Urban Dwelling

For this blog, I have asked my colleague, Maria Elliott, to provide some insight on the legal aspects of condominium ownership.  Maria Elliott is a real estate attorney who has assisted clients with condominium legal matters, both residential and commercial.

Moving to the city can offer you an opportunity to consider condo living.  If you want to minimize maintenance responsibilities but still want the benefits of property ownership, condo living, whether for your home or business, might be the right choice for you.  The City of Lancaster has several long-standing condominiums and is growing with more — from Northgate Condominium along Queen and Lemon Streets to the Clock Towers Condominium on Columbia Avenue, to the North Shippen Place Condominium at the corner of East Walnut and North Shippen.

Condominiums can consist of just residential units or commercial units or a mix of both.  Some condominium buildings are new construction while others are an adaptive reuse of warehouse or industrial buildings.  Some condominiums are site condos, such as the Red Rose Commons shopping center, where the condo units consist of defined tracts of land with improvements and are part of a larger parcel of land.  Previously, developers could create such site condominiums without having to obtain municipal land development approvals (that is, if there was going to be no new land development); however, recent Pennsylvania case law questions this practice and it is highly recommended that a developer have the local municipality approve the site condominium plan.

Pennsylvania law governs how condominiums are created, managed and sold.

Creating a Condo

A condominium is created when a developer prepares and records a declaration which “declares” that a certain piece of property is going to become a condominium and will be subject to the Pennsylvania condominium laws.  The declaration describes the condo units as well as providing the site, height and floor plans of condo units.  These plans also show the common areas and limited common areas of the condominium.  Typically, a condo unit in a building consists of the area within the walls, floors and ceilings (and their respective surfaces), which is owned and maintained by the condo unit owner.  The rest of the building (such as the roof and foundation), the landscaping, and the parking are common areas owned by all the condo unit owners but maintained by a condominium association (see discussion below).  And, some condominiums have limited common areas, which are not part of specific condo unit but designated for use by a specific unit owner.  For example, a limited common area can be a balcony, parking space or locker.

The declaration will also list restrictions on the use, occupancy, and transfer of the units.  For example, a restriction for a residential condominium may state that the unit cannot be used for any other use except residential use.  If such a restriction exists in your condo building, then you cannot operate a home business in that condo unit, unless the declaration states that a home business, such as website designer who works out of her home, does not violate that restriction.  For commercial condos, the restriction may state that certain commercial uses, such as gambling, auto repairs, or adult bookstores, are prohibited.  The declaration will also designate the percentage of votes in the association allocated to each unit.

Managing the Condo – The Condo Association

Because ownership of a building or a site will consist of many unit owners, there needs to be a cohesive way to manage the condominium, especially the common areas.  The condominium association is the mechanism used to manage the condominium.  The condominium association consists exclusively of all the condo unit owners.

One of the main functions of the condominium association is to maintain the common areas.  Condo owners pay assessment fees to the association to maintain these common areas.  Pennsylvania law allows these assessments to become a lien on the condo units, which allows the association to foreclose on a condo unit if the owner fails to pay the assessments.

The by-laws of the association explain how the owners will elect the executive board members and officers for the association.  Many times, these associations are operated by a property management company, who takes care of the duties of the association, from collecting the assessment fees to enforcing the restrictions stated in the declaration.

Buying and Selling a Condo

Before you consider buying a condo, be sure to do your homework and ask for the condominium documents, which would include the declaration and the association’s articles, by-laws, and operating budgets, or a public offering statement if you are buying directly from the developer (which provides many of these condominium documents).  A buyer should ask for a specified period of time to review these documents and a right to cancel the contract if these documents are not satisfactory to the buyer.  As a seller of condo unit, you should be aware that you have the obligation under Pennsylvania law to provide to the buyer these condominium documents, as well as a resale certificate from the association, which provides certain information about the condominium, such as the operating budget, insurance information and the amount of the assessment fees for the unit (and title companies will not insure title to the condo unit without that resale certificate).

Because many of these condominium documents can be long and complex, you should consult an attorney to review the declaration and other condominium documents to determine if condo ownership works for you.