The Planned Community Act and How it Differs from the Condominium Act
This is the third installment in our four-part series, “An Introduction to Pennsylvania Common Interest Ownership Communities”. In this series, we explore the legal background of condominiums and planned communities, the two most common types of communities in Pennsylvania and explain why choosing the right type for your project has a significant impact. The previous installment in this series is available here.
In 1996, Pennsylvania adopted the Uniform Planned Community Act (UPCA) (68 Pa. C.S. §§ 5101 to 5414) to establish a statutory model for planned communities, generically referred to as homeowners associations.
The UPCA defines a planned community as:
“Real estate with respect to which a person, by virtue of ownership of an interest in any portion of the real estate, is or may become obligated by covenant, easement or agreement imposed on the owner’s interest to pay any amount for real property taxes, insurance, maintenance, repair, improvement, management, administration or regulation of any part of the real estate other than the portion or interest owned solely by the person. The term excludes a cooperative and a condominium, but a condominium or cooperative may be part of a planned community. For purposes of this definition, “ownership” includes holding a leasehold interest of more than 20 years, including renewal options, in real estate. The term includes nonresidential campground communities.”
Ownership is the primary difference between a planned community and a condominium. A condominium must have common elements that are owned collectively by unit owners. Collective ownership is not required, however, in planned communities.
In planned communities, the common elements are real estate that is owned by the association or real estate which the association has a role in managing but does not own. Real estate owned by the association is referred to as a common facility; real estate managed by the association is called a controlled facility.
In a condominium, the common facilities are owned directly by the unit owners as an interest appurtenant to the units. In a planned community, the common facilities are owned by the association, and each unit owner has a membership interest in that association because they hold the title to their unit.
The flexibility of the controlled facilities concept is what sets the planned community apart from the condominium and makes the planned community the better platform for most residential projects. Even the simplest of modern residential subdivisions will have stormwater management facilities and other features that are not located in common real estate but are maintained by the association at some level. Utilizing controlled facilities is an easy way to address this issue.
There are other advantages to planned communities, including the availability of financing. In the next article in this series, we’ll review some of those advantages.
The Full Series on Pennsylvania Common Interest Ownership Communities
Article 1: An Introduction to Common Interest Ownership Communities
Article 2: The Uniform Condominium Act in a Nutshell
Article 3: The Planned Community Act and How it Differs from the Condominium Act
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