Associations and Unit Owners frequently disagree over who is responsible to pay for repairs to certain items.  Sometimes it is easy to figure out.  The Association needs to pay for repairs to the community swimming pool, and the Unit Owner needs to fix the stove.  Whenever the item to be repaired gets close to the boundary of the Unit, however, the answer to this question becomes more difficult.  I came across an interesting case, Winchester Condominium Association v. Auria, where the question was who is responsible to pay for re-wiring a wall outlet: the Unit Owner or the Association?

In this case, the Association required all of the Unit Owners to replace aluminum wiring in the outlets of their Units.  The Unit Owners were informed that the replacement was required for safety reasons and for the Association to maintain property insurance. [Note:  I have done this a few times for dryer vents, pans under hot water heaters and fireplace insulation.]  Every Unit Owner made arrangements to have the wiring in their outlets replaced.  Every Unit Owner, that is, except for one.  Continue Reading Wiring: Where Does the Common Element End and the Unit Begin?

Soon community associations will have to deal with snow and ice, and the problems that come with it. In this article I want to discuss salt and other deicers.  Many unit owners are certain that one type of salt will ruin their sidewalks.  Other units owners believe that any kind of ice melt will harm concrete.  Associations get complaints about ice in the winter, and then about spalling sidewalks in the spring.  Which deicers are best, and which are asking for problems?  Although most of my posts contain mostly legal advice, for this article I got to use my background as a chemical engineer too.

There are four main kinds of ice melt that are used.  They are sodium chloride (rock salt), calcium chloride, magnesium chloride and calcium magnesium acetate (CMA). The truth is that all ice melt works in basically the same way. Magnesium chloride, calcium chloride and CMA all absorb water.  In doing so, they produce a chemical reaction with the water that produces heat.  The heat produced melts the ice.  The melting ice dissolves the deicer, and then carries it onto the rest of the surface. Sodium chloride is a little different in that it actually lowers the temperature in which water freezes. So instead of freezing at 32 degrees, water with salt dissolved in it doesn’t freeze until it is 25 degrees.  Try it at home – science is fun! Continue Reading Winter is Coming

… no matter how much they want to. Many planned community and condominium declarations have a confession of judgment paragraph.  These are usually towards the back and written in all caps (just like my father-in-law sending an email).  They seem to permit associations to bypass all of the demand letters and District Justice courtrooms, and just enter a judgment against the Unit Owner.  But what looks good on paper doesn’t always work in practice.  Pennsylvania Courts just re-affirmed the long-time rule that Associations cannot confess judgment against Unit Owners.

Residential condominium or homeowner association assessments are a “consumer credit transaction.”  This means that the assessments are used to pay for goods or services that are primarily for personal family or household use.  Pennsylvania law says that a person cannot enter a confessed judgment against another for a debt that comes from a consumer credit transaction.  In the case that I read, the Association and the Unit Owner entered into a payment plan.  When the Unit Owner stopped making payments, the Association entered a confessed judgment against him. The Court struck the confessed judgment on its own – it did not even wait for the Unit Owner to make a request.  Continue Reading Associations Cannot Enter A Confessed Judgment Against Unit Owners…

One of the most important pieces of advice I give builders and developers is to “get it in writing.”  It turns out that when you get it in writing is also critical.  A big national builder found itself in Court with a home buyer because the builder did not put its arbitration clause in the Agreement of Sale. The builder used a form purchase agreement which referenced the builder’s limited warranty. Months later, at the settlement table, the builder finally gave the buyers the limited warranty. The limited warranty contained a requirement to arbitrate all disputes.  When the buyers later had problems with their home, they went directly to Court instead of to arbitration. The Pennsylvania Superior Court said the arbitration clause was not enforceable because it was not provided at the time of the Agreement of Sale.  The only mention of arbitration was provided months later, after the Agreement of Sale was signed. Continue Reading Real Estate Developers: Make sure all of your important contract provisions are included in the Agreement of Sale

