which the planned community is located.
"Original lease termination date." The date on which the
lease or sublease of a residential tenant or subtenant in
possession of a unit in a conversion building will expire by the
terms of the lease or sublease, after taking into account any
renewal or extension rights that may have been exercised prior
to the conversion notice date.
"Person." A natural person, corporation, partnership,
association, trust, other entity or any combination thereof.
"Planned community." Real estate with respect to which a
person, by virtue of ownership of an interest in any portion of
the real estate, is or may become obligated by covenant,
easement or agreement imposed on the owner's interest to pay any
amount for real property taxes, insurance, maintenance, repair,
improvement, management, administration or regulation of any
part of the real estate other than the portion or interest owned
solely by the person. The term excludes a cooperative and a
condominium, but a condominium or cooperative may be part of a
planned community. For purposes of this definition, "ownership"
includes holding a leasehold interest of more than 20 years,
including renewal options, in real estate. The term includes
nonresidential campground communities.
"Purchaser." A person other than a declarant who, by means
of a disposition, acquires a legal or equitable interest in a
unit, other than either a leasehold interest of less than 20
years, including renewal options, or as security for an
obligation. The term includes a person who will become a unit
owner in a leasehold planned community upon consummation of the
disposition.
"Real estate." Any fee, leasehold or other estate or
interest in, over or under land, including structures, fixtures
and other improvements and interests which by custom, usage or
law pass with a conveyance of land though not described in the
contract of sale or instrument of conveyance. The term includes
parcels with or without upper or lower boundaries and spaces
that may be filled with air or water.
"Residential purposes." Use for dwelling or recreational
purposes, or both.
"Residential subtenant." An individual lawfully occupying
real estate for residential purposes under a sublease.
"Residential tenant." An individual lawfully occupying real
estate for residential purposes under a lease.
"Special declarant rights." Rights reserved for the benefit
of a declarant to:
(1) complete improvements indicated on plats and plans
filed with the declaration under section 5209 (relating to
limited common elements);
(2) convert convertible real estate in a flexible
planned community under section 5211 (relating to conversion
and expansion of flexible planned communities);
(3) add additional real estate to a flexible planned
community under section 5211;
(4) withdraw withdrawable real estate from a flexible
planned community under section 5212 (relating to withdrawal
of withdrawable real estate);
(5) convert a unit into two or more units, common
facilities or controlled facilities or into two or more units
and common facilities or controlled facilities;
(6) maintain offices, signs and models under section
5217 (relating to declarant offices, models and signs);
(7) use easements through the common facilities or
controlled facilities for the purpose of making improvement
within the planned community or within any convertible or
additional real estate under section 5218 (relating to
easement to facilitate completion, conversion and expansion);
(8) cause the planned community to be merged or
consolidated with another planned community under section
5223 (relating to merger or consolidation of planned
community);
(9) make the planned community part of a larger planned
community or group of planned communities under sections 5222
(relating to master associations) and 5223 (relating to
merger or consolidation of planned community);
(10) make the planned community subject to a master
association under section 5222 (relating to master
associations); or
(11) appoint or remove an officer of the association or
a master association or an executive board member during any
period of declarant control under section 5303 (relating to
executive board members and officers).
"Structural defects." As used in section 5411 (relating to
warranty against structural defects), the term means defects in
components constituting any unit or common element which reduce
the stability or safety of the structure below accepted
standards or restrict the normal intended use of the structure
and require repair, renovation, restoration or replacement.
"Time-share estate." An interval estate or a time-span
estate.
"Time-span estate." A combination of:
(1) an undivided interest in a present estate in fee
simple in a unit, the magnitude of that interest having been
established by the declaration or by the deed conveying the
time-span estate; coupled with
(2) the exclusive right to possession and occupancy of
that unit during a regularly recurring period designated by
the deed or by a recorded document referred to in the deed.
"Unit." A physical portion of the planned community
designated for separate ownership or occupancy, the boundaries
of which are described pursuant to section 5205(5) (relating to
contents of declaration; all planned communities) and a portion
of which may be designated by the declaration as part of the
controlled facilities.
"Unit owner." A declarant or other person who owns a unit or
a lessee of a unit in a leasehold planned community whose lease
expires simultaneously with a lease, the expiration or
termination of which will remove the unit from the planned
community. The term does not include a person having an interest
in a unit solely as security for an obligation.
"Withdrawable real estate." Real estate that may be
withdrawn from a flexible planned community.
§ 5104. Variation by agreement.
Except as expressly provided in this subpart, provisions of
this subpart may not be varied by agreement, and rights
conferred by this subpart may not be waived. A declarant may not
act under a power of attorney or use any other device to evade
the limitations or prohibitions of this subpart or the
declaration.
§ 5105. Separate titles and taxation.
(a) Title.--Except as provided in subsection (b), each unit
that has been created, together with the interests, benefits and
burdens created by the declaration, including, without
limitation, the rights to any common facilities, constitutes a
separate parcel of real estate. The conveyance or encumbrance of
a unit includes the transfer of all of the rights, title and
interest of the owner of that unit in the common facilities
regardless of whether the instrument affecting the conveyance or
encumbrance so states.
(b) Taxation and assessment.--If there is a unit owner other
than a declarant, each unit must be separately taxed and
assessed. The value of a unit shall include the value of that
unit's appurtenant interest in the common facilities, excluding
convertible or withdrawable real estate. The following shall
apply:
(1) Except as provided in paragraph (2), no separate
assessed value shall be attributed to and no separate tax
shall be imposed against common facilities or controlled
facilities.
(2) Convertible or withdrawable real estate shall be
separately taxed and assessed until the expiration of the
period during which conversion or withdrawal may occur.
(c) Certain additional prohibitions.--
(1) An association shall not impose any of the following
fees against an owner or tenant of a unit in a planned
community or against any person constructing, altering,
renovating or repairing a unit in a planned community:
(i) a tapping, connection or other impact fee in excess
of the actual direct cost incurred by the association for the
connection or provision of water or sewer service to a
building or improvement;
(ii) any fee for the right to construct, alter, renovate
or repair a building or improvement except for an inclusive
fee for the actual direct costs to the association of either:
(A) architectural, aesthetic or landscaping plan
reviews or inspections of units, building siting and
exteriors, if those reviews or inspections are
required by provisions of the declaration or
association bylaws or rules and regulations and if
such provisions requiring a fee to be paid for such
reviews or inspections were in existence on or before
December 31, 1995; or
(B) if association imposed building construction
standards or building codes are permitted under section
5106 (relating to applicability of local ordinances,
regulations and building codes), building construction
standards or building code review; and
(iii) any impact fee for road maintenance or road
construction, except that the association shall not be
precluded from recovering the cost of repair of any damage
that is caused to roads or other common elements in the
course of construction, alteration, renovation or repair.
(2) Except as specifically provided in this section, an
association shall not impose any fees related to
construction, alteration, renovation or repair of a unit.
§ 5106. Applicability of local ordinances, regulations and
building codes.
(a) General rule.--A zoning, subdivision, building code or
other real estate use law, ordinance or regulation may not
prohibit a planned community form of ownership or impose any
requirement upon any structure in a planned community which it
would not impose upon a physically identical structure under a
different form of ownership.
(b) Current law unaffected.--Except as provided in
subsection (a), no provision of this subpart invalidates or
modifies any provision of any zoning, subdivision, building code
or other real estate law, ordinance or regulation.
(c) Status.--The creation of a planned community under
section 5201 (relating to creation of planned community) out of
an entire lot, parcel or tract of real estate shall not, in and
of itself, constitute a subdivision or land development for the
purpose of laws, ordinances and regulations.
(d) Building code.--An association shall be preempted by any
federally, State or locally imposed building code, standard or
regulation applicable to a building in a planned community from
imposing any building construction standards or building codes
for buildings to be constructed, renovated, altered or modified
in a planned community. In the absence of a federally, State or
locally imposed building code, standard or regulation applicable
to a building in a planned community, an association shall not
have the power to impose any building construction standards or
building codes for buildings to be constructed, renovated,
altered or modified in a planned community except:
(1) the BOCA National Building Code, 1996 edition
(excluding Chapter 13, Energy Conservation) (the "BOCA Code")
for other than for one-family or two-family residential
dwellings, together with the most recently published version
of the National Fuel Gas Code (NFPA 54/ANSI Z223.1), as such
may be updated periodically, for the installation of fuel gas
piping systems, fuel gas utilization equipment and related
accessories, and the most recently published version of the
National Electric Code (NFPA 70), an ANSI accredited
document, as such may be updated periodically, for the
construction and subsequent inspection of electrical
facilities and equipment; or
(2) with respect to one-family or two-family residential
dwellings, unless the declarant or a successor declarant
elects to comply with the BOCA Code, the Council of American
Building Officials (CABO) One and Two Family Dwelling Code,
1992 edition (excluding Part VII-Energy Conservation and
Chapter 25 of Part V-Sewers and Private or Individual Sewage
Disposal Systems), together with the most recently published
version of the National Fuel Gas Code (NFPA 54/ANSI Z223.1),
as such may be updated periodically, for the installation of
fuel gas piping systems, fuel gas utilization equipment and
related accessories, and the most recently published version
of the National Electric Code (NFPA 70), an ANSI accredited
document, as such may be updated periodically, for the
construction and subsequent inspection of electrical
facilities and equipment.
The applicable building code shall constitute the maximum and
the only acceptable standard governing building structures.
However, nothing in this section shall preclude an association
if and to the extent authorized by the declaration or
association bylaws, rules and regulations, from providing for
architectural review of units, landscaping, building exteriors
and aesthetics or from implementing requirements that may be
imposed from time to time by underwriters of insurance actually
maintained on portions of the planned community.
§ 5107. Eminent domain.
(a) General rule.--If a unit is acquired by eminent domain
or if part of a unit is acquired by eminent domain leaving the
unit owner with a remnant which may not practically or lawfully
be used for any purpose permitted by the declaration, the award
shall compensate the unit owner for the unit and, except for the
value, if any, of the interest of other units in any controlled
facilities that were, at the time of the taking, a part of the
unit subject to the taking, its appurtenant interest in the
planned community reflected by its allocated common expenses
liability, whether or not any common elements are acquired. Upon
acquisition, unless the decree otherwise provides, the unit's
allocated votes and liabilities shall automatically be
reallocated to the remaining units in proportion to the
respective allocated votes and liabilities of those units before
the taking. The association shall promptly prepare, execute and
record an amendment to the declaration reflecting the
reallocations. Any remnant of a unit remaining after part of a
unit is taken under this subsection shall be a common facility.
(b) Acquisition of part of unit.--Except as provided in
subsection (a), if part of a unit is acquired by eminent domain,
the award shall compensate the unit owner for the reduction in
value of the unit and its appurtenant interest in the planned
community, whether or not any common facilities or controlled
facilities are acquired, and shall compensate the association
for the value, if any, of the interest of other units in any
controlled facilities that were, at the time of the taking, a
part of the unit subject to the taking. Upon acquisition, unless
the decree otherwise provides, the following shall apply:
(1) The unit's appurtenant votes in the association and
common expense liability shall be reduced on the basis
specified in the declaration with respect to the reallocation
of votes and common expense liability in the event of eminent
domain or, if the declaration does not specify a basis, as
initially allocated based on the formulae stated in the
declaration under section 5208 (relating to allocation of
votes and common expense liabilities).
(2) The portion of the appurtenant votes and common
expense liability divested from the partially acquired unit
shall be automatically reallocated to that unit and the
remaining units in proportion to the respective appurtenant
votes and liabilities of those units before the taking, with
the partially acquired unit participating in the reallocation
on the basis of its reduced allocated votes and liabilities.
(c) Acquisition of part of common facilities.--If part of
the common facilities is acquired by eminent domain, the portion
of the award attributable to the interest of the association in
the common facilities taken shall be paid to the association.
The association shall divide any portion of the award not used
for any restoration or repair of the remaining common facilities
among the unit owners in proportion to the common expense
liability attributable to the units before the taking, but any
portion of the award attributable to the acquisition of a
limited common facility shall be equally divided among the
owners of the units to which that limited common facility was
allocated at the time of acquisition or in any manner as
provided in the declaration.
(d) Acquisition of part of the controlled facilities.--If,
as part of a unit acquired by eminent domain, controlled
facilities are taken which benefit other units, that portion of
the award attributable to the interest of the other units in the
controlled facilities taken shall be paid to the association.
The association shall divide any portion of the award not used
for any restoration or repair of the remaining controlled
facilities equally among the unit owners whose units were
benefited by the controlled facilities that have been taken.
§ 5108. Supplemental general principles of law applicable.
The principles of law and equity, including the law of
corporations and unincorporated associations, the law of real
property and the law relative to capacity to contract, principal
and agent, eminent domain, estoppel, fraud, misrepresentation,
duress, coercion, mistake, receivership, substantial
performance, or other validating or invalidating cause
supplement the provisions of this subpart, except to the extent
inconsistent with this subpart.
§ 5109. Construction against implicit repeal.
Because this subpart is a general act intended as a unified
coverage of its subject matter, no part of it shall be construed
to be implicitly repealed by subsequent legislation if that
construction can reasonably be avoided.
§ 5110. Uniformity of application and construction.
This subpart shall be applied and construed so as to
effectuate its general purpose to make uniform the law with
respect to the subject of this subpart among states enacting it.
§ 5111. Severability.
If any provision of this subpart or its application to any
person or circumstance is held invalid, the invalidity does not
affect other provisions or applications of this subpart which
can be given effect without the invalid provisions or
application, and to this end the provisions of this subpart are
severable.
§ 5112. Unconscionable agreement or term of contract.
(a) Powers of contract.--The court, upon finding as a matter
of law that a contract or contract clause was unconscionable at
the time the contract was made, may:
(1) refuse to enforce the contract;
(2) enforce the remainder of the contract without the
unconscionable clause; or
(3) limit the application of any unconscionable clause
in order to avoid an unconscionable result.
(b) Parties may present evidence.--Whenever it is claimed or
appears to the court that a contract or any contract clause is
or may be unconscionable, the parties, in order to aid the court
in making the determination, shall be afforded a reasonable
opportunity to present evidence as to:
(1) the commercial setting of the negotiations;
(2) whether a party has knowingly taken advantage of the
inability of the other party reasonably to protect his
interests by reason of physical or mental infirmity,
illiteracy or inability to understand the language of the
agreement or similar factors;
(3) the effect and purpose of the contract or clause;
(4) if a sale, any gross disparity, at the time of
contracting, between the amount charged for the real estate
and the value of the real estate measured by the price at
which similar real estate was readily obtainable in similar
transactions, but a disparity between the contract price and
the value of the real estate measured by the price at which
similar real estate was readily obtainable in similar
transaction does not of itself render the contract
unconscionable.
§ 5113. Obligation of good faith.
Every contract or duty governed by this subpart imposes an
obligation of good faith in its performance or enforcement.
§ 5114. Remedies to be liberally administered.
(a) General rule.--The remedies provided by this subpart
shall be liberally administered to the end that the aggrieved
party is put in as good a position as if the other party had
fully performed. However, consequential, special or punitive
damages may not be awarded except as specifically provided in
this subpart or by other rule of law.
(b) Judicial enforcement of rights and obligations.--Any
right or obligation declared by this subpart is enforceable by
judicial proceeding.
CHAPTER 52
CREATION, ALTERATION AND TERMINATION OF
PLANNED COMMUNITIES
Sec.
5201. Creation of planned community.
5202. Unit boundaries.
5203. Construction and validity of declaration and bylaws.
5204. Description of units.
5205. Contents of declaration; all planned communities.
5206. Contents of declaration for flexible planned
communities.
5207. Leasehold planned communities.
5208. Allocation of votes and common expense liabilities.
5209. Limited common elements.
5210. Plats and plans.
5211. Conversion and expansion of flexible planned
communities.
5212. Withdrawal of withdrawable real estate.
5213. Alteration of units.
5214. Relocation of boundaries between units.
5215. Subdivision or conversion of units.
5216. Easement for encroachments.
5217. Declarant offices, models and signs.
5218. Easement to facilitate completion, conversion and
expansion.
5219. Amendment of declaration.
5220. Termination of planned community.
5221. Rights of secured lenders.
5222. Master associations.
5223. Merger or consolidation of planned community.
§ 5201. Creation of planned community.
A planned community may be created pursuant to this subpart
only by recording a declaration executed in the same manner as a
deed by all persons whose interests in the real estate will be
conveyed to unit owners and by every lessor of a lease, the
expiration or termination of which will terminate the planned
community or reduce its size. If the lessor is the Commonwealth,
a municipal government or any agency of either, the lessor need
not execute the declaration if it has previously given written
notice of its filing and agreed to be bound by the provisions of
this subpart, in which case the declaration shall be executed by
the lessee in possession of the subject property. The
declaration must be recorded in every county in which any
portion of the planned community is located, must be indexed in
the same records as are notarized for the recording of a deed
and shall identify each declarant as the grantor and the name of
the planned community as grantee.
§ 5202. Unit boundaries.
Except as provided by the declaration:
(1) Subject to the provisions of paragraph (2), all
space, fixtures and improvements within the boundaries of a
unit are a part of the unit.
(2) If any fixture or improvement lies partially within
and partially outside the designated boundaries of a unit,
any portion of the fixture or improvement serving only that
unit is a limited common element allocated solely to that
unit, and any portion of the fixture or improvement serving
more than one unit or any portion of the common facilities is
a part of the common elements.
(3) Any fixtures or improvements designed or designated
in the declaration to serve a single unit, but located
outside the unit's boundaries, are limited common elements
allocated exclusively to that unit.
§ 5203. Construction and validity of declaration and bylaws.
(a) Provisions severable.--All provisions of the declaration
and bylaws are severable.
(b) Applications of rule against perpetuities.--The rule
against perpetuities may not be applied to defeat any provision
of the declaration or this subpart or any instrument executed
pursuant to the declaration or this subpart.
(c) Conflict between declaration and bylaws.--If there is a
conflict between the declaration and the bylaws, the declaration
shall prevail except to the extent the declaration is
inconsistent with this subpart.
(d) Effect of noncompliance on title to unit.--Title to a
unit and its appurtenant votes in the association shall not be
rendered unmarketable or otherwise affected by any provision of
unrecorded bylaws or by reason of an insubstantial failure of
the declaration to comply with this subpart.
