PRINTER'S NO. 2043
No. 1661 Session of 2001
INTRODUCED BY T. STEVENSON, LEWIS, PIPPY, McNAUGHTON, MARSICO,
YOUNGBLOOD, WATSON, WALKO, TIGUE, CALTAGIRONE, B. SMITH AND
BIRMELIN, MAY 23, 2001
REFERRED TO COMMITTEE ON URBAN AFFAIRS, MAY 23, 2001
AN ACT
1 Amending Title 68 (Real and Personal Property) of the
2 Pennsylvania Consolidated Statutes, further providing for
3 planned community.
4 The General Assembly of the Commonwealth of Pennsylvania
5 hereby enacts as follows:
6 Section 1. Section 5102(a) and (b) of Title 68 of the
7 Pennsylvania Consolidated Statutes are amended to read:
8 § 5102. Applicability.
9 (a) General rule.--This subpart applies to all planned
10 communities created within this Commonwealth after the effective
11 date of this subpart; but, if:
12 (1) such a planned community contains no more than 12
13 units and is not subject to any rights under section 5215
14 (relating to subdivision or conversion of units) to subdivide
15 units or to convert into common elements or under section
16 5211 (relating to conversion and expansion of flexible
17 planned communities) to add additional real estate, create
18 units or limited common elements within convertible real
1 estate or withdraw real estate, it is subject only to
2 sections 5105 (relating to separate titles and taxation),
3 5106 (relating to applicability of local ordinances,
4 regulations and building codes), 5107 (relating to eminent
5 domain) and 5218 (relating to easement to facilitate
6 completion, conversion and expansion) unless the declaration
7 provides that the entire subpart is applicable; or
8 (2) such a planned community, regardless of the number
9 of units, has common elements or limited common elements
10 which include only storm water management facilities and
11 related devices, real estate containing signage, lighting,
12 landscaping, gates, walls, fences or monuments or open space
13 and is not subject to any rights under section 5215 or under
14 section 5211, it shall be subject only to the sections listed
15 in paragraph (1), the provisions of sections 5103 (relating
16 to definitions), 5104 (relating to variation by agreement),
17 5105, 5106, 5107, 5108 (relating to supplemental general
18 principles of law applicable), 5109 (relating to construction
19 against implicit repeal), 5110 (relating to uniformity of
20 application and construction), 5111 (relating to
21 severability), 5112 (relating to unconscionable agreement or
22 term of contract), 5113 (relating to obligation of good
23 faith) and 5114 (relating to remedies to be liberally
24 administered) and the provisions of Chapter 53 (relating to
25 management of planned community) and sections 5407 (relating
26 to resales of units), 5408 (relating to escrow of deposits),
27 5409 (relating to release of liens) and 5411 (relating to
28 warranty against structural defects) unless the declaration
29 provides that the entire subpart is applicable. If a planned
30 community is subject to the provisions of this paragraph, a
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1 declarant shall:
2 (i) include [a provision] provisions in any sales
3 agreement for a unit of such planned community which
4 states that an association exists or may be created to
5 own and manage certain generally described common
6 elements or limited common elements[. There] and that
7 there may be imposed by the association assessments upon
8 unit owners for expenses related to the ownership,
9 management, administration or regulation of such elements
10 [and that the]; and
11 (ii) prepare and record a declaration in the manner
12 set forth in section 5205 (relating to contents of
13 declaration; all planned communities) or 5206 (relating
14 to contents of declaration for flexible planned
15 communities) or covenants and restrictions as may be
16 appropriate for the planned community. The declarant
17 shall provide to the purchaser copies of the proposed or
18 recorded declaration or covenants and restrictions, an
19 actual or proposed budget of the planned community in
20 accordance with the provisions of section 5402(a)(7)
21 (relating to public offering statement; general
22 provisions) and the actual or proposed bylaws of the
23 association, provided that the purchaser has the right,
24 before conveyance, to cancel the agreement within seven
25 days of the date of receiving a copy of the proposed or
26 recorded declaration or covenants and restrictions, the
27 actual or proposed budget and the actual or proposed
28 bylaws. As used in this paragraph, the term "open space"
29 shall include an area of land or an area of water or a
30 combination of land and water within a planned community
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1 intended for the use or enjoyment of residents,
2 including, but not limited to, ball fields and courts,
3 parks, walking, hiking or biking trails, wetlands, wooded
4 areas and walkways and driveways providing access thereto
5 or parking intended for users of such open space. The
6 term does not include streets, utility lines or
7 facilities or swimming pools or clubhouses owned or
8 leased and maintained by the association.
