Benjamin Franklin once said that there are only two certainties in life—death and taxes.
A recent decision handed down by the Commonwealth Court of Pennsylvania in Logans’ Reserve Homeowners’ Association v. McCabe, Nos. 820 C.D. 2016, 821 C.D. 2016. 2017 Pa. Commw. (Jan. 4), illustrated that there is actually a third certainty in life if you own a residence in a planned community in Pennsylvania—your obligation to pay common assessments charged by the homeowners’ association.
In McCabe, Jeffrey and Jennifer McCabe owned a house in a planned community known as Logans’ Reserve in York County, Pennsylvania since the summer of 2006, the opinion said. The homeowners’ association in McCabe oversaw the administration and management of the common elements of the planned community, the opinion said. As unit owners of the planned community, the homeowners’ association charged the McCabes and the other unit owners of the planned community with monthly assessments in order to pay for the common costs and expenses associated with the planned community.
In the summer of 2009, the McCabes ceased paying the monthly assessments, the opinion said. According to the opinion, the McCabes ceased making these payments because they believed that the homeowners’ association failed for years to properly maintain the common area behind their back lawn by allowing the common area to become overgrown with weeds and shrubs which caused their back lawn and home to be infested with ticks and other insects.
Litigation subsequently ensued between the parties due to the refusal and the failure of the McCabes to pay the monthly assessments charged by their homeowners’ association.
The homeowners’ association initiated the lawsuit against the McCabes in the local Magisterial District Court seeking a monetary judgment against them for the monthly assessments that remained unpaid. After a hearing, the magisterial district judge actually found in favor of the McCabes and against the homeowners’ association, the opinion said.
The homeowners’ association then appealed that ruling to the York County Court of Common Pleas and filed a formal complaint against the McCabes due to their alleged failure to pay these monthly assessments.
In the trial court proceedings, the homeowners’ association filed a motion for partial summary judgment against the McCabes, arguing that, under pre-existing law, the McCabes had no right whatsoever to withhold payment of the monthly assessments. The trial court judge agreed and entered partial summary judgment against the McCabes and in favor of the homeowners’ association.
The McCabes then appealed the trial court judge’s ruling to the Commonwealth Court.
The Commonwealth Court ultimately affirmed the grant of partial summary judgment, concluding that the McCabes, as the unit owners in their planned community, had no legal authority to withhold the assessment payments as such self-help was not supported by Pennsylvania’s Uniform Planned Community Act, 68 Pa. C.S. Section 5101 et seq.
In doing so, the Commonwealth Court first cited to the section of the act which statutorily authorizes a homeowners’ association to charge common and special assessments against unit owners in a planned community.
Under Section 5314(b) of the act, “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.”
The Commonwealth Court in McCabe then cited to the Superior Court of Pennsylvania’s ruling in Rivers Edge Condominium Association v. Rere, 568 A.2d 261 (Pa. Super. Ct. 1990), the first appellate decision in Pennsylvania to address the issue of whether a condominium unit owner can withhold assessment payments based on an association’s failure to maintain the common areas.
“In Rivers Edge, a condominium owner refused to pay assessments to the association because the owner believed that the association had failed to maintain and repair the common elements” and “the owner also claimed that he suffered property damage caused by water leaks.”
The Commonwealth Court in McCabe noted that the Superior Court in Rivers Edge held that “the owner’s ‘action in withholding his condominium assessments, even assuming that he has suffered the property damage he alleges, is not justified by the language of the condominium bylaws, the statutes of the commonwealth or general public policy considerations.'”
In Rivers Edge, the Superior Court found it significant that nothing in the statute governing condominiums in Pennsylvania supported the type of self-help action undertaken by the condominium owner. The Superior Court in Rivers Edge emphasized that had the state legislature intended to allow owners of condominium units to withhold assessments where the unit owners believed that their condominium association is not performing its obligations properly, it believed the state legislature would have explicitly so provided.
In a footnote, the Commonwealth Court in McCabe then cited to an unreported memorandum opinion another panel issued in Fawn Ridge Estates Homeowners Association v. Carlson, 2011 Pa. Commw. Unpub. (Pa. Cmwlth., No. 1462 C.D. 2010, filed July 25, 2011), in which that panel “endorsed the Superior Court’s position in Rivers Edge that withholding assessment payments based on an owner’s alleged harm is impermissible and applied the same legal analysis to a homeowner’s association”, citing to a litany of cases.
In Fawn Ridge, the Commonwealth Court relied upon a litany of other cases in which other panels of the Commonwealth Court, as well as the Superior Court, found that assessments in planned communities or condominium structures must be paid by unit owners regardless.
Applying the legal reasoning employed in Rivers Edge and its progeny, the Commonwealth Court in McCabe held that, as a matter of law, the McCabes were required to pay their monthly assessments regardless of any alleged inadequacies in the homeowners’ association’s performance.
A common theme throughout these appellate rulings is that these residential communities in Pennsylvania are analogous to mini-governments which are dependent on the collection of assessments to maintain their common areas and to provide other services to their unit owners.
The Commonwealth Court’s ruling in McCabe only confirms that unit owners in planned communities must treat their homeowners’ associations like the government. While we may not always agree how the government conducts itself that is not an excuse to withhold your tax payments to the government.
As I advise all of my clients, “it is not the principal which kills you, but other charges tacked onto the principal amount not paid in a timely fashion.” In other words, if the assessments are not paid promptly, the unit owner can expect that the homeowners’ association will also levy interest, late fees, and the legal fees and costs incurred in connection with its collection efforts.
Implicit within the Commonwealth Court’s ruling in McCabe is that, if there is a dispute as to the management of the homeowners’ association or the repair, upkeep or maintenance of the common areas of the planned community, the unit owners would be obligated to pay any assessments levied by the homeowners’ association but could nonetheless seek legal or equitable redress by filing suit against the homeowners’ association and others.
Reprinted with permission from the February 7, 2017 edition of The Legal Intelligencer © 2017 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited. For information, contact 877-257-3382, firstname.lastname@example.org or visit www.almreprints.com.