§ 5204. Description of units.
After the declaration is recorded, a description of the unit
which sets forth the name of the planned community, the
recording data for the declaration, the county or counties in
which the planned community is located and the identifying
number of the unit is a sufficient legal description of that
unit and all rights, obligations and interests appurtenant to
that unit which were created by the declaration or bylaws.
Deeds, leases and mortgages of units shall be recorded in the
same records as are maintained by the recorder for the recording
of like instruments and indexed by the recorder in the same
manner as like instruments are indexed.
§ 5205. Contents of declaration; all planned communities.
The declaration for a planned community must contain:
(1) The name of the planned community, which must
include the words "planned community" or be followed by the
words "a planned community."
(2) The name of every county in which any part of the
planned community is situated.
(3) A legally sufficient description of the real estate
included in the planned community.
(4) A description or delineation of the boundaries of
each unit, including the unit's identifying number.
(5) A statement of the maximum number of units that may
be created by the subdivision or conversion of units owned by
the declarant pursuant to section 5215 (relating to
subdivision or conversion of units).
(6) A description of any controlled facilities and the
obligations of the association for the maintenance,
improvement, repair, replacement, regulation, management,
insurance or control of the controlled facilities.
(7) A description of any limited common facilities and
any limited controlled facilities as provided in section 5209
(relating to limited common elements) and limited common
expenses, if any, and how they are assessed.
(8) A description of any common facilities and
controlled facilities not within the boundaries of any
convertible real estate which may be allocated subsequently
as limited common facilities or limited controlled
facilities, with a statement that they may be so allocated
and a description of the method by which the allocations are
to be made.
(9) An allocation to each unit of a portion of the votes
in the association and a percentage or fraction of the common
expenses of the association in section 5208 (relating to
allocation of votes and common expense liabilities).
(10) Any restrictions created by the declarant on use,
occupancy and alienation of the units and any easement or
license rights that unit owners are to have with respect to
the use or enjoyment of any of the common elements and that
are not contained in other documents which are recorded.
(11) The recording data for recorded easements and
licenses appurtenant to or included in the planned community
or to which any portion of the planned community is or may
become subject.
(12) If all or any of the units are or may be owned in
time-share estates, which units may be owned in time-share
estates and the maximum number of time-share estates that may
be created in the planned community; it being intended that
time-share estates shall not be permitted except if and to
the extent expressly authorized by the declaration.
(13) If the declarant wishes to retain the special
declarant right to cause section 5222 (relating to master
associations) to become applicable to a planned community,
then:
(i) an explicit reservation of such right;
(ii) a statement of the time limit, not exceeding
seven years after the recording of the declaration, upon
which the option reserved under subparagraph (i) will
lapse, together with and a statement of any circumstances
that will terminate the option before the expiration of
the time limit; and
(iii) the information required to be included in the
declaration by the provisions of section 5222.
(14) If the declarant wishes to retain the special
declarant right to merge or consolidate the planned community
pursuant to section 5223 (relating to merger or consolidation
of planned community), then all of the following:
(i) An explicit reservation of such right.
(ii) A statement of the time limit, not exceeding
seven years after the recording of the declaration, upon
which any option reserved under subparagraph (i) will
lapse, together with a statement of any circumstances
that will terminate the option before the expiration of
the time limit.
(iii) A statement of the name and location of each
other planned community that may be subject to such a
merger or consolidation. If such other planned
communities do not exist, then the declaration shall
include the following:
(A) A statement of the extent to which the
interest in the association, relative voting strength
in the association and share of common expense
liability of each unit in the planned community at
the time the merger or consolidation is effectuated
may be increased or decreased by actions pursuant to
any option reserved under subparagraph (i), including
the formulas to be used for those reallocations.
(B) Legally sufficient descriptions of each
portion of real estate that is part of any other
planned communities with which the planned community
may merge or consolidate.
(C) If mergers of consolidations may be
effectuated at different times, a statement to that
effect, together with:
(I) either a statement fixing the boundaries
of those planned communities and regulating the
order in which they may be merged or consolidated
or a statement that no assurances are made in
those regards; and
(II) a statement as to whether, if any other
planned communities are merged or consolidated
with the planned community, all or any of such
planned communities must be merged or
consolidated.
(D) A statement of:
(I) the maximum number of units that may be
created within the other planned communities, the
boundaries of which are fixed under clause (C);
(II) how many of those units will be
restricted exclusively to residential use; and
(III) the maximum number of units per acre
that may be created within any such other planned
communities, the boundaries of which are not
fixed under clause (C).
(E) If any of the units that may be built within
any of the other planned communities are not to be
restricted exclusively to residential use, a
statement with respect to each other planned
community of the maximum percentage of the real
estate areas and the maximum percentage of the floor
areas of all units that may be created in the planned
community that are not restricted exclusively to
residential use.
(F) A statement of the extent to which any
buildings and units that may be part of the other
planned communities will be compatible with the other
buildings and units in the planned community in terms
of architectural style, quality of construction,
principal materials employed in construction and size
or a statement that no assurances are made in those
regards.
(G) A statement that all restrictions in the
declaration affecting use, occupancy and alienation
of units will apply to units created within any of
the other planned communities or a statement of any
differentiations that may be made as to those units.
(H) General descriptions of all other
improvements and limited common elements that may be
made or created within the other planned communities
or a statement that no assurances are made in that
regard.
(I) A statement of any limitations as to the
locations of any buildings or other improvements that
may be made within the other planned communities or a
statement that no assurances are made in that regard.
(J) A statement that any limited common elements
created within any other planned communities will be
of the same general types and sizes as those within
the planned community, a statement of any other
assurances in that regard or a statement that no
assurances are made in that regard.
(K) A statement that the proportion of limited
common elements to units created within the other
planned communities will be approximately equal to
the proportion existing within the planned community,
a statement of any assurances in that regard or a
statement that no assurances are made in that regard.
(L) A statement of whether and to what extent
assurances made in the declaration regarding the
other planned communities under clauses (C) through
(K) apply if the other planned communities are not
merged or consolidated with the planned community.
(iv) A summary description of the other provisions
which materially change any rights, obligations or
liabilities that will be included in the agreement of
merger or consolidation if the right to merge or to
consolidate is exercised.
(15) If a declarant wishes to retain the right to
subject any portion of the planned community to an easement
or license in favor of any real estate not included in the
planned community or in favor of any person who is not an
owner or occupant of a unit in the planned community, then an
explicit reservation and description of such right and a
description of the effects on the association and the unit
owners of the easement or license, including, without
limitation, any impact on the budget of the association.
(16) If a declarant wishes to retain the right to
designate as a common facility any portion of a planned
community or any improvement or facility then existing or
contemplated for a planned community, then all of the
following:
(i) An explicit reservation of such right and an
identification and description of the portion of the
planned community, improvement or facility.
(ii) A statement of when any portion of a planned
community, improvement or facility will become a common
facility and that the portion will be conveyed or leased
to the association by the declarant or a successor to the
interest of the declarant in the portion by the later of
the date of conveyance or lease by the declarant of the
last unit the declarant reserves the right to include in
the planned community or the date of expiration of the
rights under section 5211 (relating to conversion and
expansion of flexible planned communities).
(iii) A statement that the obligation of the
declarant to convey or lease to the association a portion
of the planned community, improvement or facility shall
be binding on the declarant and any successor in interest
of the declarant in the portion whether or not the
successor succeeds to any special declarant right.
(iv) A statement of who will own the portion of the
planned community, improvement or facility before a
conveyance or lease to the association.
(v) A description of the procedure to be followed by
the declarant and the association for the conveyance or
lease to the association.
(vi) A statement that the portion of the planned
community, improvement or facility will be conveyed or
leased to the association for no consideration other than
the association's acceptance of the conveyance or lease
or, if additional consideration is to be given by the
association for the conveyance, a description of the
consideration and a description of the effects on the
association and each unit owner of the association
providing the consideration, including the impact on the
budget of the association and common expense or other
liabilities of the unit owners.
(vii) A description of the effect of the conveyance
or lease to the association of the portion of the planned
community, improvement or facility on the expenses and
budget of the association and the common expense
liability of the unit owners.
(viii) A statement that no conveyance or lease to
the association of any portion of the planned community,
improvement or facility shall occur until the portion has
been completed unless a third-party guarantee, bond,
escrow, letter of credit or other mechanism assuring
completion has been provided by the declarant, in
addition to the declarant's own guarantee of completion,
for the benefit of the association and a statement that
the third-party mechanism and the declarant's own
guarantee shall not expire until completion of the
portion of the planned community, improvement or
facility.
(ix) As to any uncompleted improvement or facility
that may become a common facility:
(A) a statement of the time for completion of
such improvement or facility;
(B) a statement that a declarant is required to
complete such improvement or facility by the later of
the date of the conveyance or lease by the declarant
of the last unit the declarant reserves the right to
include in the planned community or the date of the
expiration of the rights under section 5211;
(C) a statement that, until the facility or
improvement is completed, the declarant shall be
solely responsible for real estate taxes assessed
against or allocable to the improvement or facility
and for all other expenses in connection with the
improvement or facility; and
(D) a description of any third-party guarantee,
bond, escrow, letter of credit or other mechanism
that the declarant shall provide, in addition to the
declarant's own guarantee of completion, to assure,
for the benefit of the association, completion of the
improvement or facility and a statement of the time
limit, if any, of the term of such third-party
guarantee, bond, escrow, letter of credit or other
mechanism or, if no such mechanism is to be provided
by the declarant, an explicit statement that no
third-party guarantee, bond, escrow, letter of credit
or other mechanism shall be provided by the
declarant, and only the declarant's own guarantee
shall be provided to assure completion of the
improvement or facility.
(17) Any other matters the declarant deems appropriate.
§ 5206. Contents of declaration for flexible planned
communities.
The declaration for a flexible planned community shall
include, in addition to the matters specified in section 5205
(relating to contents of declaration; all planned communities),
all of the following:
(1) An explicit reservation of any options to create
units, limited common elements or both, within convertible
real estate or to add additional real estate to or withdraw
withdrawable real estate from the planned community.
(2) A statement of the time limit, not exceeding seven
years after the recording of the declaration, upon which any
option reserved under paragraph (1) will lapse, together with
a statement of circumstances that will terminate the option
before the expiration of the time limit.
(3) A statement of any limitations on any option
reserved under paragraph (1), other than limitations created
by or imposed by operation of law, or a statement that there
are no such limitations.
(4) A statement of the extent to which the interest in
the associations, relative voting strength in the association
and share of common expenses liability of each unit in the
planned community at the time the declaration is recorded may
be increased or decreased by actions pursuant to any option
reserved under paragraph (1), including the formulas to be
used for those reallocations.
(5) Legally sufficient descriptions of each portion of
convertible, additional and withdrawable real estate.
(6) If portions of any convertible, additional or
withdrawable real estate may be converted, added or withdrawn
at different times, a statement to that effect, together
with:
(i) a statement fixing the boundaries of those
portions and regulating the order in which they may be
converted, added or withdrawn or a statement that no
assurances are made in those regards; and
(ii) a statement as to whether, if any portion of
convertible, additional or withdrawable real estate is
converted, added or withdrawn, all or any particular
portion of that or any other real estate must be
converted, added or withdrawn.
(7) A statement of:
(i) the maximum number of units that may be created
within any additional or convertible real estate or
within any portion of either, the boundaries of which are
fixed under paragraph (6);
(ii) how many of those units will be restricted
exclusively to residential use; and
(iii) the maximum number of units per specified
volume of space that may be created within any portions
the boundaries of which are not fixed under paragraph
(6).
(8) If any of the units that may be built within any
additional or convertible real estate are not to be
restricted exclusively to residential use, a statement with
respect to each portion of the additional and convertible
real estate of the maximum percentage of the real estate
areas and the maximum percentage of the areas of all units
that may be created therein that are not restricted
exclusively to residential use.
(9) A statement of the extent to which any buildings and
units that may be erected upon each portion of the additional
and convertible real estate will be compatible with the other
buildings and units in the planned community in terms of
architectural style, quality of construction, principal
materials employed in construction and size or a statement
that no assurances are made in those regards.
(10) A statement that all restrictions in the
declaration affecting use, occupancy and alienation of units
will apply to units created within any convertible or
additional real estate or a statement of any differentiations
that may be made as to those units.
(11) General descriptions of all other improvements and
limited common elements that may be made or created upon or
within each portion of the additional or convertible real
estate or a statement that no assurances are made in that
regard.
(12) A statement of any limitations as to the locations
of any buildings or other improvements that may be made
within convertible or additional real estate or a statement
that no assurances are made in that regard.
(13) A statement that any limited common elements
created within any convertible or additional real estate will
be of the same general types and sizes as those within other
parts of the planned community, a statement of any other
assurances in that regard or a statement that no assurances
are made in that regard.
(14) A statement that the proportion of limited common
elements to units created within convertible or additional
real estate will be approximately equal to the proportion
existing within other parts of the planned community, a
statement of any other assurances in that regard or a
statement that no assurances are made in that regard.
(15) A statement of the extent to which any assurances
made in the declaration regarding additional or withdrawable
real estate under paragraphs (6) through (14) apply if any
additional real estate is not added to or any withdrawable
land is withdrawn from the planned community or a statement
that those assurances do not apply if the real estate is not
added to or withdrawn from the planned community.
§ 5207. Leasehold planned communities.
(a) Recording lease and contents of declaration.--A lease
the expiration or termination of which may terminate the planned
community or reduce its size shall be recorded in the same
county where the declaration is recorded under section 5201
(relating to creation of planned community). Every lessor of
those leases shall execute the declaration, and the declaration
shall state the following:
(1) The recording data for the lease.
(2) The date on which the lease is scheduled to expire.
(3) A legally sufficient description of the real estate
subject to the lease.
(4) Any right of the unit owners to redeem the reversion
and the manner whereby those rights may be exercised or a
statement that they do not have those rights.
(5) Any right of the unit owners to remove any
improvements after the expiration or termination of the lease
or a statement that the unit owners do not have those rights.
(6) Any rights of the unit owners to renew the lease and
the conditions of any renewal or a statement that the unit
owners do not have those rights.
(b) Limitations on termination of leasehold interest.--After
the declaration for a leasehold planned community is recorded,
neither the lessor nor a successor in interest may terminate the
leasehold interest of a unit owner who makes timely payment of
the owner's share of the rent and otherwise complies with all
covenants which, if violated, would entitle the lessor to
terminate the lease. A unit owner's leasehold interest is not
affected by failure of any other person to pay rent or fulfill
any other covenant.
(c) Merger of leasehold and fee simple interests.--
Acquisition of the leasehold interest of any unit owner by the
owner of the reversion or remainder does not merge the leasehold
and fee simple interests unless the leasehold interests of all
unit owners subject to that reversion or remainder are acquired.
(d) Reallocation of interests if number of votes reduced.--
If the expiration or termination of a lease decreases the number
of units in a planned community, the allocated votes in the
association and common expense liabilities shall be reallocated
in accordance with section 5107 (relating to eminent domain) as
though those units had been taken by eminent domain.
Reallocations shall be confirmed by an amendment to the
declaration prepared, executed and recorded by the association.
§ 5208. Allocation of votes and common expense liabilities.
(a) General rule.--The declaration shall allocate a fraction
or percentage of the common expenses of the association and a
portion of the votes in the association to each unit and state
the formulas used to establish those allocations. Such formulas
may take into account unusual attributes of identified units if
the formulas state how the deviation from the normal rule
applies to such units.
(b) Flexible planned communities.--If units may be added,
including by conversion of convertible real estate to one or
more units, to or withdrawn from the planned community, the
declaration shall state the formulas to be used to reallocate
the fractions, as percentages of the allocated share of the
common expenses of the association and the percentages of votes
in the association, among all units included in the planned
community after the addition or withdrawal.
(c) Votes.--
(1) Each unit shall be allocated one or more votes in
the association. The declaration shall specify how votes in
the association shall be allocated among the units and may
provide:
(i) for different allocations of votes among units
on particular matters specified in the declaration; and
(ii) for class voting on specified issues affecting
a particular class of units if necessary to protect the
valid interests of the owners of such units and not
affecting units outside of the class.
(2) Cumulative voting shall only be permitted if so
provided expressly in the declaration and only for the
purpose of electing members of the executive board. A
declarant may not utilize cumulative or class voting for the
purpose of evading any limitation imposed on declarants by
this subpart. The declaration may provide that different
allocations of votes shall be made to the units in particular
matters specified in the declaration.
(d) Alteration or partition of allocations.--Except as
provided in section 5107 (relating to eminent domain), 5211
(relating to conversion and expansion of flexible planned
communities), 5212 (relating to withdrawal of withdrawable real
estate), 5214 (relating to relocation of boundaries between
units) or 5215 (relating to subdivision or conversion of units),
the votes and common expense liability allocated to any unit may
not be changed without the consent of all unit owners whose
allocated votes and common expense liabilities are changed. The
common elements are not subject to partition, and any purported
conveyance, encumbrance, judicial sale or other voluntary or
involuntary transfer of an undivided interest in the common
elements made without the unit to which it is allocated is void.
(e) Calculations for undivided interests.--Except for minor
variations due to rounding, the sum of the common expense
liabilities allocated at any time to all the units must equal
one if stated as a fraction or 100% if stated as percentages. If
there is a discrepancy between the allocated common expense
liability and the result derived from application of the
formulas, the allocated common expense liability prevails.
§ 5209. Limited common elements.
(a) Allocation.--Except for the limited common elements
described in section 5202 (relating to unit boundaries), the
declaration shall specify to which unit or units each limited
common element is allocated, distinguishing between limited
common facilities and limited controlled facilities. That
allocation may not be altered without the consent of the unit
owners whose units are affected.
(b) Reallocation.--Subject to any provisions of the
declaration, a limited common element may be reallocated by a
recorded assignment executed by the unit owners between or among
whose units the reallocation is made or by an amendment to the
declaration executed by the unit owners. The persons executing
assignment or the amendment to the declaration shall provide a
copy to the association.
(c) Common elements not previously allocated.--A common
element not previously allocated as a limited common element may
not be so allocated except pursuant to provisions in the
declaration made in accordance with section 5205(7) (relating to
contents of declaration; all planned communities). The
declaration may provide that the allocations shall be made by
deeds or assignments executed by the declarant or the
association or by amendments to the declaration.