9 (b) Retroactivity.--Except as provided in subsection (c),
10 sections 5105, 5106, 5107, 5108, 5113, 5202 (relating to unit
11 boundaries), 5203 (relating to construction and validity of
12 declaration and bylaws), 5204 (relating to description of
13 units), 5218, 5219 (relating to amendment of declaration), 5222
14 (relating to master associations), 5223 (relating to merger or
15 consolidation of planned community), 5302(a)(1) through (6), (8)
16 and (11) through [(15)] (17) (relating to power of unit owners'
17 association), 5303 (relating to executive board members and
18 officers), 5307 (relating to upkeep of planned community), 5311
19 (relating to tort and contract liability), 5312 (relating to
20 insurance), 5314 (relating to assessments for common expenses),
21 5315 (relating to lien for assessments), 5316 (relating to
22 association records), 5407 (relating to resales of units) and
23 5412 (relating to effect of violations on rights of action) and
24 section 5103 (relating to definitions), to the extent necessary
25 in construing any of those sections, apply to all planned
26 communities created in this Commonwealth before the effective
27 date of this subpart; but those sections apply only with respect
28 to events and circumstances occurring after the effective date
29 of this subpart and do not invalidate specific provisions
30 contained in existing provisions of the declaration, bylaws or
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1 plats and plans of those planned communities.
2 * * *
3 Section 2. Section 5203 of Title 68 is amended by adding a
4 subsection to read:
5 § 5203. Construction and validity of declaration and bylaws.
6 * * *
7 (e) Interpretation and application of declaration.--The
8 executive board shall have the powers to interpret and apply the
9 declaration and bylaws, and to resolve all conflicts or disputes
10 requiring the interpretation and application of the declaration.
11 As between unit owners, the decision of the board shall be
12 final, and shall be enforceable at law as a decision of an
13 arbitrator. The executive board and its members shall have no
14 liability for exercising these powers provided they are
15 exercised in good faith and in the best interest of the
16 association in the manner set forth in section 3303 (relating to
17 executive board members and officers).
18 Section 3. Sections 5218, 5219(a) and (f), 5220(a), 5221,
19 5302(a)(4), (6), (8), (12) and (17) and 5303(a) of Title 68 are
20 amended to read:
21 § 5218. Easement to facilitate completion, conversion and
22 expansion.
23 Subject to the provisions of the declaration, a declarant has
24 an easement through the common elements as may be reasonably
25 necessary for the purpose of discharging a declarant's
26 obligations or exercising special declarant rights. In addition,
27 without affecting the rights, if any, of each unit owner with
28 respect to the use and enjoyment of the common elements, subject
29 to the provisions of the declaration, each unit owner and its
30 agents, contractors and invitees shall have a nonexclusive
20010H1661B2043 - 5 -
1 access easement through the common elements as may be reasonably
2 necessary for the purpose of construction, repair and renovation
3 of the owner's unit. An association shall have the power during
4 spring thaw conditions to restrict road usage by vehicles of
5 more than ten tons gross weight, provided:
6 (1) such restrictions shall be imposed only on a week-
7 by-week basis for an aggregate period not to exceed eight
8 weeks during any calendar year;
9 (2) thaw conditions shall be reviewed by the association
10 at least weekly; and
11 (3) signs shall be conspicuously posted by the
12 association at all entrances to the planned community
13 advising when and where such thaw restrictions are
14 applicable.
15 An association shall not have the power to impose any fees or
16 charges or require financial security, including, but not
17 limited to, surety bonds, letters of credit or escrow deposits
18 for the use of the easement rights described in this section[.
