In response to a challenging residential real estate market, Pennsylvania Governor Tom Corbett recently signed an amendment to two state laws governing the development of condominiums and planned communities to give developers three additional years to complete phased projects. The amendment, Act 37, affects the Pennsylvania Uniform Condominium Act and its nearly identical companion, the Pennsylvania Uniform Planned Community Act (the Acts), which have constituted an effective statutory framework for such developments for decades.
The Acts give developers—referred to as “declarants”—“special declarant rights” to build and add units on the common elements of the project, add property to a project, or withdraw property from a project. Act 37 applies to these so-called “flexible” condominiums and planned communities. The typical flexible project may envision hundreds of units marketed, built, and sold in the future, but initially contains only a first phase of fewer units. Until now, the Acts gave the declarant seven years to exercise its special declarant rights to complete a flexible project, after which those rights were lost.
When the real estate market imploded in 2007, many projects were stopped in their tracks, leaving the future planned units, and often amenities and improvements, unfinished. Developers, lenders, homeowners, and municipalities were each left suffering the consequences. The Permit Extension Act, which was enacted in 2010 and amended last year, offered some relief, but the recent amendments to the Acts are broader in their sweep.
The recent amendments increase the time period for exercising these special declarant rights from seven years to 10. The extended time period applies to other special declarant rights, such as the right to merge projects and create master associations. The amendment also contains an unusual provision that gives the declarants of existing projects the unilateral right to amend their recorded declarations to change the seven-year deadline to 10 years. Coupled with the Permit Extension Act, many projects should receive a new and long-lasting lease on life.