§ 5210. Plats and plans.
(a) General rule.--Plats and plans are a part of the
declaration. Separate plats and plans are not required by this
subpart if all the information required by this section is
contained in either a plat or plan. Each plat and plan must be
clear and legible. The plats and plans must contain, on the
first page of the plats and plans, a certification that all of
the plats and plans contain all information required by this
section.
(b) Contents of plat.--Each plat must show all of the
following:
(1) The name, location and dimensions of the planned
community.
(2) The location and dimensions of all existing
improvements.
(3) The intended location and dimensions of any
contemplated improvement to be constructed anywhere within
the planned community labeled with "MUST BE BUILT" or "NEED
NOT BE BUILT." Contemplated improvements within the
boundaries of convertible real estate need not be shown, but,
if contemplated improvements within the boundaries of
convertible real estate are shown, they must be labeled "MUST
BE BUILT" or "NEED NOT BE BUILT."
(4) The location and dimensions of any convertible real
estate, labeled as such.
(5) The location and dimensions of any withdrawable real
estate, labeled as such.
(6) The location and dimensions of any additional real
estate, labeled as such.
(7) The extent of any encroachments by or upon any
portion of the planned community.
(8) To the extent feasible, the location and dimensions
of all easements serving or burdening any portion of the
planned community.
(9) The location and dimensions of any vertical unit
boundaries not shown or projected on plans recorded under
subsection (c) and that unit's identifying number.
(10) The location with reference to an established datum
of any horizontal unit boundaries not shown or projected on
plans recorded under subsection (c) and that unit's
identifying number.
(11) The location and dimensions of any real estate in
which the unit owners will own only an estate for years,
labeled as "leasehold real estate."
(12) The distance between noncontiguous parcels of real
estate comprising the planned community.
(13) The location and dimensions of limited common
elements, including porches, balconies and patios, other than
parking spaces and the other limited common elements
described in section 5202 (relating to unit boundaries) not
shown on plans referred to in subsection (c).
(14) All other matters customarily shown on land
surveys.
(c) Contents of plans.--To the extent not shown or projected
on the plats, plans of every building that contains or comprises
all or part of any unit and is located or must be built within a
portion of the planned community, other than within the
boundaries of any convertible real estate, must show all of the
following:
(1) The location and dimensions of the vertical
boundaries of each unit, to the extent those boundaries lie
within or coincide with the boundaries of the building in
which the unit is located, and that unit's identifying
number.
(2) Any horizontal unit boundaries, with reference to an
established datum not shown on plats recorded under
subsection (b), and that unit's identifying number.
(3) Any units that may be converted by the declarant to
create additional units or common elements under section 5215
(relating to subdivision or conversion of units), identified
appropriately.
(4) The location and dimensions of limited common
elements, including porches, balconies and patios, other than
parking spaces and other limited common elements described in
sections 5202 and 5209 (relating to limited common elements)
not shown on plats recorded under subsection (b).
(d) Horizontal boundaries of unit partly outside building.--
Unless the declaration provides otherwise, the horizontal
boundaries of part of a unit located outside of a building have
the same elevation as the horizontal boundaries of the inside
part and need not be depicted on the plats and plans.
(e) Converting or adding real estate.--Upon converting
convertible real estate or adding additional real estate taking
action under section 5211 (relating to conversion and expansion
of flexible planned communities), the declarant shall record new
plats for that real estate conforming to the requirements of
subsection (b) and new plans for any buildings on that real
estate conforming to the requirements of subsection (c). If less
than all of any convertible real estate is being converted, the
new plats must also show the location and dimensions of any
remaining portion.
(f) Converting units.--If a declarant converts any unit into
two or more units or limited common elements or both under
section 5215, the declarant shall record new plats and plans
showing the location and dimensions of any new units and limited
common elements thus created, as well as the location and
dimension of any portion of that space not being converted.
(g) Alternative recording.--Instead of recording new plats
and plans as required by subsections (e) and (f), the declarant
may record new certifications of plats and plans previously
recorded if those plats and plans show all improvements required
by subsections (e) and (f).
(h) Who may make certifications.--Any certification of a
plat or plan required by this section or section 5201 (relating
to creation of planned community) must be made by an independent
registered surveyor, architect or professional engineer.
§ 5211. Conversion and expansion of flexible planned
communities.
(a) General rule.--To convert convertible real estate or add
additional real estate pursuant to an option reserved under
section 5206 (relating to contents of declaration for flexible
planned communities), the declarant shall prepare, execute and
record an amendment to the declaration under section 5219
(relating to amendment of declaration) and comply with section
5210 (relating to plats and plans). The declarant is the unit
owner of any units thereby created. The amendment to the
declaration must assign an identifying number to each unit
formed in the convertible or additional real estate and
reallocate votes in the association and common expense
liabilities. The amendment must describe or delineate any
limited common elements formed out of the convertible or
additional real estate, showing or designating the unit to which
each is allocated to the extent required by section 5209
(relating to limited common elements).
(b) Creations within additional real estate.--Convertible or
withdrawable real estate may be created within any additional
real estate added to the planned community if the amendment
adding that real estate includes all matters required by section
5205 (relating to contents of declaration; all planned
communities) or 5206, as the case may be, and the plat includes
all matters required by section 5210. This subsection does not
extend the time limit on conversion or contraction of a flexible
planned community imposed by the declaration under section 5206.
(c) Liability for expenses and right to income.--Until
conversion occurs or the period during which conversion may
occur expires, whichever occurs first, the declarant alone is
liable for real estate taxes assessed against convertible real
estate and all other expenses in connection with that real
estate. No other unit owner and no other portion of the planned
community is subject to a claim for payment of those taxes or
expenses. Unless the declaration provides otherwise, any income
or proceeds from convertible real estate inures to the
declarant.
§ 5212. Withdrawal of withdrawable real estate.
(a) General rule.--To withdraw withdrawable real estate from
a flexible planned community pursuant to an option reserved
under section 5206 (relating to contents of declaration for
flexible planned communities), the declarant shall prepare,
execute and record an amendment to the declaration containing a
legally sufficient description of the real estate being
withdrawn and stating the fact of withdrawal. The amendment must
reallocate votes in the association and common expense
liabilities to the remaining units in the planned community in
proportion to the respective votes and liabilities of those
units before the withdrawal. The reallocation is effective when
the amendment is recorded.
(b) When withdrawal prohibited.--If a portion of a planned
community was described under section 5206, that portion may not
be withdrawn if any person other than the declarant owns a unit
situated therein. If the portion was not so described, none of
it is withdrawable if any person other than the declarant owns a
unit situated therein.
(c) Liability for expenses and right to income.--Until
withdrawal occurs or the period during which withdrawal may
occur expires, whichever occurs first, the declarant alone is
liable for real estate taxes assessed against withdrawable real
estate and all other expenses in connection with that real
estate. No other unit owner and no other portion of the planned
community is subject to a claim for payment of those taxes or
expenses. Unless the declaration provides otherwise, any income
or proceeds from withdrawable real estate inures to the
declarant.
§ 5213. Alteration of units.
Subject to the provisions of the declaration and other
provisions of law, all of the following apply:
(1) A unit owner may make any improvements or
alterations to the unit that do not impair the structural
integrity or mechanical systems or lessen the support of any
portion of the planned community.
(2) A unit owner may not change the appearance of the
common elements or any other portion of the planned community
other than portions of units that are not controlled
facilities, without the permission of the association.
However, a unit owner may change the exterior appearance of a
unit except any portion of a unit which is a controlled
facility, without the permission of the association.
(3) After acquiring an adjoining unit or an adjoining
part of an adjoining unit, a unit owner may remove or alter
any intervening partition or create apertures therein, even
if the partition in whole or in part is a common element, if
those acts do not impair the structural integrity or
mechanical systems or lessen the support of any portion of
the planned community. Removal of partitions or creation of
apertures under this paragraph is not an alteration of
boundaries.
§ 5214. Relocation of boundaries between units.
(a) General rule.--Subject to the provisions of the
declaration and other provisions of law, the boundaries between
adjoining units may be relocated by an amendment to the
declaration upon application to the association by the owners of
those units. If the owners of the adjoining units have specified
a reallocation between their units of their allocated votes in
the association and common expense liability, the application
must state the proposed reallocations. Unless the executive
board determines, within 30 days, that the reallocations are
unreasonable, the association shall prepare an amendment that
identifies the units involved, states the reallocations, is
executed by those unit owners, contains words of conveyance
between them, and, upon recording, is indexed in the name of the
grantor and the grantee.
(b) Recording.--The association shall prepare and record
plats or plans necessary to show the altered boundaries between
adjoining units and their dimensions and identifying numbers.
§ 5215. Subdivision or conversion of units.
(a) General rule.--If the declaration expressly so permits,
a unit may be subdivided into two or more units or, in the case
of a unit owned by a declarant, may be subdivided into two or
more units, common elements or a combination of units and common
elements. Subject to the provisions of the declaration and other
provisions of law, upon application of a unit owner to subdivide
a unit or upon application of a declarant to convert a unit, the
association shall prepare, execute and record an amendment to
the declaration, including the plats and plans, subdividing or
converting that unit.
(b) Execution and contents of amendment.--The amendment to
the declaration must be executed by the owner of the unit to be
subdivided, must assign an identifying number to each unit
created and must reallocate the allocated votes in the
association and common expense liability formerly allocated to
the subdivided unit to the new units in any reasonable manner
prescribed by the owner of the subdivided unit.
(c) Conversion of unit of declarant to common elements.--In
the case of a unit owned by a declarant, if a declarant converts
all of a unit to common elements, the amendment to the
declaration must reallocate among the unit owners votes in the
association and common expense liability formerly allocated to
the converted unit on a pro rata basis, inter se.
§ 5216. Easement for encroachments.
To the extent that any unit or common element encroaches on
any other unit or common element, a valid easement for the
encroachment exists. The easement does not relieve a unit owner
of liability in case of the unit owner's willful misconduct nor
relieve a declarant or any contractor, subcontractor or
materialman or any other person of liability for failure to
adhere to the plats and plans.
§ 5217. Declarant offices, models and signs.
(a) Common elements.--A declarant may maintain offices and
models in the common element portion of the planned community
only in connection with management of or sale or rental of units
owned by the declarant in the planned community if the
declaration so provides and specifies the rights of a declarant
with regard to the number, size, location and relocation
thereof. At such time as a declarant ceases to be a unit owner,
the declarant ceases to have any rights with regard to such
portions of the common elements so used unless the portions are
removed promptly from the planned community in accordance with a
right to remove reserved in the declaration. Upon the relocation
of a model or office constituting a common element, a declarant
may remove all personal property and fixtures therefrom. Any
fixtures not so removed shall be deemed common elements, and any
personal property not so removed shall be deemed the property of
the association.
(b) Signs.--Subject to any limitation in the declaration, a
declarant may maintain signs in the declarant's units and on the
common elements advertising units in the planned community owned
by the declarant for sale or lease.
(c) Units.--A declarant shall have the right to locate,
relocate and maintain offices and models used only in connection
with management of or sale or rental of units owned by the
declarant in the planned community in the declarant's unit or
units in the planned community notwithstanding the fact that the
declaration would otherwise preclude use of units for such
purpose, but subject to all other provisions in the declaration,
including without limitation, modification or elimination of the
declarant's rights under this subsection by specific reference
thereto.
§ 5218. Easement to facilitate completion, conversion and
expansion.
Subject to the provisions of the declaration, a declarant has
an easement through the common elements as may be reasonably
necessary for the purpose of discharging a declarant's
obligations or exercising special declarant rights. In addition,
without affecting the rights, if any, of each unit owner with
respect to the use and enjoyment of the common elements, subject
to the provisions of the declaration, each unit owner and its
agents, contractors and invitees shall have a nonexclusive
access easement through the common elements as may be reasonably
necessary for the purpose of construction, repair and renovation
of the owner's unit. An association shall have the power during
spring thaw conditions to restrict road usage by vehicles of
more than ten tons gross weight provided:
(1) Such restrictions shall be imposed only on a week-
by-week basis for an aggregate period not to exceed eight
weeks during any calendar year;
(2) Thaw conditions shall be reviewed by the association
at least weekly; and
(3) Signs shall be conspicuously posted by the
association at all entrances to the planned community
advising when and where such thaw restrictions are
applicable.
An association shall not have the power to impose any fees or
charges or require financial security, including, but not
limited to, surety bonds, letters of credit or escrow deposits
for the use of the easement rights described in this section
except for the repair of damage caused to common elements in the
exercise of the easement rights.
§ 5219. Amendment of declaration.
(a) Number of votes required.--
(1) The declaration, including the plats and plans, may
be amended only by vote of at least:
(i) 67% of the association;
(ii) a larger percentage of the association
specified in the declaration; or
(iii) a smaller percentage of the association
specified in the declaration if all units are restricted
exclusively to nonresidential use.
(2) Paragraph (1) is limited by subsection (d).
(3) Paragraph (1) shall not apply to any of the
following:
(i) Amendments executed by a declarant under:
(A) section 5210(e) or (f) (relating to plats
and plans);
(B) section 5211(a) (relating to conversion and
expansion of flexible planned communities); or
(C) section 5212(a) (relating to withdrawal of
withdrawable real estate).
(ii) Amendments executed by the association under:
(A) subsection (f);
(B) section 5107 (relating to eminent domain);
(C) section 5207(d) (relating to leasehold
planned communities);
(D) section 5209 (relating to limited common
elements); or
(E) section 5215 (relating to subdivision or
conversion of units).
(iii) Amendments executed by certain unit owners
under:
(A) section 5209(b);
(B) section 5214(a) (relating to relocation of
boundaries between units);
(C) section 5215; or
(D) section 5220(b) (relating to termination of
planned community).
(b) Limitation of action to challenge amendment.--No action
to challenge the validity of an amendment adopted by the
association under this section may be brought more than one year
after the amendment is recorded.
(c) Recording amendment.--Every amendment to the declaration
must be recorded in every county in which any portion of the
planned community is located in the same records as are
maintained for the recording of deeds of real property and shall
be indexed in the name of the planned community in both the
grantor and grantee index. An amendment is effective only upon
recording.
(d) When unanimous consent or declarant joinder required.--
Except to the extent expressly permitted or required by other
provisions of this subpart, without unanimous consent of all
unit owners affected, no amendment may create or increase
special declarant rights, alter the terms or provisions
governing the completion or conveyance or lease of common
facilities or increase the number of units or change the
boundaries of any unit, the common expense liability or voting
strength in the association allocated to a unit, or the uses to
which any unit is restricted. In addition, no declaration
provisions pursuant to which any special declarant rights have
been reserved to a declarant shall be amended without the
express written joinder of the declarant in such amendment.
(e) Officer authorized to execute amendment.--Amendments to
the declaration required by this subpart to be recorded by the
association shall be prepared, executed, recorded and certified
by an officer of the association designated for that purpose or,
in the absence of designation, by the president of the
association.
(f) Technical corrections.--Except as otherwise provided in
the declaration, if any amendment to the declaration is
necessary in the judgment of the executive board to do any of
the following:
(1) cure an ambiguity;
(2) correct or supplement any provision of the
declaration, including the plats and plans, that is
defective, missing or inconsistent with any other provision
of the declaration or with this subpart; or
(3) conform to the requirements of any agency or entity
that has established national or regional standards with
respect to loans secured by mortgages or deeds of trust or
units in planned community or so-called "PUD" projects, such
as Federal National Mortgage Association and the Federal Home
Loan Mortgage Corporation;
the executive board may effect an appropriate corrective
amendment without the approval of the unit owners or the holders
of liens on the planned community, upon receipt of an opinion
Act text part 2
from independent legal counsel to the effect that the proposed
amendment is permitted by the terms of this subsection.
§ 5220. Termination of planned community.
(a) Number of votes required.--Except in the case of a
taking of all the units by eminent domain in section 5107
(relating to eminent domain), a planned community may be
terminated only by agreement of unit owners of units to which at
least 80%, or such larger percentage specified in the
declaration, of the votes in the association are allocated. The
declaration may specify a smaller percentage only if all of the
units in the planned community are restricted exclusively to
nonresidential uses.
(b) Execution and recording agreement and ratifications.--An
agreement to terminate must be evidenced by the execution or
ratification of a termination agreement, in the same manner as a
deed, by the requisite number of unit owners who are owners of
record as of the date preceding the date of recording of the
termination agreement. The termination agreement must specify
the date it was first executed or ratified by a unit owner. The
termination agreement shall become void unless it is recorded on
or before the earlier of the expiration of one year from the
date it was first executed and ratified by a unit owner or such
date as shall be specified in the termination agreement. A
termination agreement and all ratifications thereof must be
recorded in every county in which a portion of the planned
community is located in the same records as are maintained for
the recording of deeds of real property and shall be indexed in
the name of the planned community in both the grantor and
grantee index. A termination agreement is effective only upon
recording.
(c) Sale of real estate.--The association, on behalf of the
unit owners, may contract for the sale of real estate in the
planned community. The contract is not binding until approved
under subsections (a) and (b). If any real estate in the planned
community is to be sold by the association following
termination, title to that real estate, upon termination, vests
in the association as trustee for the holders of all interests
in the units. Thereafter, the association has all powers
necessary and appropriate to effect the sale. Until the sale has
been concluded and the proceeds thereof distributed, the
association continues in existence with all powers it had before
termination. Proceeds of the sale shall be distributed to unit
owners and lien holders as their interests may appear in
proportion to the respective interests of unit owners as
provided in subsection (f). Unless otherwise specified in the
termination agreement, as long as the association holds title to
the real estate, each unit owner and the owner's successors in
interest have an exclusive right to occupancy of the portion of
the real estate that formerly constituted the owner's unit.
During the period of that occupancy, each unit owner and the
owner's successors in interest remain liable for all assessments
and other obligations imposed on unit owners by this subpart or
the declaration.
(d) Nonsale upon termination.--If the real estate
constituting the planned community is not to be sold following
termination, title to the common facilities and, in a planned
community containing only units having horizontal boundaries
described in the declaration, title to all the real estate in
the planned community vest in the unit owners upon termination
as tenants in common in proportion to their respective interests
as provided in subsection (f), and liens on the units shift
accordingly. While the tenancy in common exists, each unit owner
and the owner's successors in interest have an exclusive right
to occupancy of the portion of the real estate that formerly
constituted the owner's unit.