19 An association shall be entitled to recover costs and expenses
20 incurred by the association for the repair of damage caused to
21 common elements in the exercise of the easement rights.];
22 however, the declarant or owner who exercises the easement
23 rights described in this section, whether directly or indirectly
24 through an agent, servant, contractor or employee, shall have
25 the obligation to promptly return any damaged portion of the
26 common elements to the appearance, condition and function in
27 which it existed prior to the exercise of the easement, or to
28 reimburse the association for all reasonable costs, fees and
29 expenses incurred by the association to return any damaged
30 portion of the common elements to the appearance, condition and
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1 function in which it existed prior to the exercise of the
2 easement.
3 § 5219. Amendment of declaration.
4 (a) Number of votes required.--
5 (1) [The] Without regard for any larger majority the
6 declaration may specify or the absence of any amendment
7 provisions in the declaration, the declaration, including the
8 plats and plans, may be amended only by vote of at least:
9 (i) 67% of the association;
10 (ii) a larger percentage of the association
11 specified in the declaration; or
12 (iii) a smaller percentage of the association
13 specified in the declaration if all units are restricted
14 exclusively to nonresidential use.
15 (2) Paragraph (1) is limited by subsection (d).
16 (3) Paragraph (1) shall not apply to any of the
17 following:
18 (i) Amendments executed by a declarant under:
19 (A) section 5210(e) or (f) (relating to plats
20 and plans);
21 (B) section 5211(a) (relating to conversion and
22 expansion of flexible planned communities); or
23 (C) section 5212(a) (relating to withdrawal of
24 withdrawable real estate).
25 (ii) Amendments executed by the association under:
26 (A) subsection (f);
27 (B) section 5107 (relating to eminent domain);
28 (C) section 5207(d) (relating to leasehold
29 planned communities);
30 (D) section 5209 (relating to limited common
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1 elements); or
2 (E) section 5215 (relating to subdivision or
3 conversion of units).
4 (iii) Amendments executed by certain unit owners
5 under:
6 (A) section 5209(b);
7 (B) section 5214(a) (relating to relocation of
8 boundaries between units);
9 (C) section 5215; or
10 (D) section 5220(b) (relating to termination of
11 planned community).
12 * * *
13 (f) Technical corrections.--Except as otherwise provided in
14 the declaration, if any amendment to the declaration is
15 necessary in the judgment of the executive board to do any of
16 the following:
17 (1) cure an ambiguity;
18 (2) correct or supplement any provision of the
19 declaration, including the plats and plans, that is
20 defective, missing or inconsistent with any other provision
21 of the declaration or with this subpart; [or]
22 (3) conform to the requirements of any agency or entity
23 that has established national or regional standards with
24 respect to loans secured by mortgages or deeds of trust or
25 units in planned community or so-called "PUD" projects, such
26 as Federal National Mortgage Association and the Federal Home
27 Loan Mortgage Corporation; or
28 (4) comply with any statute, regulation, code or
29 ordinance which may now or hereafter be made applicable to
30 the planned community or association, or to make a reasonable
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1 accommodation or permit a reasonable modification in favor of
2 handicapped, as may be defined by prevailing Federal or State
3 laws or regulations applicable to the association, unit
4 owners, residents or employees;
5 then, at any time, the executive board may, at its discretion,
6 effect an appropriate corrective amendment without the approval
7 of the unit owners or the holders of liens on all or any part of
8 the planned community, upon receipt of an opinion from
9 independent legal counsel to the effect that the proposed
10 amendment is permitted by the terms of this subsection.
11 § 5220. Termination of planned community.
12 (a) Number of votes required.--[Except] Without regard for
13 the provisions of any declaration purporting to establish any
14 self-executing deadline or termination date for any planned
15 community existing under this subpart or any planned community
16 or "PUD" created prior to the adoption of this subpart, and
17 except in the case of a taking of all the units by eminent
18 domain in section 5107 (relating to eminent domain), [a] no
19 planned community may be terminated [only] except by the written
20 agreement of unit owners of units to which at least 80%, or such
21 larger percentage specified in the declaration, of the votes in
22 the association are allocated. The declaration may specify a
23 smaller percentage only if all of the units in the planned
24 community are restricted exclusively to nonresidential uses.