Lots of Association board members worry whether the Association is required to enact rules to control dangerous dogs.  In McMahon v. Pleasant Valley West Association, the Commonwealth Court ruled that an Association does not have a duty to force a unit owner to maintain, control or confine their dogs on the dog owner’s property.  The Association also does not have a duty to prevent dogs from harming other unit owners.  Because they have no duty to control the dog, or to protect unit owners from harm caused by the dog, the Association was not responsible for injuries to the unit owner.  The Court noted that there was no “special relationship” between the Association and the dog owner or the victim of the dog attack.  The Court noted that the Association did not act to “provide any additional protections against an attack by the … dogs over and above the protections provided in the dog law….” Continue Reading Homeowners’ Association is not required to protect residents from dogs

In the summer of 2017, property tax assessments and assessment appeals were a big topic of discussion.  That is because 2017 marked the countywide reassessment for all properties.  The County Tax Assessment Appeal Board heard tens of thousands of assessment appeals.  Some of the appeals resulted in substantial savings for the property owners.

This blog article is a reminder that even if you did not appeal your property tax assessment in 2017, you can still appeal that assessment in 2018.  Appeals must be filed on or before August 1, 2018.

            Here are a few of the topics that this blog covered in 2017:

If you did not appeal your assessment in 2017, but you think that your assessment is wrong, you have another chance to reduce your property taxes.  If you wonder whether you should appeal, we would be happy to help.

Aaron Marines is an attorney at Russell, Krafft & Gruber, LLP, in Lancaster, Pennsylvania. He received his law degree from Widener University and practices in a variety of areas including Commercial and Residential Real Estate, Land Use, Land Planning and Zoning matters.

Kathleen Krafft Miller is an attorney at Russell, Krafft & Gruber, LLP, in Lancaster, Pennsylvania. She received her law degree from Widener University and regularly advises homeowners and individuals on legal matters ranging from tax assessment appeals to domestic relations matters and estate planning.

We have written a few articles about the changes to the Tax Code.  The change that many professionals are trying to figure out is the 20% deduction for individuals using a pass-through business entity such as a partnership, LLC, “S” corporation or sole proprietorship.  Code Section 199A is not just a minor change in already settled law.  It is a brand new concept.  Even the AICPA has requested – twice – that the IRS and Department of the Treasury provide guidance on the pass-through deduction.

There are a couple of key concepts that are building blocks to understanding Section 199A.  Some of these are:

  • The business must be a “qualified business.” A qualified business is anything that is not a “specified service trade or business.”  This means that service businesses such as accounting, actuaries, brokers, consultants and lawyers are not qualified businesses and cannot take advantage of the deduction.  Engineers and architects are qualified businesses, and the owners may use the deduction.

Of course, this exclusion has an exception.  If a business would otherwise be disqualified, but the taxpayer has a taxable income less than $207,500.00 for an individual ($415,000.00 for taxpayers filing a joint return), then the taxpayer may be eligible for the deduction.  In this case the deduction is phased out depending on how close the income is to that threshold amount.

  • The deductible amount requires a lot of calculation. The deduction that a taxpayer can take is the lesser of (A) 20% of the taxpayer’s business income or (B) the greater of either:  (i) 50% of the W-2 wages paid by the business; or (ii) the sum of 25% of the W-2 wages paid by the business plus 2.5% of the unadjusted basis of qualified property of the business.

But even this confusing definition has different qualifiers.  For example, qualified business income excludes net capital gain.  This means that the higher the ratio of net capital gain to taxable income, the lower the pass-through deduction.  The deduction favors companies with employees because 50% of the W-2 wages paid could be deductible.  On the other hand, if a company has few employees, but creates income through its depreciable assets (such as landlords), they can deduct up to 2.5% of the unadjusted basis of the property. Continue Reading Questions About the Tax Deduction for Pass-Through Income

I have written a number of articles about whether a condominium or homeowner association (or apartment owner) needs to allow emotional support animalsDelta airlines new policy related to service and emotional support animals created some controversy and was heavily reported in national news.  As service and emotional support animals become more commonplace, questions keep coming up, and so associations need to be reminded of what to do when a resident wants to keep a support animal.