(e) Proceeds of sale.--Following termination of the planned
community, the proceeds of any sale of real estate, together
with the assets of the association, are held by the association
as trustee for unit owners and holders of liens on the units as
their interests may appear. Following termination, creditors of
the association holding liens on the units which were recorded,
filed of public record or otherwise perfected before termination
may enforce those liens in the same manner as any lien holder.
All other creditors of the association are to be treated as if
they had perfected liens on the units immediately before
termination.
(f) Respective interests of unit owners.--The respective
interests of unit owners referred to in subsections (c), (d) and
(e) are as follows:
(1) Except as provided in paragraph (2), the respective
interests of unit owners are the fair market values of their
units and limited common elements immediately before the
termination, as determined by one or more independent
appraisers selected by the association. The decision of the
independent appraisers shall be distributed to the unit
owners and becomes final unless disapproved within 30 days
after distribution by unit owners of units to which 25% of
the votes in the association are allocated. The proportion of
any unit owner's interest to that of all unit owners is
determined by dividing the fair market value of that unit
owner's unit by the total fair market values of all the units
and common elements.
(2) If any unit or any limited common element is
destroyed to the extent that an appraisal of the fair market
value thereof before destruction cannot be made, the
interests of all unit owners are their respective common
expense liabilities immediately before the termination.
(g) Effect of foreclosure or enforcement of lien.--Except as
provided in subsection (h), foreclosure or enforcement of a lien
or encumbrance against the entire planned community does not of
itself terminate the planned community. Foreclosure or
enforcement of a lien or encumbrance against a portion of the
planned community does not of itself withdraw that portion from
the planned community. Foreclosure or enforcement of a lien or
encumbrance against withdrawable real estate does not of itself
withdraw that real estate from the planned community, but the
person taking title thereto has the right to require from the
association, upon request, an amendment excluding the real
estate from the planned community.
(h) Exclusion from planned community upon foreclosure.--If a
lien or encumbrance against a portion of the real estate
comprising the planned community has priority over the
declaration and if the lien or encumbrance has not been
partially released, the parties foreclosing the lien or
encumbrance may, upon foreclosure, record an instrument
excluding the real estate subject to that lien or encumbrance
from the planned community.
§ 5221. Rights of secured lenders.
The declaration may require that all or a specified number or
percentage of the mortgagees or beneficiaries of deeds of trust
encumbering the units approve specified actions of the unit
owners or the association as a condition to the effectiveness of
those actions, but no requirement for approval may operate to do
any of the following:
(1) Deny or delegate control over the general
administrative affairs of the association by the unit owners
or the executive board.
(2) Prevent the association or the executive board from
commencing, intervening in or settling any litigation or
proceeding or receiving and distributing any insurance
proceeds except under section 5312 (relating to insurance).
§ 5222. Master associations.
(a) Applicability of section.--If the declaration for a
planned community provides that any of the powers described in
section 5302 (relating to power of unit owners' association)
with respect to the planned community are to be exercised by or
may be delegated to a profit or nonprofit corporation or
unincorporated association (a "master association") which
exercises those or other powers on behalf of one or more other
planned communities or other incorporated or unincorporated
associations, then, except as modified by this section, all
provisions of this subpart applicable to unit owners'
associations shall apply to any such master association insofar
as its actions affect the planned community.
(b) Powers.--Unless a master association is acting in the
capacity of an association described in section 5301 (relating
to organization of unit owners' association) with respect to a
planned community which is part of the master association, it
may exercise with respect to the planned community only such
powers set forth in section 5302 and only to the extent
expressly permitted in the declaration which provides for the
delegation of powers from its planned community association to
the master association and accepted by the master association,
as indicated in the provisions of the declaration or other
organizational documents of the master association.
(c) Liability of executive board members and officers.--If
the declaration of a planned community provides that the
executive board may delegate certain powers to a master
association, the members of the executive board have no
liability for the acts or omissions of the master association
with respect to those powers following delegation. The officers
and members of the governing board of the master association are
subject to liability to the planned community association whose
powers are delegated to the master association and the unit
owners of the planned community on the same basis as officers
and executive board members of the planned community immediately
before such delegation of powers.
(d) Rights and responsibilities of persons electing
governing body.--The rights and responsibilities of unit owners
with respect to the unit owners' association set forth in
sections 5302, 5303 (relating to executive board members and
officers), 5309 (relating to quorums), 5310 (relating to voting;
proxies) and 5320 (relating to declarant delivery of items to
association) apply in the conduct of the affairs of a master
association with respect to the exercise of powers elected
pursuant to a planned community declaration to the master
association, but apply only to those persons who elect the
governing body of a master association, whether or not those
persons are otherwise unit owners within the meaning of this
subpart.
(e) Election of master association governing body.--
Notwithstanding the provisions of section 5303(e) with respect
to the election of the executive board by all unit owners after
the period of declarant control ends and even if a master
association is also an association described in section 5301,
the instrument creating the master association and the
declaration of each planned community of the organizational
documents of other associations, the powers of which are
assigned pursuant to the declaration or organizational documents
or delegated to the master association, shall provide that the
governing body of the master association must be elected after
the period of declarant control in any of the following ways:
(1) All unit owners of all planned communities and other
properties subject to the master association elect all
members of the governing body of the master association.
(2) All members of the governing bodies of the planned
community associations and other property owners'
associations subject to the master association elect all
members of the master association governing body.
(3) All unit owners of each planned community and other
property owners' association subject to the master
association elects specified members of the master
association governing body.
(4) All members of the governing bodies of the planned
communities and other property associations subject to the
master association elect specified members of the master
association governing body.
(f) Delegation of responsibility and authority.--The
provisions of this section shall apply to a planned community
upon any of the following:
(1) A date specified in the declaration or any amendment
thereto from and after which this section shall apply to the
planned community.
(2) An event or action that the declaration or any
amendment thereto states shall cause this section to become
applicable and the association causes to be recorded an
instrument duly executed by the president of the association
stating that:
(i) the event or action has occurred and the date of
such occurrence, thereby causing this section to become
applicable to the planned community; and
(ii) a copy of such instrument has been sent to all
unit owners.
(3) The declarant executes and records an instrument
stating that this section shall thereafter apply to the
planned community and that a copy of such instrument has been
sent to the executive board and all unit owners. This
paragraph shall be applicable only if the declarant shall
have expressly reserved in the declaration, under section
5205(13) (relating to contents of declaration; all planned
communities), the special declarant right to make this
section applicable to the planned community and only if the
instrument exercising such right has been recorded during the
time period allowed for the exercise of such right.
(g) Delegation of all powers.--If all of the powers of a
planned community association are delegated to a master
association and accepted by the master association under
subsection (b), then the governing body of the master
association may act in all respects as the executive board of
the planned community, and no separate executive board need be
elected or exist.
§ 5223. Merger or consolidation of planned community.
(a) General rule.--Any two or more planned communities by
agreement of the unit owners as provided in subsection (b) may
be merged or consolidated into a single planned community. In
the event of a merger or consolidation, unless the agreement
otherwise provides, the resultant planned community is, for all
purposes, the legal successor of all of the preexisting planned
communities, and the operations and activities of all
associations of the preexisting planned communities shall be
merged or consolidated into a single association which shall
hold all powers, rights, obligations, assets and liabilities of
all preexisting associations. The resultant planned community
shall, in addition, be subject in all respects to the provisions
and requirements of this subpart regardless of whether or not
any of the preexisting planned communities have been established
under this subpart.
(b) Requirements of agreement.--The merger or consolidation
of two or more planned communities under subsection (a) must be
evidenced by a recorded agreement duly executed by the president
of the association of each of the preexisting planned
communities following approval by owners of units to which are
allocated the percentage of votes in each planned community
required to terminate such planned community. Any such agreement
must be recorded in every county in which a portion of the
planned community is located and is not effective until so
recorded.
(c) Reallocations.--
(1) Every merger or consolidation agreement must provide
for the reallocation of the common expense liability,
including both general and limited common expenses, and
portion of the votes in the resulting association among the
units of the resulting planned community in one of the
following manners:
(i) by stating the reallocations or the formulas
upon which they are based; or
(ii) by stating the common expense liability,
including both general and limited common expenses, and
portion of the votes in the resulting association which
are allocated to all of the units comprising each of the
preexisting planned communities, and providing that the
common expense liability, including both general and
limited common expenses, and portion of the votes in the
association for the resulting planned community shall be
the same as was allocated to each unit formerly
comprising a part of the preexisting planned community by
the declaration of the preexisting planned community.
(d) Action by declarant.--Notwithstanding the provisions of
subsections (a) and (b), if a declarant shall have expressly
retained the special declarant right to merge or consolidate a
planned community under section 5205(14) (relating to contents
of declaration; all planned communities) and if the declarant
shall have exercised such right within the time period allowed
for such exercise by giving written notice to that effect to all
unit owners accompanied by a copy of the agreement evidencing
such merger or consolidation, then such agreement may be
executed by the declarant rather than by the president of the
association of that planned community and without the necessity
for approval or consent by unit owners or their mortgagees,
provided that the agreement is recorded within the time period
allowed for the exercise of this special declarant right.
CHAPTER 53
MANAGEMENT OF PLANNED COMMUNITY
Sec.
5301. Organization of unit owners' association.
5302. Power of unit owners' association.
5303. Executive board members and officers.
5304. Transfer of special declarant rights.
5305. Termination of contracts and leases of declarant.
5306. Bylaws.
5307. Upkeep of planned community.
5308. Meetings.
5309. Quorums.
5310. Voting; proxies.
5311. Tort and contract liability.
5312. Insurance.
5313. Surplus funds.
5314. Assessments for common expenses.
5315. Lien for assessments.
5316. Association records.
5317. Association as trustee.
5318. Conveyance or encumbrance of common facilities.
5319. Other liens affecting planned community.
5320. Declarant delivery of items to association.
§ 5301. Organization of unit owners' association.
A unit owners' association shall be organized no later than
the date the first unit in the planned community is conveyed to
a person other than a successor declarant. The membership of the
association at all times shall consist exclusively of all the
unit owners or, following termination of the planned community,
of all former unit owners entitled to distributions of proceeds
under section 5218 (relating to easement to facilitate
completion, conversion and expansion) or their heirs, successors
or assigns. The association shall be organized as a profit or
nonprofit corporation or as an unincorporated association.
§ 5302. Power of unit owners' association.
(a) General rule.--Except as provided in subsection (b) and
subject to the provisions of the declaration and the limitations
of this subpart, the association, even if unincorporated, may:
(1) Adopt and amend bylaws and rules and regulations.
(2) Adopt and amend budgets for revenues, expenditures
and reserves and collect assessments for common expenses from
unit owners.
(3) Hire and terminate managing agents and other
employees, agents and independent contractors.
(4) Institute, defend or intervene in litigation or
administrative proceedings in its own name on behalf of
itself or two or more unit owners on matters affecting the
planned community.
(5) Make contracts and incur liabilities.
(6) Regulate the use, maintenance, repair, replacement
and modification of common elements.
(7) Cause additional improvements to be made as a part
of the common facilities and, only to the extent permitted by
the declaration, the controlled facilities.
(8) Acquire, hold, encumber and convey in its own name
any right, title or interest to real or personal property,
but common facilities may be conveyed or subjected to a
security interest only under the provisions of section 5318
(relating to conveyance or encumbrance of common facilities).
(9) Grant easements, leases, licenses and concessions
through or over the common facilities and, only to the extent
permitted by the declaration, the controlled facilities.
(10) Impose and receive payments, fees or charges for
the use, except as limited by other provisions of this
subpart, rental or operation of the common elements other
than the limited common elements described in section 5202(2)
and (3) (relating to unit boundaries).
(11) Impose charges for late payment of assessments and,
after notice and an opportunity to be heard, levy reasonable
fines for violations of the declaration, bylaws and rules and
regulations of the association.
(12) Impose reasonable charges for the preparation and
recording of amendments to the declaration, resale
certificates required by section 5407 (relating to resales of
units) which shall be one charge that may be made by the
association solely because of the resale or retransfer of any
unit or statement of unpaid assessments. In addition, an
association may impose a capital improvement fee, but no
other fees, on the resale or transfer of units in accordance
with the following:
(i) The capital improvement fee for any unit shall
not exceed the annual assessments for general common
expense charged to such unit during the most recently
completed fiscal year of the association; provided that:
(A) in the case of resale or transfer of a unit
consisting of unimproved real estate, the capital
improvement fee shall not exceed one-half of the
annual assessments for general common expenses
charged to such unit during the most recently
completed fiscal year of the association; and
(B) in the case of resale or transfer of a unit
which was either created or added to the planned
community in accordance with section 5211 (relating
to conversion and expansion of flexible planned
communities) at some time during the most recently
completed fiscal year of the association but was not
in existence for the entire fiscal year, the capital
improvement fee shall not exceed one-half of the
annual assessments for general common expenses
charged to a unit comparable to such unit during the
most recently completed fiscal year of the
association.
(ii) Capital improvement fees allocated by an
association must be maintained in a separate capital
account and may be expended only for new capital
improvements or replacement of existing common elements,
and may not be expended for operation, maintenance or
other purposes.
(iii) No capital improvement fee shall be imposed on
any gratuitous transfer of a unit between any of the
following family members: spouses, parent and child,
siblings, grandparent and grandchild.
(iv) No fees may be imposed upon any person who:
(A) acquires a unit consisting of unimproved
real estate and signs and delivers to the association
at the time of such person's acquisition a sworn
affidavit declaring the person's intention to
reconvey such unit within 18 months of its
acquisition; and
(B) completes such reconveyance within such 18
months.
(13) Provide for the indemnification of its officers and
executive board and maintain directors' and officers'
liability insurance.
(14) Exercise any other powers conferred by this
subpart, the declaration or bylaws.
(15) Exercise all other powers that may be exercised in
this Commonwealth by legal entities of the same type as the
association.
(16) Exercise any other powers necessary and proper for
the governance and operation of the association.
(17) Assign its right to future income, including the
right to receive common expense assessments, only to the
extent the declaration expressly provides.
(18) Assign or delegate any powers of the association
listed in this section to a master association subject to the
provisions of section 5222 (relating to master associations)
and accept an assignment or delegation of powers from one or
more planned communities or other incorporated or
unincorporated associations.
(b) Restrictions on limitations in declaration.--
Notwithstanding subsection (a), the declaration may not impose
limitations on the power of the association to deal with
declarants which are more restrictive than the limitations
imposed on the power of the association to deal with other
persons. Any exercise of a power under subsection (a)(7), (8) or
(9) which would materially impair quiet enjoyment of a unit
shall require the prior written approval of the owner of that
unit.
§ 5303. Executive board members and officers.
(a) Powers and fiduciary status.--Except as provided in the
declaration, in the bylaws, in subsection (b) or in other
provisions of this subpart, the executive board may act in all
instances on behalf of the association. In the performance of
their duties, the officers and members of the executive board
shall stand in a fiduciary relation to the association and shall
perform their duties, including duties as members of any
committee of the board upon which they may serve, in good faith;
in a manner they reasonably believe to be in the best interests
of the association; and with care, including reasonable inquiry,
skill and diligence as a person of ordinary prudence would use
under similar circumstances. In performing any duties, an
officer or executive board member shall be entitled to rely in
good faith on information, opinions, reports or statements,
including financial statements and other financial data, in each
case prepared or presented by any of the following:
(1) One or more other officers or employees of the
association whom the officer or executive board member
reasonably believes to be reliable and competent in the
matters presented.
(2) Counsel, public accountants or other persons as to
matters which the officer or executive board member
reasonably believes to be within the professional or expert
competence of that person.
(3) A committee of the executive board upon which the
officer or executive board member does not serve, designated
in accordance with law, as to matters within its designated
authority, which committee the officer or executive board
member reasonably believes to merit confidence.
(b) Limitation on authority.--The executive board may not
act on behalf of the association to amend the declaration under
section 5219 (relating to amendment of declaration), to
terminate the planned community under section 5220 (relating to
termination of planned community) or to elect members of the
executive board or determine the qualifications, powers and
duties or terms of office of executive board members under
subsection (e), but the executive board may fill vacancies in
its membership for the unexpired portion of any term. The
executive board shall deliver to all unit owners copies of each
budget approved by the executive board and notice of any capital
expenditure approved by the executive board promptly after such
approval. In addition to other rights conferred by the
declaration, bylaws or this subpart, the unit owners, by
majority or any larger vote specified in the declaration, may
reject any budget or capital expenditure approved by the
executive board within 30 days after approval.
(c) Status during period of declarant control.--
(1) Subject to subsection (d), the declaration may
provide for a period of declarant control of the association
during which a declarant or persons designated by the
declarant may appoint and remove the officers and members of
the executive board.
(2) Any period of declarant control extends from the
date of the first conveyance of a unit to a person other than
a declarant for a period of not more than:
(i) seven years in the case of a flexible planned
community containing convertible real estate or to which
additional real estate may be added; and
(ii) five years in the case of any other planned
community.
(3) Regardless of the period provided in the
declaration, a period of declarant control terminates no
later than the earlier of:
(i) sixty days after conveyance of 75% of the units
which may be created to unit owners other than a
declarant;
(ii) two years after all declarants have ceased to
offer units for sale in the ordinary course of business;
or
(iii) two years after any development right to add
new units was last exercised.
(4) A declarant may voluntarily surrender the right to
appoint and remove officers and members of the executive
board before termination of that period. In that event the
declarant may require, for the duration of the period of
declarant control, that specified actions of the association
or executive board, as described in a recorded instrument
executed by the declarant, be approved by the declarant
before they become effective.
(d) Election of members during transfer of declarant
control.--Not later than 60 days after conveyance of 25% of the
units which may be created to unit owners other than a
declarant, at least one member and not less than 25% of the
members of the executive board shall be elected by unit owners
other than the declarant. Not later than 60 days after
conveyance of 50% of the units which may be created to unit
owners other than a declarant, not less than 33% of the members
of the executive board shall be elected by unit owners other
than the declarant.
(e) Election of members and officers following declarant
control.--Not later than the termination of any period of
declarant control, the unit owners shall elect an executive
board of at least three members, at least a majority of whom
shall be unit owners, provided that the executive board may
consist of two members, both of whom shall be unit owners, if
the planned community consists of two units. The executive board
shall elect the officers. The executive board members and
officers shall take office upon election.