25 * * *
26 § 5221. Rights of secured lenders.
27 (a) Secured lender approval.--The declaration may require
28 that all or a specified number or percentage of the mortgagees
29 or beneficiaries of deeds of trust encumbering the units approve
30 specified actions of the unit owners or the association as a
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1 condition to the effectiveness of those actions, but no
2 requirement for approval may operate to do any of the following:
3 (1) Deny or delegate control over the general
4 administrative affairs of the association by the unit owners
5 or the executive board.
6 (2) Prevent the association or the executive board from
7 commencing, intervening in or settling any litigation or
8 proceeding or receiving and distributing any insurance
9 proceeds except under section 5312 (relating to insurance).
10 (b) Secured lender approval procedures.--If the declaration
11 requires mortgagees or beneficiaries of deeds of trust
12 encumbering the units to approve specified actions of the unit
13 owners or the association as a condition to the effectiveness of
14 those actions, then the executive board will provide the lender
15 with written notice of the specified action proposed to be
16 taken, together with a request for the secured lender to approve
17 or disapprove the actions specified. If the notice to the
18 secured lender states that the secured lender will be deemed to
19 have approved the actions specified in the written notice if it
20 does not respond to the request within 30 days, and the secured
21 lender does not respond in writing within 30 days, then the
22 secured lender will be deemed for all purposes to have approved
23 the action specified in the notice. Written notice to the
24 secured lender shall be given by first-class mail, postage
25 prepaid, at the address provided by the secured lender, or in
26 the absence thereof, at the address of the secured lender
27 endorsed on any mortgage or deed of trust of record, or the
28 address to which the unit owner mails any periodic payment paid
29 to the secured lender; the notice to the secured lender shall
30 include a statement of the specified action, a copy of the full
20010H1661B2043 - 10 -
1 text of any proposed amendment, and a form prepared by the
2 association upon which the secured lender may indicate its
3 approval or rejection of the specified action or amendment.
4 § 5302. Power of unit owners' association.
5 (a) General rule.--Except as provided in subsection (b) and
6 subject to the provisions of the declaration and the limitations
7 of this subpart, the association, even if unincorporated, may:
8 * * *
9 (4) Institute, defend or intervene in litigation or
10 administrative proceedings, or engage in arbitrations or
11 mediations, in its own name on behalf of itself or two or
12 more unit owners on matters affecting the planned community.
13 * * *
14 (6) Regulate the use, maintenance, repair, replacement
15 and modification of common elements; and make reasonable
16 accommodations, or permit reasonable modifications to be made
17 to units, the common facilities, the controlled facilities or
18 the common elements, to accommodate people with disabilities,
19 as defined by prevailing Federal, State or local statute,
20 regulations, code or ordinance, unit owners, residents,
21 tenants or employees.
22 * * *
23 (8) Acquire, hold, encumber and convey in its own name
24 any right, title or interest to real or personal property,
25 and pledge or assign assessment income necessary to create
26 amortization reserves to retire debts, but common facilities
27 may be conveyed or subjected to a security interest only
28 under the provisions of section 5318 (relating to conveyance
29 or encumbrance of common facilities). Reserve funds held for
30 future major repairs and replacements of the common elements
20010H1661B2043 - 11 -
1 or controlled facilities may not be assigned or pledged.
