By Deborah Goonan, Independent American Communities
Quietly, and with little fanfare, the Pennsylvania Legislature passed several important amendments. New laws regulate homeowners, rather than their homeowners’ associations (HOAs).
On October 19, 2018, Governor Tom Wolf approved HB 1499. The bill is now officially recorded as Act 84, amendments to Chapter 68, Real and Personal Property.
This post highlights important changes affecting homeowners in common interest communities in Pennsylvania.
The following highlighted amendment provisions apply to all types of homeowners’ associations (HOAs): condominium associations, housing cooperatives, and planned communities.
Storm water management regulations and responsibilities of HOAs
Act 84 now specifically states that developer or homeowner controlled HOAs will be in charge of maintenance and operation of all storm water facilities. Furthermore, HOAs must operate these facilities according to best management practices that comply with state and local environmental regulations.
Once the Department of Environmental Protection and/or a conservation district releases the post-construction permit, homeowners are on the hook for all future regulatory obligations. Homeowners ultimately pay all associated expenses for their “private,” collectively-owned storm water management system.
State and local agencies will do little, if anything, to support or oversee private maintenance efforts of HOA boards.
In other words, no one will provide volunteer leaders with professional guidance as to how and when homeowners’ associations should maintain and repair storm water components.
Nevertheless, all homeowners will be financially responsible for the acts or omissions of their HOAs.
The new regulation creates unknown future liabilities for homeowners in common interest communities governed by private associations.
Increased power of HOAs to regulate homeowners
State law already gives associations the right to levy reasonable fines for violations of HOA governing documents.
Act 84 now also empowers HOA boards to penalize members for:
a) being delinquent on payment of assessments, or b) being in violation of the declaration, bylaws, or rules and regulations.
HOAs can used any of the following enforcement methods:
- Suspending a unit owner’s right to vote
- Suspending a unit owner’s right to serve on the board or any committees
- Prohibiting access to common elements, recreational facilities, or amenities
As usual, the industry trade group who supported these amendments, Community Associations Institute, creates greater powers for HOA boards to regulate owners and residents, without providing corresponding powers for association members.
It’s important to note that these new HOA police (enforcement) powers come without any conditions that would ensure accountability of the HOA board to its members.
What if the HOA board acts unreasonably, oversteps its authority, or violates state law?
What is the homeowner’s recourse?
As a reminder of the lack of accountability of HOAs in Pennsylvania, see previous IAC posts on recently enacted HB 595, now codified as Act 17.
Act 17 creates unreasonable conditions and limitations for Attorney General oversight of Pennsylvania HOAs.
Act 17 also creates gaping loopholes for irresponsible HOA governing boards, allowing them to avoid accountability.
In essence Act 17 amounts to political “window dressing,” creating nothing more than a superficial appearance of regulation of HOAs.
It’s now far easier for HOAs board to enforce countless covenants, restrictions, and rules against homeowners, but far more difficult for housing consumers to enforce state and federal laws against their rogue or abusive HOA boards.
Limited regulation of Declarant (developer) controlled HOAs
What are homeowner options when the developer simply refuses to give up control of the association-governed community?
Act 84 now states as follows:
In plain English, this amendment provides some limited options for homeowners to gain control of their community from a developer who is reluctant to give up power.
1) If at least one member of the developer-controlled board is an elected homeowner, then that board member may call a special meeting of unit owners, for the purposes of electing homeowners to replace the developer’s appointees.
2) If there are no elected homeowners on the developer-controlled board, then at least 10% voting interests of all homeowner members of the community must join forces to call for a special meeting, for the purposes of electing a homeowner-controlled board of directors.
Depending on the size of the community, it may be relatively easy or quite difficult to organize owners representing 10% of the association to enforce the owners’ right to a special meeting to elect a board of directors for their HOA.
If the community has 50 homes, it may be fairly simple to find 5 interested homeowners. But what if the community has hundreds or thousands of housing units?
The flaw with this provision is that it does not absolutely mandate turnover of the association from the Declarant (developer) to homeowners.
It creates the need for substantial effort on the part of homeowners to fight against a deep-pocketed, politically connected developer.
Regulation of HOA construction defects, extended developer warranty period
There’s a real need to protect homeowners in the event that common infrastructure or amenities are found to be defective in some way.
Up until now, Pennsylvania law has provided a relatively short 6-year warranty period. A 10-year warranty is required in many other states. (And most consumer advocates will tell you that some defects don’t become apparent in the first 7 to 10 years following construction.)
What if the developer hangs onto control for most of the entire 6 year warranty period — or beyond?
Homeowners may still have a chance to enforce the warranty contract against the developer.
Act 84 now extends the warranty period to 2 years following the time when unit owners first elect their executive board.
The amended act also specifies that the developer or home builder must pay all property taxes due prior to turning over real estate to the homeowner-controlled association.
Obviously, these two amendments are modest improvements for homeowners.
Overall, however, Pennsylvania laws regulate homeowners more than they regulate developers or HOA boards.