(f) Removal of members.--Notwithstanding any provision of
the declaration or bylaws to the contrary, the unit owners, by a
two-thirds vote of all persons present and entitled to vote at
any meeting of the unit owners at which a quorum is present, may
remove any member of the executive board with or without cause,
other than a member appointed by the declarant.
§ 5304. Transfer of special declarant rights.
(a) Execution and recording instrument of transfer.--No
special declarant right created or reserved under this subpart
may be transferred except by an instrument evidencing the
transfer recorded in every county in which any portion of the
planned community is located in the same records as are
maintained for the recording of deeds of real property and shall
be indexed in the name of the planned community in both the
grantor and grantee indices. The instrument is not effective
unless executed by the transferee.
(b) Liability of declarant following transfer.--Upon
transfer of any special declarant right, the liability of a
transferor declarant is as follows:
(1) A transferor is not relieved of any obligation or
liability arising before the transfer and remains liable for
warranty obligations imposed on a declarant by this subpart.
Lack of privity does not deprive any unit owner of standing
to bring an action to enforce any obligation of the
transferor.
(2) If a successor to any special declarant right is an
affiliate of a declarant, the transferor is jointly and
severally liable with any successor for any obligations or
liabilities of the successor relating to the planned
community.
(3) If a transferor retains any special declarant rights
but transfers one or more other special declarant rights to a
successor who is not an affiliate of the declarant, the
transferor is liable for any obligations or liabilities
imposed on a declarant by this subpart or by the declaration
relating to the retained special declarant rights and arising
after the transfer.
(4) A transferor has no liability for any act or
omission or any breach of a contractual or warranty
obligation arising from the exercise of a special declarant
right by a successor declarant who is not an affiliate of the
transferor and to whom the special declarant right has not
previously been assigned.
(c) Rights of purchaser in foreclosure, etc., proceedings.--
Unless otherwise provided in a mortgage instrument or deed of
trust, in case of mortgage foreclosure, tax sale, judicial sale,
sale by a trustee under a deed of trust or sale under 11 U.S.C.
(relating to bankruptcy) or under receivership proceedings of
any units owned by a declarant or real estate in a planned
community subject to development rights, a person acquiring
title to all the real estate being foreclosed or sold, but only
upon his request, succeeds to all special declarant rights
related to that real estate held by that declarant or only to
any rights reserved in the declaration under section 5217
(relating to declarant offices, models and signs) and held by
that declarant to maintain models, sales offices and signs. The
judgment or instrument conveying title shall provide for
transfer of only the special declarant rights requested.
(d) Rights of declarant following foreclosure, etc.--Upon
foreclosure, tax sale, judicial sale, sale by a trustee under a
deed of trust or sale under 11 U.S.C. or under receivership or
similar proceedings of all units and other real estate in a
planned community owned by a declarant:
(1) the declarant ceases to have any special declarant
rights; and
(2) the period of declarant control under section
5303(d) (relating to executive board members and officers)
terminates unless the judgment or instrument conveying title
provides for transfer of all special declarant rights held by
that declarant to a successor declarant.
(e) Liabilities and obligations of successors.--The
liabilities and obligations of persons who succeed to special
declarant rights are as follows:
(1) A successor to any special declarant right who is an
affiliate of a declarant is subject to all obligations and
liabilities imposed on the transferor by this subpart or by
the declaration.
(2) A successor to any special declarant right, other
than a successor described in paragraph (3) or (4), who is
not an affiliate of a declarant is subject to all obligations
and liabilities imposed by this subpart or the declaration on
any of the following:
(i) A declarant insofar as the obligation or
liability relates to the exercise or nonexercise of
special declarant rights.
(ii) The successor's transferor, other than any of
the following:
(A) Misrepresentations by any previous declarant
except to the extent knowingly continued or permitted
to continue without correcting such
misrepresentations.
(B) Warranty obligations on improvements made by
any previous declarant or made before the planned
community was created.
(C) Breach of any fiduciary obligation by any
previous declarant or such declarant's appointees to
the executive board.
(D) Any liability or obligation imposed on the
transferor as a result of the transferor's acts or
omissions after the transfer.
(3) A successor to only a right reserved in the
declaration to maintain models, sales offices and signs under
section 5217, if the successor is not an affiliate of a
declarant, may not exercise any other special declarant right
and is not subject to any liability or obligation as a
declarant except the obligation to provide a public offering
statement and any liability arising as a result thereof.
(4) A successor to all special declarant rights held by
his transferor who is not an affiliate of that transferor
declarant and who succeeded to those rights pursuant to a
deed in lieu of foreclosure or a judgment or instrument
conveying title to units or an instrument conveying solely
special declarant rights under subsection (c) may declare his
intention to hold those rights solely for transfer to another
person. Thereafter, until transferring all special declarant
rights to any person acquiring title to any unit owned by the
successor or until recording an instrument permitting
exercise of all those rights, that successor may not exercise
any of those rights other than any right held by his
transferor to control the executive board in accordance with
the provisions of section 5303(d) for the duration of any
period of declarant control; and any attempted exercise of
those rights is void. As long as a successor declarant may
not exercise special declarant rights under this paragraph,
the successor is not subject to any liability or obligation
as a declarant other than liability for his acts and
omissions under section 5303(d).
(f) Limitation on liability of successor.--Nothing in this
section subjects any successor to a special declarant right to
any claims against or other obligations of a transferor
declarant other than claims and obligations arising under this
subpart or the declaration.
§ 5305. Termination of contracts and leases of declarant.
(a) General rule.--If entered into before the executive
board elected by the unit owners under section 5303(e) (relating
to executive board members and officers) takes office, any of
the following may be terminated without penalty by the
association at any time after the executive board elected by the
unit owners under section 5303(e) takes office upon not less
than 90 days' notice to the other party:
(1) Any management contract, employment contract or
lease of recreational or parking areas or facilities.
(2) Any other contract or lease to which a declarant or
an affiliate of a declarant is a party.
(3) Any contract or lease that is not bona fide or was
unconscionable to the unit owners at the time entered into
under the circumstances then prevailing.
(b) Exception.--This section does not apply to any lease the
termination of which would terminate the planned community or
reduce its size unless the real estate subject to that lease was
included in the planned community for the purpose of avoiding
the right of the association to terminate a lease under this
section.
§ 5306. Bylaws.
(a) Mandatory provisions.--The bylaws of the association
shall provide for all of the following:
(1) The number of members of the executive board and the
titles of the officers of the association.
(2) Election by the executive board of a president,
treasurer, secretary and any other officers of the
association the bylaws specify.
(3) The qualifications, powers and duties, terms of
office and manner of electing and removing executive board
members and officers and filling vacancies.
(4) Which, if any, of its powers the executive board or
officers may delegate to other persons or to a managing
agent.
(5) Which of its officers may prepare, execute, certify
and record amendments to the declaration on behalf of the
association.
(6) The method of amending the bylaws.
(b) Other provisions.--Subject to the provisions of the
declaration, the bylaws may provide for any other matters the
association deems necessary and appropriate.
§ 5307. Upkeep of planned community.
(a) General rule.--Except to the extent provided by the
declaration, subsection (b) or section 5312 (relating to
insurance), the association is responsible for maintenance,
repair and replacement of the common elements, and each unit
owner is responsible for maintenance, repair and replacement of
his unit. Each unit owner shall afford to the association and
the other unit owners and to their agents or employees access
through the unit reasonably necessary for those purposes. If
damage is inflicted on the common elements or on any unit
through which access is taken, the unit owner responsible for
the damage or the association if it is responsible is liable for
the prompt repair of the damage.
(b) Nonresidential planned communities.--If any unit in a
planned community all of whose units are restricted to
nonresidential use is damaged and the exterior appearance of the
unit is thereby affected, the person responsible for the
exterior of the unit shall cause the unit to be repaired or
rebuilt to the extent necessary to restore its exterior
appearance. If that person fails within a reasonable period of
time to effect the repairs or rebuilding, the association may
purchase the unit at its fair market value to be determined by
an independent appraiser selected by the association.
§ 5308. Meetings.
The bylaws shall require that meetings of the association be
held at least once each year and shall provide for special
meetings. The bylaws shall specify which of the association's
officers, not less than ten nor more than 60 days in advance of
any meeting, shall cause notice to be hand delivered or sent
prepaid by United States mail to the mailing address of each
unit or to any other mailing address designated in writing by
the unit owner. The notice of any meeting must state the time
and place of the meeting and the items on the agenda, including
the general nature of any proposed amendment to the declaration
or bylaws; any budget or assessment changes; and, where the
declaration or bylaws require approval of unit owners, any
proposal to remove a director or officer.
§ 5309. Quorums.
(a) Association.--Unless the bylaws provide otherwise, a
quorum is present throughout any meeting of the association if
persons entitled to cast 20% of the votes which may be cast for
election of the executive board are present in person or by
proxy at the beginning of the meeting. The bylaws may require a
larger percentage or a smaller percentage not less than 10%.
(b) Executive board.--Unless the bylaws specify a larger
percentage, a quorum is deemed present throughout any meeting of
the executive board if persons entitled to cast 50% of the votes
on the board are present at the beginning of the meeting.
§ 5310. Voting; proxies.
(a) Unit owner other than natural person.--If the owner of a
unit is a corporation, joint venture, partnership or
unincorporated association, the natural person who shall be
entitled to cast the vote for that unit shall be the person
named in a certificate executed by that entity pursuant to its
governing documents. If the owner of a unit is a trust, the
trustee or trustees shall be deemed to be the owner for voting
purposes. If the ownership of a unit is in more than one person,
the natural person who shall be entitled to cast the vote of the
unit shall be the person named in a certificate executed by all
of the owners of the unit and filed with the secretary of the
association or, in the absence of that named person from the
meeting or in the event of failure to execute and file such a
certificate, the person owning such unit who is present. If more
than one of the multiple owners are present, the votes allocated
to that unit may be cast only in accordance with their unanimous
agreement unless the declaration expressly provides otherwise.
There shall be deemed to be unanimous agreement if any one of
the multiple owners casts the votes allocated to that unit
without protest being made promptly to the person presiding over
the meeting by any of the other owners of the unit. Such a
certificate shall be valid until revoked by a subsequent
certificate similarly executed. Except where execution by owners
of a unit in the same manner as a deed is required in this
subpart and subject to the provisions of the declaration and
bylaws, wherever the approval or disapproval of a unit owner is
required by this subpart, the declaration or the bylaws, the
approval or disapproval shall be made only by the person who
would be entitled to cast the vote of the unit at any meeting of
the association.
(b) Proxies.--Votes allocated to a unit may be cast pursuant
to a proxy duly executed by a unit owner. If a unit is owned by
more than one person, each owner of the unit may vote or
register protest to the casting of votes by the other owners of
the unit through a duly executed proxy. A unit owner may not
revoke a proxy given under this section except by actual notice
of revocation to the person presiding over a meeting of the
association. A proxy is void if it is not dated or purports to
be revocable without notice. A proxy terminates one year after
its date unless it specifies a shorter term.
(c) Voting by lessees.--If the declaration requires that
votes on specified matters affecting the planned community be
cast by lessees rather than unit owners of leased units, all of
the following apply:
(1) The provisions of subsections (a) and (b) apply to
lessees as if they were unit owners.
(2) Unit owners who have leased their units to other
persons may not cast votes on those specified matters.
(3) Lessees are entitled to notice of meetings, access
to records and other rights respecting those matters as if
they were unit owners.
Unit owners shall also be given notice, in the manner provided
in section 5308 (relating to meetings), of all meetings at which
lessees may be entitled to vote.
(d) Units owned by association.--No votes allocated to a
unit owned by the association may be cast.
§ 5311. Tort and contract liability.
(a) General rule.--
(1) An action in tort alleging a wrong done by a
declarant or his agent or employee in connection with a
portion of any convertible or withdrawable real estate or
other portion of the planned community which the declarant
has the responsibility to maintain may not be brought against
the association or against a unit owner other than a
declarant.
(2) Except as otherwise provided by paragraph (1):
(i) An action in tort alleging a wrong done by the
association or by an agent or employee of the
association, or on behalf of the association, must be
brought against the association.
(ii) A unit owner shall not be subject to suit or,
except as otherwise provided by subsection (b), be
otherwise directly or indirectly held accountable for the
acts of the association or its agents or employees on
behalf of the association.
(3) If the tort or breach of contract occurred during
any period of declarant control under section 5303(c)
(relating to executive board members and officers), the
declarant is liable to the association for all unreimbursed
losses suffered by the association as a result of that tort
or breach of contract, including costs and reasonable
attorney fees. If a claim for a tort or breach of contract is
made after the period of declarant control, the association
shall have no right against the declarant under this
paragraph unless the association shall have given the
declarant all of the following:
(i) Notice of the existence of the claim promptly
after the date on which a member of the executive board
who is not a designee of the declarant learns of the
existence of the claim.
(ii) An opportunity to defend against the claim on
behalf of the association but at the declarant's expense.
(4) A unit owner is not precluded from bringing an
action contemplated by this subsection because he is a unit
owner or a member or officer of the association.
Any statute of limitation affecting the association's right of
action under this section is tolled until the period of
declarant control terminates.
(b) Lien of judgment.--Except as otherwise provided in this
subpart, a judgment for money against the association if and
when entered of record against the name of the association in
the office of the clerk of the court of common pleas of the
county where the planned community is located shall also
constitute a lien against each unit for a pro rata share of the
amount of that judgment, including interest thereon, based on
the common expense liability allocated to that unit under
section 5208 (relating to allocation of votes and common expense
liabilities). No other property of a unit owner is subject to
the claims of creditors of the association.
(c) Indexing judgment.--A judgment against the association
must be indexed in the name of the planned community.
(d) Applicability of section.--The provisions of this
section shall apply to all associations without regard to
whether the association is organized as a corporation or as an
unincorporated association.
§ 5312. Insurance.
(a) Insurance to be carried by association.--Commencing not
later than the time of the first conveyance of a unit to a
person other than a declarant, the association shall maintain,
to the extent reasonably available, all of the following:
(1) Property insurance on the common facilities and
controlled facilities to the extent the controlled facilities
can be insured separately from the unit and, if insurance for
the unit is not provided by the association under subsection
(b) or the declaration, insuring against all common risks of
direct physical loss. The total amount of insurance after
application of any deductibles shall be not less than 80% of
the actual cash value of the insured property, exclusive of
land, excavations, foundations and other items normally
excluded from property policies.
(2) Comprehensive general liability insurance, including
medical payments insurance, in an amount determined by the
executive board but not less than any amount specified in the
declaration covering all occurrences commonly insured against
for death, bodily injury and property damage, arising out of
or in connection with the use, ownership or maintenance of
the common elements.
(b) Units having horizontal boundaries.--In the case of a
building containing units having horizontal boundaries described
in the declaration, that insurance described in subsection
(a)(1), to the extent reasonably available, shall include the
units but need not include improvements and betterments
installed by unit owners.
(c) Other insurance carried by association.--If the
insurance described in subsections (a) and (b) is not
maintained, the association promptly shall cause notice of that
fact to be hand delivered or sent prepaid by United States mail
to all unit owners. The declaration may require the association
to carry any other insurance. The association may carry any
other insurance it deems appropriate to protect the association
or the unit owners.
(d) Policy terms.--Insurance policies carried under
subsections (a) and (b) shall provide all of the following:
(1) Each unit owner is an insured person under the
policy with respect to liability arising out of his
membership in the association.
(2) The insurer waives its right to subrogation under
the policy against any unit owner or member of the owner's
household.
(3) No act or omission by any unit owner, unless acting
within the scope of his authority on behalf of the
association, will void the policy or be a condition to
recovery under the policy.
(4) If at the time of a loss under the policy there is
other insurance in the name of a unit owner covering the same
risk covered by the policy, the association's policy is
primary insurance not contributing with the other insurance.
(e) Proceeds from property insurance.--Any loss covered by
the property policy under subsections (a)(1) and (b) shall be
adjusted with the association, but the insurance proceeds for
that loss shall be payable to any insurance trustee designated
for that purpose, or otherwise to the association, and not to
any mortgagee or beneficiary under a deed of trust. The
insurance trustee or the association shall hold any insurance
proceeds in trust for unit owners and lienholders as their
interests may appear. Subject to the provisions of subsection
(h), the proceeds shall be disbursed first for the repair or
restoration of the damaged common elements and units, and unit
owners and lienholders are not entitled to receive payment of
any portion of the proceeds unless there is a surplus of
proceeds after the common elements and units have been
completely repaired or restored or the planned community is
terminated.
(f) Unit owner insurance.--A residential unit owner shall
insure the owner's unit except as insurance is provided by the
association in accordance with this section or the declaration.
An insurance policy issued to the association does not prevent a
unit owner from obtaining insurance for the owner's own benefit.
(g) Evidence and cancellation of insurance.--An insurer that
has issued an insurance policy under this section shall issue
certificates or memoranda of insurance to the association and,
upon request, to any unit owner, mortgagee or beneficiary under
a deed of trust. The insurance may not be canceled until 30 days
after notice of the proposed cancellation has been mailed to the
association, each unit owner and each mortgagee or beneficiary
under a deed of trust, to whom a certificate or memorandum of
insurance has been issued.
(h) Disposition of insurance proceeds.--
(1) Any portion of the planned community for which
insurance is required to be maintained by the association by
this section or the declaration and which is damaged or
destroyed shall be repaired or replaced promptly by the
association unless:
(i) the planned community is terminated;
(ii) repair or replacement would be illegal under
any State or local health or safety statute or ordinance;
or
(iii) 80% of the unit owners, including every owner
of a unit or assigned limited common element which will
not be rebuilt, vote not to rebuild.
The cost of repair or replacement of those portions in excess
of insurance proceeds and reserves is a common expense.
(2) Any portion of the planned community for which
insurance is required to be maintained by the unit owner by
this section or the declaration and which is damaged or
destroyed shall be repaired or replaced promptly by the unit
owner unless:
(i) the planned community is terminated;
(ii) repair or replacement would be illegal under
any State or local health or safety statute or ordinance;
or
(iii) 80% of the unit owners, including every owner
of a unit or assigned limited common element which will
not be rebuilt, vote to not rebuild.