2 * * *
3 (12) Impose reasonable charges for the preparation and
4 recording of amendments to the declaration, resale
5 certificates required by section 5407 (relating to resales of
6 units) which shall be one charge that may be made by the
7 association solely because of the resale or retransfer of any
8 unit or statement of unpaid assessments. In addition, an
9 association may impose a capital improvement fee, but no
10 other fees, on the resale or transfer of units in accordance
11 with the following:
12 (i) The capital improvement fee for any unit shall
13 not exceed the annual assessments for general common
14 expense charged to such unit during the most recently
15 completed fiscal year of the association, provided that:
16 (A) in the case of resale or transfer of a unit
17 consisting of unimproved real estate, the capital
18 improvement fee shall not exceed one-half of the
19 annual assessments for general common expenses
20 charged to such unit during the most recently
21 completed fiscal year of the association; [and]
22 (B) in the case of resale or transfer of a unit
23 which was either created or added to the planned
24 community in accordance with section 5211 (relating
25 to conversion and expansion of flexible planned
26 communities) at some time during the most recently
27 completed fiscal year of the association but was not
28 in existence for the entire fiscal year, the capital
29 improvement fee shall not exceed one-half of the
30 annual assessments for general common expenses
20010H1661B2043 - 12 -
1 charged to a unit comparable to such unit during the
2 most recently completed fiscal year of the
3 association[.]; and
4 (C) capital improvement fees are not refundable
5 upon any sale, conveyance or any other transfer of
6 the title to a unit.
7 (ii) Capital improvement fees allocated by an
8 association must be maintained in a separate capital
9 account and may be expended only for new capital
10 improvements or replacement of existing common elements
11 and may not be expended for operation, maintenance or
12 other purposes.
13 (iii) No capital improvement fee shall be imposed on
14 any gratuitous transfer of a unit between any of the
15 following family members: spouses, parent and child,
16 siblings, grandparent and grandchild.
17 (iv) No fees may be imposed upon any person who:
18 (A) acquires a unit consisting of unimproved
19 real estate and signs and delivers to the association
20 at the time of such person's acquisition a sworn
21 affidavit declaring the person's intention to
22 reconvey such unit within 18 months of its
23 acquisition; and
24 (B) completes such reconveyance within such 18
25 months.
26 * * *
27 (17) Assign its right to future income, including the
28 right to receive common expense assessments[, only to the
29 extent the declaration expressly provides].
30 * * *
20010H1661B2043 - 13 -
1 § 5303. Executive board members and officers.
2 (a) Powers and fiduciary status.--Except as provided in the
3 declaration, in the bylaws, in subsection (b) or in other
4 provisions of this subpart, the executive board may act in all
5 instances on behalf of the association. In the performance of
6 their duties, the officers and members of the executive board
7 shall stand in a fiduciary relation to the association and shall
8 perform their duties, including duties as members of any
9 committee of the board upon which they may serve, in good faith;
10 in a manner they reasonably believe to be in the best interests
11 of the association; and with care, including reasonable inquiry,
12 skill and diligence as a person of ordinary prudence would use
13 under similar circumstances. In managing the association's
14 reserve funds, the officers and members of the executive board
15 shall have the power to invest the association's reserve funds
16 in investments permissible by law for the investment of trust
17 funds and shall be governed in the management of the
18 association's reserve funds by the Prudent Investor Rule. In
19 performing any duties, an officer or executive board member
20 shall be entitled to rely in good faith on information,
21 opinions, reports or statements, including financial statements
22 and other financial data, in each case prepared or presented by
23 any of the following:
24 (1) One or more other officers or employees of the
25 association whom the officer or executive board member
26 reasonably believes to be reliable and competent in the
27 matters presented.
28 (2) Counsel, public accountants or other persons as to
29 matters which the officer or executive board member
30 reasonably believes to be within the professional or expert
20010H1661B2043 - 14 -
1 competence of that person.
2 (3) A committee of the executive board upon which the
3 officer or executive board member does not serve, designated
4 in accordance with law, as to matters within its designated
5 authority, which committee the officer or executive board
6 member reasonably believes to merit confidence.
7 * * *
8 Section 4. Sections 5312(a), (c), (f) and (h) and 5315(b) of
9 Title 68 are amended and the sections are amended by adding
10 subsections to read:
11 § 5312. Insurance.