To review, there are two federal laws to follow:  the Americans With Disabilities Act (“ADA”) and the Fair Housing Act (“FHA”).  The ADA says that a service dog is permitted in all public places.  A service dog is an animal that is specially trained to perform a task that is directly related to a person’s disability.  Under the FHA, providers of housing – like a landlord of  condominium association – need to provide reasonable accommodations for assistance animals.  Unlike a service dog, an “assistance animal” does not need to be specially trained to perform a task.  They can provide only emotional support for a person with a disability.  The definition of assistance animal or emotional support animal is much broader than a service animal under the ADA. Continue Reading Are These Dogs Allowed: Yet Another Case on Emotional Support Animals

Very often, a real estate developer is only active in a project until the subdivision plan is approved.  At that point, the developer often sells some or all of the development rights to the builders who actually construct and sell the homes. The developer may not realize that it usually retains liability for the completion of the community, even though the developer and builder planned to pass that responsibility onto the builder.  Why?  Like most legal surprises, the reason is not taking care of the details of the transaction.

In Hillside Villas Condominium Association, Inc. v. Bottaro Development Company, a neighborhood was created using this typical model.  The developer created a community in nine separate phases. The builder constructed the homes, and paid the developer every time a home was sold. This looks like a typical residential condominium project. Whenever a phase of the community was added, the developer assigned special declarant rights to the builder. This allowed the builder to construct and to legally declare the units. The developer retained all of the declarant rights that were not specifically transferred or assigned to the builder.  So long as the builder sold at least four units per year, this relationship would continue until the community was sold out.

In all of these relationships, the problem comes when the builder fails to complete something.  Here, the storm water management basins were not completed, and the roads required repairs totaling $900,000.00.  The Association sued both the builder and the developer.  Continue Reading How to Avoid Declarant Liability in a Condominium

* House Bill 595 was signed by Governor Tom Wolf on Monday, May 7, 2018.  The Bill becomes effective on Wednesday, July 6.

The Pennsylvania General Assembly passed House Bill 595, which is expected to be signed by Governor Wolf.  This Bill gives a process for deciding disputes in Condominium and Homeowners’ Associations.  There are a few things that every Association should know about this new requirement.  They are:

  • Most Associations need to adopt bylaws or rules and regulations that establish Alternate Dispute Resolution (ADR) procedures. This includes procedures for disputes between two or more unit owners and/or between a unit owner and the Association.
  • A “unit owner in good standing” can file a Complaint with the Attorney General’s Bureau of Consumer Protection for a violation of the Act relating to meetings, quorums, voting, proxies, and Association records. Previously, this option was available only to disputes over Association financial records.
  • A “unit owner in good standing” is someone who has no past due assessments. So a unit owner that is behind on their assessments cannot file a Complaint with the Bureau of Consumer Protection.  Except that if the unpaid assessments are related to a Complaint filed with the Bureau of Consumer Protection, then the unit owner is in good standing regardless of unpaid assessments.
  • A unit owner cannot file a Complaint with the Bureau of Consumer Protection until he or she has exhausted the ADR procedure or at least 100 days after the unit owner started the Alternative Dispute Resolution procedure. If there is no ADR procedure, the unit owner can go straight to the Bureau.
  • Finally, if a unit owner has a dispute with the Association and wins, he or she may be entitled to an award of costs and reasonable attorney’s fees.

These additions to the Uniform Condominium Act and the Uniform Planned Communities Act are intended to help owners and Associations settle their differences without going to court.  In order to do this, Associations will need to take some steps to prepare themselves: Continue Reading Alternate Dispute Resolution Comes to Association Communities (Whether they want it or not)