The cost of repair or replacement of these portions in excess
of insurance proceeds is the unit owner's expense.
(3) If the entire planned community is not repaired or
replaced, the following apply:
(i) The insurance proceeds attributable to the
damaged common elements shall be used to restore the
damaged area to a condition compatible with the remainder
of the planned community.
(ii) The insurance proceeds attributable to units
shall be paid to unit owners except those proceeds
attributable to controlled facilities for which insurance
is separately maintained by the association under this
section or the declaration shall be distributed to all
unit owners in proportion to their common expense
liability. Proceeds attributable to limited common
facilities which are not rebuilt shall be distributed
equally to owners of units to which those limited common
facilities were assigned.
(iii) The remainder of the proceeds shall be
distributed to all the unit owners in proportion to their
common expense liability.
(4) If the unit owners vote not to rebuild any unit,
that unit's votes in the association and common expense
liability are automatically reallocated upon the vote as if
the unit had been condemned under section 5107(a) (relating
to eminent domain), and the association promptly shall
prepare, execute and record an amendment to the declaration
reflecting the reallocations.
(5) Notwithstanding the provisions of this subsection,
section 5220 (relating to termination of planned community)
governs the distribution of insurance proceeds if the planned
community is terminated.
(i) Nonresidential planned communities.--The provisions of
this section may be varied or waived in the case of a planned
community all of whose units are restricted to nonresidential
use.
§ 5313. Surplus funds.
Any amounts accumulated from assessments for limited common
expenses and income from the operation of limited common
elements to which those limited common expenses pertain in
excess of the amount required for actual limited common expenses
and reserves for future limited common expenses shall be
credited to each unit assessed for a share of those limited
common expenses in proportion to the share of those limited
common expenses so assessed. These credits shall be applied,
unless the declaration provides otherwise, to the next monthly
assessments of limited common expenses against that unit under
the current fiscal year's budget and thereafter until exhausted.
Any amounts accumulated from assessments for general common
expenses and income from the operation of the common elements,
other than limited common elements with regard to which limited
common expenses are assessed, in excess of the amount required
for actual general common expenses and reserves for future
general common expenses, shall be credited to each unit in
accordance with that unit's interests in common elements. These
credits shall be applied, unless the declaration provides
otherwise, to the next monthly assessments of general common
expenses against the unit under the current fiscal year's budget
and thereafter until exhausted.
§ 5314. Assessments for common expenses.
(a) General rule.--Until the association makes a common
expense assessment, the declarant shall pay all the expenses of
the planned community. After any assessment has been made by the
association, assessments shall be made at least annually, based
on a budget adopted at least annually by the association. The
budgets of the association shall segregate limited common
expenses from general common expenses if and to the extent
appropriate.
(b) Allocation and interest.--Except for assessments under
subsection (c), all common expenses shall be assessed against
all the units in accordance with the common expense liability
allocated to each unit in the case of general common expenses
and in accordance with subsection (c) in the case of special
allocation of expenses. Any past due assessment or installment
thereof shall bear interest at the rate established by the
association at not more than 15% per year.
(c) Special allocations of expenses.--Except as provided by
the declaration:
(1) Any common expense associated with the maintenance,
repair or replacement of a limited common element shall be
assessed in equal shares against the units to which that
limited common element was assigned at the time the expense
was incurred.
(2) Any common expense benefiting fewer than all of the
units shall be assessed exclusively against the units
benefited.
(3) The costs of insurance shall be assessed in
proportion to risk, and the costs of utilities that are
separately metered to each unit shall be assessed in
proportion to usage.
(4) If a common expense is caused by the negligence or
misconduct of any unit owner, the association may assess that
expense exclusively against his unit.
(d) Reallocation.--If common expense liabilities are
reallocated, common expense assessments and any installment
thereof not yet due shall be recalculated in accordance with the
reallocated common expense liabilities.
§ 5315. Lien for assessments.
(a) General rule.--The association has a lien on a unit for
any assessment levied against that unit or fines imposed against
its unit owner from the time the assessment or fine becomes due.
The association's lien may be foreclosed in a like manner as a
mortgage on real estate. A judicial or other sale of the unit in
execution of a common element lien or any other lien shall not
affect the lien of a mortgage on the unit, except the mortgage
for which the sale is being held, if the mortgage is prior to
all other liens upon the same property except those liens
identified in 42 Pa.C.S. § 8152(a) (relating to judicial sale as
affecting lien of mortgage) and liens for planned community
assessments created under this section. Unless the declaration
otherwise provides, fees, charges, late charges, fines and
interest charged under section 5302(a)(10), (11) and (12)
(relating to power of unit owners' association) and reasonable
costs and expenses of the association, including legal fees,
incurred in connection with collection of any sums due to the
association by the unit owner or enforcement of the provisions
of the declaration, bylaws, rules or regulations against the
unit owner are enforceable as assessments under this section. If
an assessment is payable in installments and one or more
installments are not paid when due, the entire outstanding
balance of the assessment becomes effective as a lien from the
due date of the delinquent installment.
(b) Priority of lien.--
(1) General rule.--A lien under this section is prior to
all other liens and encumbrances on a unit except:
(i) Liens and encumbrances recorded before the
recording of the declaration.
(ii) First mortgages or deeds of trust on the unit
securing first mortgage holders and recorded before due
date of the assessment, if the assessment is not payable
in installments or the due date of the unpaid
installment, if the assessment is payable in
installments.
(iii) Liens for real estate taxes and other
governmental assessments or charges against the unit.
(2) Limited nondivestiture.--The association's lien for
common expenses shall be divested by a judicial sale of the
unit:
(i) As to unpaid common expense assessments made
under section 5314(b) (relating to assessments for common
expenses) that come due during the six months immediately
preceding institution of an action to enforce collection
of a lien against a unit by a judicial sale, only to the
extent that the six months' unpaid assessments are paid
out of the proceeds of the sale.
(ii) As to unpaid common expense assessments made
under section 5314(b) other than the six months
assessment referred to in subparagraph (i), in a full
amount of the unpaid assessments, whether or not the
proceeds of the judicial sale are adequate to pay these
assessments. To the extent that the proceeds of the sale
are sufficient to pay some or all of these additional
assessments after satisfaction in full of the costs of
the judicial sale and the liens and encumbrances of the
types described in paragraph (1) and the unpaid common
expense assessments that come due during the six-month
period described in subparagraph (i), the assessments
shall be paid before any remaining proceeds may be paid
to any other claimant, including the prior owner of the
unit.
(3) Monetary exemption.--The lien is not subject to the
provisions of 42 Pa.C.S. § 8123 (relating to general monetary
exemption).
(c) Liens having equal priority.--If the association and one
or more associations, condominium associations or cooperative
associations have liens for assessments created at any time on
the same real estate, those liens have equal priority.
(d) Notice and perfection of lien.--Subject to the
provisions of subsection (b), recording of the declaration
constitutes record notice and perfection of the lien.
(e) Limitation of actions.--A lien for unpaid assessments is
extinguished unless proceedings to enforce the lien are
instituted within three years after the assessments become
payable.
(f) Other remedies preserved.--Nothing in this section shall
be construed to prohibit actions or suits to recover sums for
which subsection (a) creates a lien or to prohibit an
association from taking a deed in lieu of foreclosure.
(g) Costs and attorney fees.--A judgment or decree in any
action or suit brought under this section shall include costs
and reasonable attorney fees for the prevailing party.
(h) Statement of unpaid assessments.--The association shall
furnish to a unit owner upon written request a recordable
statement setting forth the amount of unpaid assessments
currently levied against his unit and any credits of surplus in
favor of his unit under section 5313 (relating to surplus
funds). The statement shall be furnished within ten business
days after receipt of the request and is binding on the
association, the executive board and every unit owner.
§ 5316. Association records.
(a) Financial records.--The association shall keep financial
records sufficiently detailed to enable the association to
comply with section 5407 (relating to resales of units). All
financial and other records shall be made reasonably available
for examination by any unit owner and authorized agents.
(b) Annual financial statements.--Within 180 days after the
close of its fiscal year, the association in any planned
community having more than 12 units or subject to any rights
under section 5215 (relating to subdivision or conversion of
units) or 5211 (relating to conversion and expansion of flexible
planned communities) shall prepare annual financial statements
consisting of at least a balance sheet and a statement of
revenues and expenses for the association. The cost of preparing
the financial statements shall be a common expense. Each unit
owner shall be entitled to receive from the association, within
30 days after submitting a written request to the association, a
copy of the annual financial statements and, if such financial
statements are audited, reviewed or compiled by an independent
certified public accountant or independent public accountant, a
copy of the independent accountant's report on the financial
statements. The association may charge a fee not to exceed the
cost of producing copies of records other than the financial
statement.
(c) Filing of complaints.--If an association subject to
subsection (a) fails to provide a copy of the annual financial
statements and, if applicable, the report of an independent
accountant as required under subsection (b) to the requesting
unit owner within 30 days of the unit owner's written request or
if the financial records of the association which substantiate
an association's financial statements are not made reasonably
available by any association for examination by any unit owner
and authorized agents, the unit owner may file a complaint with
the Bureau of Consumer Protection in the Office of Attorney
General.
§ 5317. Association as trustee.
With respect to a third person dealing with the association
in the association's capacity as a trustee, the existence of
trust powers and their proper exercise by the association may be
assumed without inquiry. A third person is not bound to inquire
whether the association has power to act as trustee or is
properly exercising trust powers. A third person without actual
knowledge that the association is exceeding or improperly
exercising its powers is fully protected in dealing with the
association as if it possessed and properly exercised the powers
it purports to exercise. A third person is not bound to assure
the proper application of trust assets paid or delivered to the
association in its capacity as trustee.
§ 5318. Conveyance or encumbrance of common facilities.
(a) General rule.--Portions of the common facilities may be
conveyed or subjected to a security interest by the association
if the persons entitled to cast at least 80% of the votes in the
association, including 80% of the votes allocated to units not
owned by a declarant, or any larger percentage the declaration
specifies, agree to that action; but the owners of units to
which any limited common facility is allocated must agree in
order to convey that limited common facility or subject it to a
security interest. The declaration may specify a smaller
percentage only if all of the units are restricted exclusively
to nonresidential uses. Proceeds of the sale are an asset of the
association.
(b) Required agreement.--An agreement to convey common
facilities or subject them to a security interest shall be
evidenced by the execution of an agreement or ratifications of
the agreement, in the same manner as a deed, by the requisite
number of unit owners. The agreement must specify a date after
which the agreement will be void unless recorded before that
date. The agreement and all ratifications shall be recorded in
every county in which a portion of the planned community is
situated and is effective only upon recording.
(c) Association powers.--The association on behalf of the
unit owners may contract to convey common facilities or subject
them to a security interest, but the contract is not enforceable
against the association until approved under subsections (a) and
(b). Thereafter, the association has all powers necessary and
appropriate to effect the conveyance or encumbrance, including
the power to execute deeds or other instruments.
(d) Other conveyances or encumbrances void.--Any purported
conveyance, encumbrance, judicial sale or other voluntary
transfer of common facilities, unless made pursuant to this
section, is void.
(e) Right of access and support.--A conveyance or
encumbrance of common facilities pursuant to this section does
not deprive any unit of its right of access and support.
(f) Preexisting encumbrances.--Unless the declaration
otherwise provides, a conveyance or encumbrance of common
facilities pursuant to this section does not affect the priority
or validity of preexisting encumbrances.
(g) Limitation.--Common facilities which may be conveyed or
encumbered pursuant to this section shall not include any land,
buildings or other facilities:
(1) containing or comprising one or more units; or
(2) necessary for the use or operation of one or more
units.
§ 5319. Other liens affecting planned community.
(a) General rule.--Except as provided in subsection (b), a
judgment for money against the association, if and when the
judgment has been perfected as a lien on real property, is not a
lien on the common facilities but is a lien in favor of the
judgment lienholder against all of the units in the planned
community at the time the judgment was entered. No other
property of a unit owner is subject to the claims of creditors
of the association.
(b) Security interest in common facilities.--If the
association has granted a security interest in the common
facilities to a creditor of the association under section 5318
(relating to conveyance or encumbrance of common facilities),
the holder of that security interest shall exercise its right
against the common facilities before its judgment lien on any
unit may be enforced.
(c) Release upon payment of unit owner's share.--Whether
perfected before or after the creation of the planned community,
if a lien other than a deed of trust or mortgage, including a
judgment lien or lien attributable to work performed or
materials supplied before creation of the planned community,
becomes effective against two or more units, the unit owner of
an affected unit may pay to the lienholder the amount of the
lien attributable to his unit; and the lienholder, upon receipt
of payment, promptly shall deliver a release of the lien
covering that unit. The amount of the payment shall be
proportionate to the ratio which that unit owner's common
expense liability bears to the common expense liabilities of all
unit owners whose units are subject to the lien. After payment,
the association may not assess or have a lien against that unit
owner's unit for any portion of the common expenses incurred in
connection with that lien.
(d) Indexing of judgments.--A judgment against the
association shall be indexed in the name of the planned
community and the association and, when so indexed, is notice of
the lien against the units.
§ 5320. Declarant delivery of items to association.
Except as set forth in paragraph (9), not later than 60 days
after the required termination of the period of declarant
control under section 5303(c) (relating to executive board
members and officers) or the declarant's earlier voluntary
termination of control, the declarant shall deliver to the
association all property of the unit owners and of the
association held by or controlled by the declarant, including,
without limitation, all of the following items, if applicable,
as to each planned community or other owners' association
operated by the association:
(1) The original or a certified copy or a photocopy of
the recorded declaration and all amendments thereto. If a
photocopy is delivered, the photocopy shall reflect the
recording information and shall be accompanied by an
affidavit executed by the declarant certifying the photocopy
to be a true, correct and complete copy of the actual
recorded declaration and all amendments thereto.
(2) The association articles of incorporation, if
incorporated, with evidence of filing with the Department of
State.
(3) A copy of the bylaws.
(4) A complete set of all executive board minutes and
resolutions and all other books and records of the
association.
(5) A complete copy of all rules and regulations that
may have been adopted.
(6) Copies of all Federal, State and local tax returns
filed by or on behalf of the association and copies of any
tax-exempt elections made by or on behalf of the association.
(7) Copies of all past and current budgets of the
association.
(8) Resignations of officers and members of the
executive board who are required to resign because the
declarant is required to relinquish or has relinquished
control of the association.
(9) Not later than 90 days after the required
termination of the period of declarant control under section
5303(c) or the declarant's earlier voluntary termination of
control, a complete audit of the finances of the association
for the time period between the last audit of the
association's financial books and records and the date of
termination of the period of declarant control, prepared by
an independent certified public accountant in accordance with
generally accepted accounting principles, the costs of which
audit are to be borne equally by the declarant and the
association. If the planned community consists of not more
than 12 units, a warranty from the declarant to the
association that the books and records of the association
completely and accurately reflect all activities of the
association from its inception through the date of
termination of the period of declarant control may be
substituted for the audit referred to in this paragraph.
(10) All association funds or control thereof.
(11) All tangible personal property and inventories
thereof:
(i) that may have been represented or should have
been represented by the declarant in any public offering
statement, sales materials or other writings to be part
of the common elements; or
(ii) that are otherwise property of the association.
(12) A copy of the plans or drawings and specifications,
if any, utilized in the construction, rehabilitation,
renovation or remodeling of any buildings and improvements
within the planned community and in the construction and
installation of any mechanical components and equipment
serving the buildings and improvements and property if and to
the extent the construction, rehabilitation, renovation,
remodeling or installation was performed by or on behalf of
the declarant and substantially completed during the period
commencing three years prior to the date of the first public
offering statement regarding the planned community. If no
public offering statement is required for any unit in the
planned community, the three-year period shall commence on
the date of the recording of the planned community
declaration or amendment thereto with respect to such
improvements and shall end on the date by which compliance
with this section is required. If such construction,
rehabilitation, renovation, remodeling or installation was
substantially completed within the three-year period but not
by or on behalf of the declarant, the obligation of the
declarant under this paragraph shall be to provide all such
plans, drawings and specifications in the possession of the
declarant and to use reasonable efforts to obtain and provide
any such plans, drawings or specifications not within the
possession of the declarant. If such construction,
rehabilitation, renovation, remodeling or installation was
substantially completed more than three years prior to the
commencement of the three-year period described in this
paragraph, the obligations of the declarant under this
paragraph shall be to provide all such plans, drawings and
specifications in the possession of the declarant. To the
extent previously made available to the declarant, the
declarant in all cases shall deliver to the association
owners operating, care and maintenance manuals and other
information regarding mechanical components and equipment
serving any buildings and improvements in the planned
community. A declarant's delivery of plans, drawings or
specifications under this paragraph shall not constitute a
representation or warranty of the accuracy or completeness of
the plans, drawings or specifications and shall not expand or
otherwise affect the declarant's warranties created under
section 5411 (relating to warranty against structural
defects).
(13) All insurance policies insuring the association
then in force.
(14) Copies of any certificates or statements of
occupancy which may have been issued with respect to the
improvements comprising the planned community, if and to the
extent available.
(15) Any other permits issued by governmental bodies
applicable to the planned community property which are then
currently in force, notices of violations of governmental
requirements then outstanding and incurred and all reports of
investigations for the presence of hazardous conditions as
defined in section 5402(a)(27) (relating to public offering
statement; general provisions).
(16) Any written warranties then in force and effect
from contractors, subcontractors, suppliers or manufacturers
who have performed work with respect to the planned community
property or have supplied equipment or services to the
planned community property.
(17) A roster of unit owners and mortgagees and their
respective addresses and telephone numbers, if known, as
shown on the declarant's records.
(18) Employment contracts in which the association is or
is to be one of the contracting parties.
(19) Service and other contracts and leases in which the
association is or is to be one of the contracting parties and
service contracts in which the association has directly or
indirectly an obligation or a responsibility to pay some or
all of the fees or charges of the person or persons
performing such services.
CHAPTER 54
PROTECTION OF PURCHASERS
Sec.
5401. Applicability; waiver.
5402. Public offering statement; general provisions.
5403. Public offering statement; time-share estates.
5404. Public offering statement; planned communities
containing conversion buildings.