12 (a) Insurance to be carried by association.--Commencing not
13 later than the time of the first conveyance of a unit to a
14 person other than a declarant, the association shall maintain,
15 to the extent reasonably available, all of the following:
16 (1) Property insurance on the common facilities and
17 controlled facilities to the extent the controlled facilities
18 can be insured separately from the unit and, if insurance for
19 the unit is not provided by the association under subsection
20 (b) or the declaration, insuring against all common risks of
21 direct physical loss. The total amount of insurance after
22 application of any deductibles shall be not less than 80% of
23 the actual cash value of the insured property, exclusive of
24 land, excavations, foundations and other items normally
25 excluded from property policies.
26 (2) Comprehensive general liability insurance, including
27 medical payments insurance, in an amount determined by the
28 executive board but not less than any amount specified in the
29 declaration covering all occurrences commonly insured against
30 for death, bodily injury and property damage, arising out of
20010H1661B2043 - 15 -
1 or in connection with the use, ownership or maintenance of
2 the common elements.
3 (3) Any property or comprehensive general liability
4 insurance carried by the association may contain a deductible
5 provision.
6 * * *
7 (c) Other insurance carried by association.--If the
8 insurance described in subsections (a) and (b) is not
9 maintained, the association promptly shall cause notice of that
10 fact to be hand delivered or sent prepaid by United States mail
11 to all unit owners. The declaration may require the association
12 to carry any other insurance. The association may carry any
13 other insurance [it deems] in such reasonable amounts and with
14 such reasonable deductibles as it may deem appropriate to
15 protect the association or the unit owners.
16 * * *
17 (f) Unit owner insurance.--A unit owner may insure his unit
18 for all losses to his unit, including losses not covered by the
19 insurance maintained by the association due to a deductible
20 provision or otherwise. A residential unit owner shall insure
21 the owner's unit except as insurance is provided by the
22 association in accordance with this section or the declaration.
23 An insurance policy issued to the association [does] shall not
24 prevent a unit owner from obtaining insurance for the owner's
25 own benefit, including, but not limited to, insurance to cover
26 any deductibles or losses not covered by the association's
27 property or comprehensive general liability insurance.
28 * * *
29 (h) Disposition of insurance proceeds.--
30 (1) Any portion of the planned community for which
20010H1661B2043 - 16 -
1 insurance is required to be maintained by the association by
2 this section or the declaration and which is damaged or
3 destroyed shall be repaired or replaced promptly by the
4 association unless:
5 (i) the planned community is terminated;
6 (ii) repair or replacement would be illegal under
7 any State or local health or safety statute or ordinance;
8 or
9 (iii) 80% of the unit owners, including every owner
10 of a unit or assigned limited common element which will
11 not be rebuilt, vote not to rebuild.
12 [The] Except for the costs of repair or replacement which are
13 not covered due to deductibles, the cost of repair or
14 replacement of those portions in excess of insurance proceeds
15 and reserves, which have not been identified by the executive
16 board to fund costs of capital expenditures budgeted for the
17 current fiscal year of the association, is a common expense.
18 (2) Any portion of the planned community for which
19 insurance is required to be maintained by the unit owner by
20 this section or the declaration and which is damaged or
21 destroyed shall be repaired or replaced promptly by the unit
22 owner unless:
23 (i) the planned community is terminated;
24 (ii) repair or replacement would be illegal under
25 any State or local health or safety statute or ordinance;
26 or
27 (iii) 80% of the unit owners, including every owner
28 of a unit or assigned limited common element which will
29 not be rebuilt, vote to not rebuild.
30 The cost of repair or replacement of these portions in excess
20010H1661B2043 - 17 -
1 of insurance proceeds is the unit owner's expense.
2 (3) If the entire planned community is not repaired or
3 replaced, the following apply:
4 (i) The insurance proceeds attributable to the
5 damaged common elements shall be used to restore the
6 damaged area to a condition compatible with the remainder
7 of the planned community.
8 (ii) The insurance proceeds attributable to units
9 shall be paid to unit owners except those proceeds
10 attributable to controlled facilities for which insurance
11 is separately maintained by the association under this
12 section or the declaration shall be distributed to all
13 unit owners in proportion to their common expense
14 liability. Proceeds attributable to limited common
15 facilities which are not rebuilt shall be distributed
16 equally to owners of units to which those limited common
17 facilities were assigned.
