For many years, an important tool for the redevelopment and refinance of shopping centers, industrial parks, office parks and other similar developments was the site condominium. The site condominium allowed developers and lenders to create legally-transferable condominium units containing land and buildings which were marketable and could be subject to the security interest of a mortgage. The Pennsylvania Uniform Condominium Act (as well as the Pennsylvania Uniform Planned Community Act), provides that the creation of a condominium or planned community in and of itself does not constitute a subdivision or land development. In the case of Shaffer v. Zoning Hearing Board of Chanceford Township, the Pennsylvania Commonwealth Court issued a decision which adversely affected the ability to create site condominiums. In the Shaffer case, a township objected to the creation of a planned community out of an estate property and the conveyance of parcels among family members for estate planning purposes. The township took the position that the creation of the planned community fell within the definition of land development under the Municipalities Planning Code notwithstanding the clear language of the Uniform Condominium Act and Uniform Planned Community Act which said that the creation of condominiums and planned communities did not constitute land development. The trial court and the Commonwealth Court made no effort to reconcile the conflict in the wording between the Municipalities Planning Code and the Uniform Condominium Act and Uniform Planned Community Act. However, neither the trial court nor the Commonwealth Court addressed this issue and unfortunately the Pennsylvania Supreme Court affirmed the decision of the Commonwealth Court without any further opinion.
Carl Weiner, who has created over 150 condominiums and planned communities in Pennsylvania, led the effort in working with the state legislature and the Pennsylvania State Association of Township Supervisors to draft legislation to address this conflict between the Pennsylvania Uniform Condominium Act and the Pennsylvania Municipalities Planning Code. As a result of his efforts, Act No. 37 of 2015 was passed by both the Pennsylvania House and Senate at the end of June and the Act was signed into law by Governor Wolf on July 10, 2015. This legislation clarifies that site condominiums and planned communities can be created out of existing residential, commercial and industrial properties to establish condominium and planned community units which can be sold and financed without the approval of the local municipality. If any additional construction is proposed, or if the use changes on the property, then the municipality will have the right of review. This legislation should enable developers, lenders and title companies to once again use the condominium and planned community forms of ownership to facilitate the redevelopment of existing properties.
If you are considering the redevelopment of an existing property, or considering the allocation of portions of a large property for purposes of estate planning, please do not hesitate to contact us for further information.