5405. Public offering statement; planned community securities.
5406. Purchaser's right to cancel.
5407. Resales of units.
5408. Escrow of deposits.
5409. Release of liens.
5410. Planned communities containing conversion buildings.
5411. Warranty against structural defects.
5412. Effect of violations on rights of action.
5413. Labeling of promotional material.
5414. Declarant's obligation to complete and restore.
§ 5401. Applicability; waiver.
(a) General rule.--This chapter applies to all units subject
to this subpart, except as provided in subsection (b) and
section 5411 (relating to warranty against structural defects)
or as modified or waived by agreement of the purchaser of any
unit which is intended for nonresidential use at the time of
sale of such unit by the declarant or by agreement of purchasers
of units in a planned community who are or intend to be in the
business of buying and selling planned community units, provided
that:
(1) a purchaser of a unit intended for residential use
at the time of sale by the declarant may not modify or waive
the provisions of section 5411 with regard to such unit and
the common elements;
(2) with regard to any limited common element
appurtenant only to nonresidential units, the unit owners of
all such units have agreed to such modification or waiver
and, with regard to any common elements other than limited
common elements, in a planned community in which all units
are restricted to nonresidential use, all unit owners have
agreed to such modification or waiver; and
(3) no modification or waiver shall prevent any unit
owner from indirectly benefiting from any provision in this
chapter by reason of such unit owner being a unit owner in
the planned community and a member of the association.
(b) Public offering statements.--A public offering statement
need not be prepared or delivered in the case of:
(1) a gratuitous transfer of a unit;
(2) a disposition pursuant to court order;
(3) a disposition by a government or governmental
agency;
(4) a disposition by foreclosure or deed in lieu of
foreclosure;
(5) a disposition of a unit situated wholly outside this
Commonwealth pursuant to a contract executed wholly outside
this Commonwealth; or
(6) a transfer to which section 5407 (relating to
resales of units) applies.
(c) Resale certificates.--A resale certificate as described
in section 5407 need not be prepared or delivered in the cases
described in subsection (b)(1) through (5).
(d) Unified public offering statement.--If a unit is part of
two or more planned communities or is part of a planned
community and is part of any other real estate regime in
connection with the sale of which the delivery of a public
offering statement is required under the laws of this
Commonwealth, a single public offering statement conforming to
the requirements of sections 5402 (relating to public offering
statement; general provisions), 5403 (relating to public
offering statement; time-share estates) and 5404 (relating to
public offering statement; planned communities containing
conversion buildings), as those requirements relate to any real
estate regimes in which the unit is located and to any other
requirements imposed under the laws of this Commonwealth, may be
prepared and delivered in lieu of providing two or more public
offering statements.
§ 5402. Public offering statement; general provisions.
(a) General rule.--Except as provided in subsection (b), a
public offering statement must contain or fully and accurately
disclose:
(1) The name and principal address of the declarant and
of the planned community.
(2) A general description of the planned community,
including, without limitation, the types, number and
declarant's schedule of commencement and completion of
construction of all buildings, units and amenities.
(3) A narrative description of the type and character of
units offered, including a statement of the degree of
completion to be provided or undertaken by the declarant of
such units and the common elements necessary for use and
enjoyment of such units upon the conveyance by the declarant
of units offered.
(4) The total number of additional units that may be
included in the planned community and the proportion of units
the declarant intends to rent or market in blocks of units to
investors.
(5) A brief narrative description of any options
reserved by a declarant to withdraw withdrawable real estate
under section 5206(1) (relating to contents of declaration
for flexible planned communities) and the expected effect
that withdrawal would have on the remaining portion of the
planned community.
(6) Copies and a brief narrative description of the
significant features of the declaration, other than the plats
and plans, and the bylaws, rules and regulations, agreement
of sale, copies of any contracts and leases to be signed by
the purchasers prior to or at closing and a brief narrative
description of any other contracts or leases or agreements of
a material nature to the planned community that will or may
be subject to cancellation by the association under section
5305 (relating to termination of contracts and leases of
declarant).
(7) Any current balance sheet and a projected budget for
the association, either within or as an exhibit to the public
offering statement, for one year after the date of the first
conveyance to a purchaser; and thereafter, the current budget
of the association; a statement of who prepared the budget;
and a statement of the budget's material assumptions,
including those concerning occupancy and inflation factors.
The budget must include, without limitation:
(i) A statement of the amount, or a statement that
there is no amount, included in the budget as a reserve
for repairs and replacement.
(ii) A statement containing a description of any
provisions made in the budget for reserves for
anticipated material capital expenditures or any other
reserves or, if no provision is made for reserves, a
statement to that effect.
(iii) The projected common expense assessment by
category of expenditures for the association.
(iv) The projected monthly common expense assessment
for each type of unit.
(8) Any of the following:
(i) Services not reflected in the budget that the
declarant provides or expenses that the declarant pays
and that the declarant expects may become at any
subsequent time a common expense of the association.
(ii) Personal property not owned by the association
but provided by the declarant and being used or to be
used in the operation and enjoyment of the common
elements which is or will be required in connection with
the operation and enjoyment of the common elements after
such personal property is no longer provided by the
declarant and the projected common expense assessment for
the association and for each type of unit attributable to
each of those services or expenses and purchase or rental
of such personal property.
(9) Any initial or special fee due from the purchaser at
closing, together with a description of the purpose and
method of calculating the fee.
(10) A description of any liens, defects or encumbrances
on or affecting the title to the planned community.
(11) A description of any financing for purchasers
offered or arranged by the declarant.
(12) The terms and significant limitations of any
warranties provided by the declarant, including statutory
warranties and limitations on the enforcement thereof or on
damages.
(13) A statement in at least ten-point boldface type,
appearing on the first page of the public offering statement,
as follows:
(i) That, within 15 days or, in case of a sale of a
time-share estate, seven days after receipt of a public
offering statement or an amendment to the public offering
statement that materially and adversely affects the
rights or obligations of the purchaser, the purchaser,
before conveyance, may cancel any contract for purchase
of a unit from a declarant.
(ii) That, if a declarant fails to provide a public
offering statement and any amendments to a purchaser
before conveying a unit, the purchaser may recover from
the declarant damages as provided in section 5406(c)
(relating to purchaser's right to cancel).
(iii) A description of damages under section
5406(c).
(iv) That, if a purchaser receives the public
offering statement more than 15 days or, in case of a
sale of a time-share estate, seven days before signing a
contract, the purchaser cannot cancel the contract unless
there is an amendment to the public offering statement
that would have a material and adverse effect on the
rights or obligations of that purchaser.
(14) A statement of any judgments against the
association, the status of any pending suits to which the
association is a party and the status of any pending suits
material to the planned community of which a declarant has
actual knowledge.
(15) A statement that any deposit made in connection
with the purchase of a unit will be held in an escrow account
in accordance with the provisions of section 5408 (relating
to escrow of deposits) and will be returned to the purchaser
if the purchaser cancels the contract pursuant to section
5406.
Act text part 3
(16) Any restraints on alienation of any portion of the
planned community.
(17) A description of all insurance coverage provided or
intended to be provided, if such insurance is not then in
effect, for the benefit of unit owners, including the types
and extent of coverage and the extent to which such coverage
includes or excludes improvements or betterments made to
units, in accordance with section 5312 (relating to
insurance).
(18) Any current or expected fees or charges to be paid
by unit owners for the use of the common elements and other
facilities related to the planned community.
(19) The extent to which financial arrangements have
been provided for completion of all improvements labeled
"MUST BE BUILT" under section 5414 (relating to declarant's
obligation to complete and restore).
(20) All unusual and material circumstances, features
and characteristics of the planned community and the units.
(21) In the case of a leasehold planned community, at
least the following information:
(i) The name and address of each lessor and his
assignee, if any.
(ii) Any relationship between the declarant and any
lessor or assignee.
(iii) A description of the leased property.
(iv) The rent and any provision in the lease for
increases in the rent and any other charges or payments
required to be paid by the lessee under the lease.
(v) Whether the lessee has any right to terminate
the lease.
(vi) The information contained in the declaration as
required by section 5207(a) (relating to leasehold
planned communities).
(vii) The following notice in boldface type:
"Purchasers should be aware that this is a leasehold
planned community, and the purchaser's interest
therein may be less valuable than a fee interest, may
depreciate over time and may be of questionable
marketability."
(22) A statement containing a declaration as to the
present condition of all structural components and major
utility installations in the subject property, including the
dates of construction, installation and major repairs, if
known or ascertainable, and the expected useful life of each
item, together with the estimated cost in current dollars of
replacing each of the same.
(23) A description of how votes are allocated among the
units and a statement as to whether cumulative or class
voting is permitted and, if so, under what circumstances. The
statement shall also explain the operation of cumulative or
class voting.
(24) A description of any circumstances under which the
association is to become a master association or part of a
master association.
(25) A statement of all governmental approvals and
permits required for the use and occupancy of the planned
community, indicating the name and expiration date of each
such approval or permit that has been obtained and, as to any
approvals or permits that have not been obtained, a statement
indicating when each such approval or permit is expected to
be obtained and the person responsible for the expense of
obtaining each such approval or permit.
(26) A statement as to whether there are any outstanding
and uncured notices of violations of governmental
requirements and, if there are any such notices of
violations, a description of the alleged violation and a
statement indicating when each violation is expected to be
cured and the person who shall bear the expense of curing
such violation.
(27) A statement as to whether the declarant has
knowledge of any one or more of the following:
(i) Hazardous conditions, including contamination,
affecting the planned community site by hazardous
substances, hazardous wastes or the like or the existence
of underground storage tanks for petroleum products or
other hazardous substances.
(ii) Any investigation conducted to determine the
presence of hazardous conditions on or affecting the
planned community site.
(iii) Any finding or action recommended to be taken
in the report of any such investigation or by any
governmental body, agency or authority, in order to
correct any hazardous conditions and any action taken
pursuant to those recommendations. If the declarant has
no knowledge of such matters, the declarant shall make a
statement to that effect. The declarant shall also set
forth the address and phone number of the regional
offices of the Department of Environmental Resources and
the United States Environmental Protection Agency where
information concerning environmental conditions affecting
the planned community site may be obtained.
(28) A summary and description of all the provisions of
the declaration for the planned community to comply with
section 5205(16) (relating to contents of declaration; all
planned communities).
(29) A statement identifying all facilities and
amenities in the planned community which the declarant shall
be obligated to complete and, with respect thereto:
(i) The time within which each identified facility
or amenity shall be completed.
(ii) Whether there is a source of funding to
complete the facilities and amenities or any security for
the completion, and a description of any such funding
source and security.
(iii) Who will own the facilities and amenities to
be completed by the declarant.
(iv) The responsibilities of unit owners and the
association, respectively, for the maintenance, repair,
improvement, administration and regulation of the
facilities and amenities.
(b) Exceptions.--If a planned community composed of not more
than 12 units is not a flexible planned community and no power
is received to a declarant to make the planned community part of
a larger planned community, a group of planned communities or
other real estate, a public offering statement may, but need
not, include the information otherwise required by subsection
(a)(4) and (5) and the narrative descriptions of documents
required by subsection (a)(6).
(c) Amendment for material change in information.--A
declarant shall promptly amend the public offering statement to
report any material change in the information required by this
section.
§ 5403. Public offering statement; time-share estates.
If the declarant provides that ownership or occupancy of any
units are or may be owned in time-shares, the public offering
statement shall contain or disclose in addition to the
information required by section 5402 (relating to public
offering statement; general provisions):
(1) The total number of units in which time-share
estates may be created.
(2) The total number of time-share estates that may be
created in the planned community.
(3) The projected common expense assessment for each
time-share estate and whether those assessments may vary
seasonally.
(4) A statement of any services, not reflected in the
budget, which the declarant provides or expenses which he
pays and which the declarant expects may become at any
subsequent time a common expense of the association and the
projected common expense assessment attributable to each of
those services or expenses for each time-share estate.
(5) The extent to which the time-share owners of a unit
are jointly and severally liable for the payment of real
estate taxes and all assessments and other charges levied
against that unit.
(6) The extent to which a suit for partition may be
maintained against a unit owned in time-share estates.
(7) The extent to which a time-share estate may become
subject to a tax or other lien arising out of claims against
other time-share owners of the same unit.
(8) A statement in at least ten-point boldface type,
appearing on the first page of the public offering statement,
that:
(i) Within seven days after receipt of a public
offering statement, a purchaser, before conveyance, may
cancel any contract for purchase of a unit from a
declarant.
(ii) If a declarant fails to provide a public
offering statement to a purchaser before conveying a
unit, the purchaser may recover from the declarant
damages as provided in section 5406(c) (relating to
purchaser's right to cancel) and a description of such
damages.
(iii) If a purchaser receives the public offering
statement more than seven days before signing a contract,
the purchaser cannot cancel the contract.
§ 5404. Public offering statement; planned communities
containing conversion buildings.
(a) General rule.--The public offering statement of a
planned community containing a conversion building must contain,
in addition to the information required by section 5402
(relating to public offering statement; general provisions):
(1) A statement by the declarant, based on a report
prepared by an independent registered architect or
professional engineer:
(i) Describing the age and present condition and, if
known or reasonably ascertainable, the dates of
construction, installation and major repairs of all
structural components and mechanical and electrical
installations, including, but not limited to, roofs,
plumbing, heating, air conditioning, elevators, storm
water systems and sewage treatment systems material to
the use and enjoyment of the planned community.
(ii) Describing the results of the inspection of the
units and common elements required pursuant to section
5411(c) (relating to warranty against structural defects)
for visible conditions that adversely affect the health
or safety of residential occupants. The statement should
also state the extent to which the report by the
architect or professional engineer is based upon a visual
inspection of the units as well as the common elements.
(2) A statement by the declarant of the expected useful
life of each item reported on in paragraph (1), including the
current replacement costs of such item.
(3) A list of any outstanding notices of uncured
violations of building codes or other municipal regulations,
together with the estimated cost of curing those violations.
(4) A statement by the declarant, based on a report
prepared by an independent licensed exterminating company,
describing the presence at the planned community of any
visible pest conditions dangerous to health and safety, such
as the presence of insects and rodents dangerous to health or
safety, and outlining actions taken or to be taken to
eliminate the existence of pest conditions dangerous to
health or safety.
(b) Applicability of section.--This section applies only to
units that may be occupied for residential use.
§ 5405. Public offering statement; planned community
securities.
If an interest in a planned community is currently registered
with the Securities and Exchange Commission of the United
States, a declarant satisfies all requirements relating to the
preparation of a public offering statement in this subpart if
the declarant delivers to the purchaser a copy of the public
offering statement filed with the Securities and Exchange
Commission. An interest in a planned community is not in and of
itself a security under the provisions of the act of December 5,
1972 (P.L.1280, No.284), known as the Pennsylvania Securities
Act of 1972. The offer and sale of planned community units in
accordance with the requirements of this chapter shall not also
be subject to the registration requirements of section 201 or
301 of the Pennsylvania Securities Act of 1972 or the
promotional real estate sales requirements of the act of
February 19, 1980 (P.L.15, No.9), known as the Real Estate
Licensing and Registration Act.
§ 5406. Purchaser's right to cancel.
(a) General rule.--In cases where delivery of a public
offering statement is required under section 5401 (relating to
applicability; waiver), a declarant shall provide a purchaser of
a unit with a copy of the public offering statement and all
amendments thereto not later than the date the purchaser
executes the contract of sale for such unit or, if no contract
of sale is executed, not later than 15 days before conveyance of
such unit. Unless a purchaser is given the public offering
statement, including all the currently effective amendments
thereof, within the time period referred to in the preceding
sentence, the purchaser, before conveyance, may, except in the
case of a time-share estate, cancel the contract within 15 days,
after first receiving the public offering statement and all
currently effective amendments. Unless a purchaser of a time-
share estate is given the public offering statement, including
all the currently effective amendments thereof, more than seven
days before the purchaser executes the contract for the purchase
of the unit or, if no contract of sale is executed, seven days
before conveyance of the unit, the purchaser, before conveyance,
may cancel the contract within seven days after first receiving
the public offering statement and all currently effective
amendments thereof. If a public offering statement is amended
after the public offering statement has been received by a
purchaser of a unit, the amendment shall be provided to the
purchaser promptly after it becomes effective. If the amendment
materially and adversely affects the rights or obligations or
both of the purchaser, then the purchaser, before conveyance,
may cancel the contract of sale within 15 days, or within seven
days in case of the sale of a time-share estate, after receiving
the amendment.
(b) Method and effect of cancellation.--If a purchaser
elects to cancel a contract pursuant to subsection (a), the
purchaser may do so by hand-delivering notice thereof to the
declarant or by mailing notice thereof by prepaid United States
mail to the declarant or to the declarant's agent for service of
process. Cancellation is without penalty and all payments made
by the purchaser before cancellation shall be refunded promptly.
(c) Penalty for noncompliance by declarant.--If a declarant
fails to provide a purchaser to whom a unit is conveyed with a
public offering statement and all amendments thereto as required
by subsection (a), the purchaser, in addition to any other
relief, is entitled to receive from the declarant an amount
equal to 5% of the sales price of the unit up to a maximum of
$2,000 or actual damages, whichever is the greater amount. A
minor omission or error in the public offering statement or an
amendment thereto that is not willful shall entitle the
purchaser to recover only actual damages, if any.
§ 5407. Resales of units.
(a) Information supplied by unit owner.--In the event of a
resale of a unit by a unit owner other than a declarant, the
unit owner shall furnish to a purchaser before execution of any
contract for sale of a unit or otherwise before conveyance a
copy of the declaration other than the plats and plans, the
bylaws, the rules or regulations of the association and a
certificate containing:
(1) A statement disclosing the effect on the proposed
disposition of any right of first refusal or other restraint
on the free alienability of the unit.
(2) A statement setting forth the amount of the monthly
common expense assessment and any unpaid common expense or
special assessment currently due and payable from the selling
unit owner and any surplus fund credits to be applied with
regard to the unit pursuant to section 5313 (relating to
surplus funds).
(3) A statement of any other fees payable by unit
owners.
(4) A statement of any capital expenditures proposed by
the association for the current and two next succeeding
fiscal years.
(5) A statement of the amount of any reserves for
capital expenditures and of any portions of those reserves
designated by the association for any specified project.
(6) The most recent regularly prepared balance sheet and
income and expense statement, if any, of the association.
(7) The current operating budget of the association.