18 (iii) The remainder of the proceeds shall be
19 distributed to all the unit owners in proportion to their
20 common expense liability.
21 (4) If the unit owners vote not to rebuild any unit,
22 that unit's votes in the association and common expense
23 liability are automatically reallocated upon the vote as if
24 the unit had been condemned under section 5107(a) (relating
25 to eminent domain), and the association promptly shall
26 prepare, execute and record an amendment to the declaration
27 reflecting the reallocations.
28 (5) Notwithstanding the provisions of this subsection,
29 section 5220 (relating to termination of planned community)
30 governs the distribution of insurance proceeds if the planned
20010H1661B2043 - 18 -
1 community is terminated.
2 * * *
3 (j) Recovery of deductibles.--If any insurance policy
4 maintained by the association contains a deductible, then that
5 portion of any loss or claim which is not covered by insurance
6 due to the application of a deductible, as well as any claim or
7 loss for which the association is self-insured, shall be levied
8 by the executive board in accordance with section 5314(c)
9 (relating to assessments for common expenses) to the extent
10 applicable, or in the absence of the application, in a pro rata
11 manner, as a common expense assessment against all of the units
12 benefited by the repair or replacement.
13 § 5315. Lien for assessments.
14 * * *
15 (b) Priority of lien.--
16 (1) General rule.--A lien under this section is prior to
17 all other liens and encumbrances on a unit except:
18 (i) Liens and encumbrances recorded before the
19 recording of the declaration.
20 (ii) First mortgages or deeds of trust on the unit
21 securing first mortgage holders and recorded before due
22 date of the assessment if the assessment is not payable
23 in installments or the due date of the unpaid installment
24 if the assessment is payable in installments.
25 (iii) Liens for real estate taxes and other
26 governmental assessments or charges against the unit.
27 (2) Limited nondivestiture.--The association's lien for
28 common expenses shall be divested by a judicial sale [of] in
29 foreclosure of the first mortgage on the unit:
30 (i) [As] Except as to unpaid [common expense
20010H1661B2043 - 19 -
1 assessments made under section 5314(b) (relating to
2 assessments for common expenses)] assessments for which
3 the association has a lien under this section that come
4 due during the six months immediately preceding
5 [institution of] a judicial sale of a unit in an action
6 to enforce collection of a lien against a unit [by a
7 judicial sale, only to the extent that the six months'
8 unpaid assessments are paid out of the proceeds of the
9 sale].
10 (ii) As to unpaid [common expense] assessments [made
11 under section 5314(b)] for which the association has a
12 lien under this section other than the six months'
13 assessment referred to in subparagraph (i), in a full
14 amount of the unpaid assessments[, whether or not the
15 proceeds of the judicial sale are adequate to pay these
16 assessments]. To the extent that the proceeds of the sale
17 are sufficient to pay some or all of [these] the
18 additional unpaid assessments after satisfaction in full
19 of the costs of the judicial sale and the liens and
20 encumbrances of the types described in paragraph (1) and
21 the unpaid common expense assessments that come due
22 during the six-month period described in subparagraph
23 (i), the assessments shall be paid before any remaining
24 proceeds may be paid to any other claimant, including the
25 prior owner of the unit.
26 (3) Monetary exemption.--The lien is not subject to the
27 provisions of 42 Pa.C.S. § 8123 (relating to general monetary
28 exemption).
29 * * *
30 (i) Application of payments.--Unless the declaration
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1 provides otherwise, any payment received by an association in
2 connection with the lien under this section shall be applied
3 first to any interest accrued by the association, then to any
4 late fee, then to any costs and reasonable attorney fees
5 incurred by the association in collection or enforcement and
6 then to the delinquent assessment. The foregoing shall be
7 applicable notwithstanding any restrictive endorsement,
8 designation or instructions placed on or accompanying a payment.
9 Section 5. This act shall take effect in 60 days.
D9L68JS/20010H1661B2043 - 21 -