(8) A statement of any judgments against the association
and the status of any pending suits to which the association
is a party.
(9) A statement describing any insurance coverage
provided for the benefit of unit owners.
(10) A statement as to whether the executive board has
knowledge that any alterations or improvements to the unit or
to the limited common elements assigned thereto violate any
provision of the declaration.
(11) A statement as to whether the executive board has
knowledge of any violations of applicable governmental
requirements or knowledge of the existence of any hazardous
conditions pursuant to section 5402(a)(27) (relating to
public offering statement; general provisions) with respect
to the unit, the limited common elements assigned to the unit
or any other portion of the planned community.
(12) A statement of the remaining term of any leasehold
estate affecting the planned community and the provisions
governing any extension or renewal thereof.
(13) A statement as to whether the declaration provides
for cumulative voting or class voting.
(14) A statement as to whether an agreement to terminate
the planned community has been submitted to the unit owners
for approval and remains outstanding.
(15) A statement of whether the planned community is a
master association or is part of a master association or
could become a master association or part of a master
association.
(16) A statement describing which units, if any, may be
owned in time-share estates and the maximum number of time-
share estates that may be created in the planned community.
(17) A statement of whether the declarant retains the
special declarant right to cause a merger or consolidation of
the planned community and, if so, the information describing
such right which was supplied by the declaration pursuant to
section 5205(13) (relating to contents of declaration; all
planned communities), if any.
(b) Information supplied by association.--The association,
within ten days after a request by a unit owner, shall furnish a
certificate containing the information and copies of documents
necessary to enable the unit owner to comply with this section.
A unit owner providing a certificate pursuant to subsection (a)
is not liable to the purchaser for any erroneous information
provided by the association and included in the certificate.
(c) Liability for error or inaction by association.--A
purchaser is not liable for any unpaid assessment or fee greater
than the amount set forth in the certificate prepared by the
association. A unit owner is not liable to a purchaser for the
failure or delay of the association to provide the certificate
in a timely manner, but the purchase contract is voidable by the
purchaser until the certificate has been provided and for five
days thereafter or until conveyance, whichever first occurs.
§ 5408. Escrow of deposits.
Any deposit (which shall not include any installment payment
under an installment sales contract nor a payment specifically
stated in a sales contract to be in payment of or on account of
extras, changes or custom work) made in connection with the
purchase or reservation of a unit from a declarant shall be
placed in escrow and held in this Commonwealth by a licensed
real estate broker, an attorney admitted to practice in this
Commonwealth, a financial institution or a licensed title
insurance company in an account or in the form of a certificate
of deposit designated solely for that purpose with a financial
institution whose accounts are insured by a governmental agency
or instrumentality until:
(1) delivered to the declarant at closing or, in the
case of the sale of a unit pursuant to an installment sales
contract, upon the expiration of 30 days from the date of
occupancy of the unit;
(2) delivered to the declarant because of purchaser's
default under a contract to purchase the unit; or
(3) refunded to the purchaser.
§ 5409. Release of liens.
(a) General rule.--Before conveying a unit, other than by
deed in lieu of foreclosure, to a purchaser other than a
declarant, a declarant shall record or furnish to the purchaser
releases of all liens affecting that unit and its rights with
respect to any common elements which the purchaser does not
expressly agree to take subject to or assume or shall provide a
surety bond or substitute collateral for or insurance against
the liens adequate in nature and amount. This subsection does
not apply to any convertible or withdrawable real estate in
which no unit has been conveyed.
(b) Other liens.--Before conveying real estate to the
association, the declarant shall have the real estate released
from:
(1) All liens the foreclosure of which would deprive
unit owners of any right of access to or easements of support
of their units.
(2) All other liens on that real estate unless the
public offering statement describes certain real estate which
may be conveyed subject to liens in specified amounts.
§ 5410. Planned communities containing conversion buildings.
(a) Notice of conversion.--The declarant of every planned
community containing one or more conversion buildings shall give
each of the residential tenants and residential subtenants, if
any, lawfully in possession of a unit or units in a conversion
building or buildings a conversion notice no later than one year
before the declarant requires the residential tenant and
residential subtenant to vacate. The conversion notice must set
forth generally the rights of residential tenants and
residential subtenants under this section and shall be hand
delivered to the unit or mailed by prepaid United States
certified or registered mail, return receipt requested, to the
residential tenant and residential subtenant at the address of
the unit and not more than one other mailing address provided by
the residential tenant. Every notice shall be accompanied by a
public offering statement concerning the proposed sale of
planned community units within such building or buildings.
Except as provided in subsection (f), no residential tenant or
residential subtenant in a conversion building may be required
by the declarant to vacate the unit earlier than one year after
the conversion notice date except by reason of nonpayment of
rent, waste or conduct that disturbs other tenants' peaceful
enjoyment of the premises, and the terms of the tenancy,
including those terms that apply to a period occurring in whole
or in part after the conversion notice date, may not be altered
but may be enforced during that period. Failure of a declarant
to give notice to a residential tenant or residential subtenant
entitled to such notice under this subsection is a defense to an
action for possession against such residential tenant or
residential subtenant.
(b) Offer to tenant to purchase unit.--For six months after
the conversion notice date, the declarant shall offer to convey
each unit or proposed unit occupied for residential use in a
conversion building to the tenant who leases that unit. If the
tenant fails to purchase his unit during that six-month period,
the declarant may not offer to dispose of an interest in that
unit during the following six months at a price or on terms more
favorable to the offeree than the price or terms offered to the
tenant. This subsection shall not apply to any rental unit:
(1) which, immediately prior to the conversion notice
date, was restricted or devoted exclusively to nonresidential
use; or
(2) the boundaries of which, after the creation of the
planned community, will not substantially conform to the
boundaries of such unit on the conversion notice date.
(c) Effect of wrongful conveyance.--If a declarant, in
violation of subsection (b), conveys a unit to a purchaser for
value who has no knowledge of the violation, recording of the
deed conveying the unit extinguishes any right a tenant may have
under subsection (b) to purchase that unit if the deed states
that the seller has complied with subsection (b) but does not
affect the right of a tenant to recover damages from the
declarant for a violation of subsection (b).
(d) Notice to vacate.--If a conversion notice specifies a
date by which a unit or proposed unit must be vacated, the
conversion notice also constitutes a notice of termination of
the tenant's lease, subject to revocation in accordance with
subsection (j), and a notice to quit specified by section 501 of
the act of April 6, 1951 (P.L.69, No.20), known as The Landlord
and Tenant Act of 1951.
(e) Improper lease termination prohibited.--
(1) Nothing in this section permits termination of a
lease by a declarant in violation of its terms.
(2) Nothing in this section or in any lease shall
prohibit a residential tenant, after receiving notice under
subsection (a), from terminating any lease without any
liability for such termination provided such tenant gives the
building owner 90 days' written notice of the intent to
terminate the lease.
(3) The declarant or owner of any proposed conversion
planned community shall not engage in any activity of any
nature which would coerce the tenant into terminating any
lease, including, but not limited to, harassing tenants or
withholding normal services or repairs.
(f) Units leased to senior citizens and disabled persons.--
(1) For the purpose of this subsection, an eligible
tenant or subtenant shall be a natural person who, on the
conversion notice date, lawfully occupies a unit in a
conversion building as a principal residence and is 62 years
of age or older or is disabled and has occupied the unit for
at least two years. For purposes of this subsection, a person
shall be deemed to be disabled if on the conversion notice
date he is totally and permanently unable to engage in any
substantial gainful activity by reason of any medically
determinable physical or mental impediment, including, but
not limited to, blindness.
(2) Within 60 days after the conversion notice date, any
tenant or subtenant in possession of a unit who believes that
he is an eligible tenant or subtenant shall so notify the
declarant and shall provide the declarant with proof of his
eligibility. Any eligible tenant or subtenant who has
established his eligibility as aforesaid shall be entitled to
remain in possession of his unit for two years following the
conversion notice date, notwithstanding any prior termination
date in his lease, except by reason of nonpayment of rent,
waste or conduct that disturbs other occupants' peaceful
enjoyment of the planned community, and the terms of the
tenancy, including terms that apply to a time period after
the conversion notice date, may not be altered but may be
enforced during the time period between the original lease
termination date and the expiration of this two-year period
except as is otherwise provided in paragraph (3).
(3) The monthly rental payable by the tenant during the
time period commencing upon the later to occur of the
original lease termination date or the first anniversary of
the conversion notice date and ending upon the expiration of
the two-year period described in paragraph (2) shall be the
same monthly rental as was payable for the month immediately
preceding the original lease termination date, except that,
at the landlord's option, such monthly rental may be
increased by the lesser of 5% of such monthly rental or the
same percentage increase as the percentage increase, if any,
in the Consumer Price Index, as calculated and published by
the United States Department of Labor for the six-month time
period commencing on the first day of the first full calendar
month after the conversion notice date.
(4) Failure of a declarant to comply with the provisions
of this subsection is a defense to an action for possession.
(g) Tenant meetings; open to the public.--With respect to
any conversion building containing one or more units then
occupied for residential use, at least 30 days before the
conversion notice date, the declarant shall hold a tenant
meeting open to the public in the municipality where the
proposed conversion building is located at a place and time
convenient to the persons who may be directly affected by the
conversion. At least ten days' notice of the time and place of
the meeting shall be given to residential tenants and
subtenants, in lawful possession of their units, in the same
manner as is required for the giving of the conversion notice,
and to the general public by a notice in a newspaper of general
circulation in the municipality in which the planned community
is located, except that no notice to the general public need be
given with respect to conversion buildings as to which the
provisions of section 5402(b) (relating to public offering
statement; general provisions) are applicable. At such meeting,
representatives of the declarant shall briefly describe the
following and may, but shall not be required to, discuss other
matters:
(1) The rights and obligations of tenants and subtenants
under this section.
(2) Improvements, if any, then planned to be made to the
planned community by the declarant.
(3) The anticipated approximate range of initial unit
sales prices. Specific unit sales prices need not, however,
be provided.
(4) The anticipated approximate range of estimated
monthly common expenses for various types of units; however,
specific per unit estimates need not be provided.
(h) Community development grants.--If Federal funds under
the Community Economic Development Act of 1981 (Public Law 97-
35, 42 U.S.C. § 9801 et seq.) have been used to finance the
rehabilitation of multifamily rental housing, with the intent
that such housing subsequent to the rehabilitation is to be used
for residential rental purposes, such housing shall not be
converted to a planned community for a period of ten years from
the date the rehabilitation is completed.
(i) Revocation.--A declarant may subsequently revoke a
conversion notice if the declarant has expressly reserved the
right of revocation in the conversion notice and if the notice
of revocation:
(1) Is given prior to the conveyance of any unit in the
planned community occurring after the conversion notice date
other than a unit or units conveyed to a successor declarant
or as a result of foreclosure of a mortgage on the unit or a
deed in lieu thereof.
(2) Is given in the same manner as is required for the
giving of the conversion notice.
(3) Is given to all persons who were entitled to receive
the conversion notice and who continue to be in lawful
occupancy at the time such notice of revocation is given. The
giving of a notice of revocation revokes all rights granted
under this section, but does not revoke the rights granted to
residential tenants under subsection (a) or (f) and such
rights shall be deemed to have been incorporated in each
residential tenant's lease.
(j) Waiver of purchase rights.--Notwithstanding any
provisions of this subpart prohibiting waiver of rights, any
tenant may waive his right to purchase a unit under subsection
(b) if the waiver is in writing, is acknowledged and is given in
consideration of:
(1) an extension of the term of the tenant's tenancy and
right of occupancy under this subpart beyond the time period
required by subsection (b);
(2) the tenant entering into an agreement to purchase
another unit in the planned community; or
(3) all occupants of the unit making alternative living
arrangements.
(k) Alteration of terms of tenancy.--Notwithstanding any
provisions of subsection (a) or (f), the terms of the tenancy of
a tenant or subtenant may be altered with the express written
consent of that tenant or subtenant, and such altered terms
shall then be the terms of tenancy referred to in this section.
(l) Application of section.--The provisions of this section
shall apply only with respect to conversion buildings in which
one or more residential tenants or residential subtenants are in
lawful occupancy on the conversion notice date and the only
tenants who are entitled to exercise the rights granted under
this section are residential tenants or residential subtenants:
(1) who are in lawful occupancy of conversion building
on the date the declarant gives the conversion notice; or
(2) who commence their tenancy after the notice of
conversion is given to the other residential tenants without
having been notified in writing, at or prior to the
commencement of their tenancy, that the property is then a
planned community and that they are not entitled to the
rights granted under this section. Such rights continue only
so long as the lawful occupancy of the tenant or subtenant
continues.
§ 5411. Warranty against structural defects.
(a) Scope.--Nothing in this section shall be construed to
make the declarant responsible for any items of maintenance
relating to the units or common elements.
(b) General rule.--A declarant warrants against structural
defects in each of the units and the controlled facilities that
are part of a unit for two years from the date each unit is
conveyed to a bona fide purchaser, and all of the controlled
facilities that are not part of a unit and all common facilities
for two years. Only the association may bring an action for
breach of warranty with respect to common facilities and the
controlled facilities that are not part of a unit. An action for
breach of warranty with respect to one or more units or
controlled facilities that are a part of a unit may be brought
either by the association or an owner of an affected unit. Any
conveyance of a unit during the two-year warranty period shall
be deemed to transfer to the purchaser all of the declarant's
warranties created under this section. The two years shall
begin, as to each of the controlled facilities that are not part
of a unit, whenever the controlled facilities that are not part
of the unit have been completed and, as to each common facility,
whenever such common facilities have been completed, or if
later:
(1) As to any controlled facilities that are not part of
a unit and as to common facilities within any additional real
estate or portion thereof, at the time the first unit therein
is conveyed to a bona fide purchaser.
(2) As to any controlled facilities that are not part of
a unit and as to common facilities within any convertible
real estate or portion thereof, at the time the first unit
therein is conveyed to a bona fide purchaser.
(3) As to any controlled facilities that are not part of
a unit and as to common facilities within any other portion
of the planned community, at the time the first unit therein
is conveyed to a bona fide purchaser.
(c) Planned communities containing conversion buildings.--A
declarant of a planned community containing one or more
conversion building warrants as follows:
(1) That there are no structural defects in components
installed anywhere in the planned community or in work done
or improvements made by or on behalf of the declarant
anywhere in the planned community.
(2) That all units and common elements in each
conversion building have been inspected for visible
structural and mechanical defects and for other visible
conditions that adversely affect the health or safety of
residential occupants, as required by section 5404(a)(1)
(relating to public offering statement; planned communities
containing conversion buildings), except no such inspection
is required of any unit if the tenant or other lawful
occupant of the unit does not permit such inspection to be
conducted.
(3) That any defects and other visible conditions found
have been repaired.
The warranties under subsection (b) shall be applicable to any
units and common elements that are located within a building
that contains or comprises one or more units and is not a
conversion building. Otherwise the declarant may offer the
units, common elements, or both, in an "as is" condition. The
declarant of a planned community containing any conversion
buildings may also give a more extensive warranty in writing.
The times at which the warranties required by this subsection
commence and the duration of such warranties shall be as
provided in subsection (b).
(d) Exclusion or modification of warranty.--Except with
respect to a purchaser of a unit for residential use, the
warranty against structural defects:
(1) May be excluded or modified by agreement of the
parties.
(2) Is excluded by expression of disclaimer, such as "as
is," "with all faults" or other language which in common
understanding calls the buyer's attention to the exclusion of
warranties.
(e) Limitation of actions.--No action to enforce the
warranty created by this section shall be commenced later than
six years after the warranty begins.
§ 5412. Effect of violations on rights of action.
If a declarant or any other person subject to this subpart
violates any provision of this subpart or any provisions of the
declaration or bylaws, any person or class of persons adversely
affected by the violation has a claim for appropriate relief.
Punitive damages may be awarded in the case of a willful
violation of the subpart.
§ 5413. Labeling of promotional material.
If any improvement contemplated in a planned community is
required by section 5210 (relating to plats and plans) to be
labeled "NEED NOT BE BUILT" on a plat or plan or is to be
located within convertible real estate, no promotional material
may be displayed or delivered to prospective purchasers which
describes or depicts that improvement unless the description or
depiction of the improvement is conspicuously labeled or
identified as "NEED NOT BE BUILT."
§ 5414. Declarant's obligation to complete and restore.
(a) Completing improvements.--The declarant shall complete
all improvements labeled "MUST BE BUILT" on plats or plans
prepared pursuant to section 5210 (relating to plats and plans).
(b) Repair and restoration.--The declarant is subject to
liability for the prompt repair and restoration, to a condition
compatible with the remainder of the planned community, of any
portion of the planned community affected by the exercise of
rights reserved pursuant to or created by sections 5211
(relating to conversion and expansion of flexible planned
communities), 5212 (relating to withdrawal of withdrawable real
estate), 5217 (relating to declarant offices, models and signs)
and 5218 (relating to easement to facilitate completion,
conversion and expansion).
(c) Substantial completion prerequisite to conveyance.--A
unit which is part of or constitutes a structure shall not be
conveyed to a person other than a successor to any special
declarant rights unless all structural components and common
element mechanical systems of the structure containing or
constituting such unit or units are substantially completed to
the extent required of the declarant so as to permit the use of
such unit or units and any limited common elements appurtenant
thereto for their intended use. Such substantial completion
shall be evidenced by a recorded certification of completion
executed by an independent registered surveyor, architect or
professional engineer with regard to any such structure.
(d) Substantial completion of unit.--No interest in a unit
shall be conveyed to a person other than a successor to any
special declarant rights until the unit is substantially
completed in accordance with the descriptions set forth in both
the declaration under section 5205 (relating to contents of
declaration; all planned communities) and in the public offering
statement under section 5402(a) (relating to public offering
statement; general provisions), as evidenced by a recorded
certificate of completion executed by an independent registered
surveyor, architect or professional engineer.
(e) Construction of section.--Nothing contained in this
subpart shall prevent the offering for sale of a unit or
interest in a unit or the execution of any agreement to sell and
purchase a unit or any interest in a unit (as opposed to actual
conveyance) prior to the completion of the unit or any other
portion of the planned community.
Section 2. This act shall take effect in 45 days.
APPROVED--The 19th day of December, A. D. 1996.
THOMAS J. RIDGE
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