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        PRIOR PRINTER'S NOS. 3126, 3698               PRINTER'S NO. 4061

THE GENERAL ASSEMBLY OF PENNSYLVANIA


HOUSE BILL

No. 2188 Session of 2008


        INTRODUCED BY WALKO, PETRONE, J. TAYLOR, ARGALL, BELFANTI,
           BRENNAN, CALTAGIRONE, CAPPELLI, COHEN, CURRY, FRANKEL,
           FREEMAN, GEIST, GEORGE, GINGRICH, HALUSKA, HARKINS,
           HENNESSEY, JOSEPHS, KOTIK, LONGIETTI, McGEEHAN, MELIO,
           MICOZZIE, MYERS, PRESTON, READSHAW, ROEBUCK, SAYLOR,
           K. SMITH, THOMAS, WANSACZ, J. WHITE, YOUNGBLOOD, YUDICHAK,
           LENTZ, PAYTON, WAGNER AND MOYER, JANUARY 23, 2008

        AS AMENDED ON SECOND CONSIDERATION, HOUSE OF REPRESENTATIVES,
           JUNE 25, 2008

                                     AN ACT

     1  Providing for court-appointed conservators to bring residential,
     2     commercial and industrial buildings into municipal code
     3     compliance when owners fail to comply.

     4     The General Assembly of the Commonwealth of Pennsylvania
     5  hereby enacts as follows:
     6  Section 1.  Short title.
     7     This act shall be known and may be cited as the Abandoned and
     8  Blighted Property Conservatorship Act.
     9  Section 2.  Legislative findings and purpose.
    10     The General Assembly finds and declares that:
    11         (1)  Pennsylvanian's older communities are important to
    12     the Commonwealth's economic health by providing a focal point
    13     for businesses and services and to this Commonwealth's
    14     quality of life with its rich histories and diverse
    15     communities. However, many older communities suffer from


     1     blighted properties that have been abandoned by their owners.
     2         (2)  Many citizens of this Commonwealth are adversely
     3     affected by abandoned and blighted residential, commercial
     4     and industrial properties, including those citizens who live
     5     in proximity to such substandard buildings as well as those
     6     who own property in the vicinity of such buildings.
     7         (3)  Substandard, deteriorating and abandoned
     8     residential, commercial and industrial structures are a
     9     public safety threat and nuisance and their blighting effect
    10     diminishes property values in the communities in which these
    11     properties are located.
    12         (4)  If these buildings are not rehabilitated, they are
    13     likely to remain abandoned and further deteriorate, resulting
    14     in increased costs to the Commonwealth, municipality and
    15     taxpayers to secure and ultimately demolish them.
    16         (5)  Providing a mechanism to transform abandoned and
    17     blighted buildings into productive reuse is an opportunity
    18     for communities to modernize, revitalize and grow and to
    19     improve the quality of life for neighbors who are already
    20     there.
    21         (6)  If the owner of a residential, commercial or
    22     industrial building fails to maintain the property in
    23     accordance with applicable municipal codes or standards of
    24     public welfare or safety, it is in the best interests of the
    25     Commonwealth, the municipality and the community for the
    26     court, pursuant to the provisions of this act, to appoint a
    27     conservator to make the necessary improvements before the
    28     building deteriorates further and necessitates demolition,
    29     resulting in the removal of the building from the housing
    30     supply or prohibiting future productive economic use.
    20080H2188B4061                  - 2 -     

     1  Section 3.  Definitions.
     2     The following words and phrases when used in this act shall
     3  have the meanings given to them in this section unless the
     4  context clearly indicates otherwise:
     5     "Building."  A residential, commercial or industrial building
     6  or structure and the land appurtenant thereto.
     7     "Code."  A building, housing, property maintenance, fire,
     8  health or other public safety ordinance enacted by a
     9  municipality.
    10     "Competent entity."  A person or entity, including a
    11  governmental unit with experience in the rehabilitation of
    12  residential, commercial or industrial buildings and the ability
    13  to provide or obtain the necessary financing for such
    14  rehabilitation.
    15     "Cost "COSTS of rehabilitation."  Costs and expenses for       <--
    16  construction, stabilization, rehabilitation, MAINTENANCE AND      <--
    17  OPERATION or demolition, including reasonable nonconstruction
    18  costs associated with the project, including, but not limited
    19  to, environmental remediation, architectural, engineering and
    20  legal fees, permits, financing fees and a developer's fee
    21  consistent with the standards for developers' fees established
    22  by the Pennsylvania Housing Finance Agency.
    23     "Court."  The appropriate court of common pleas.
    24     "Historic property."  A property which is listed on the
    25  National Register of Historic Places or is a contributing
    26  property in a national register historic district or is located
    27  in a local government ordinance historic district.
    28     "Immediate family."  A parent, spouse, child, brother or
    29  sister.
    30     "Nonprofit corporation."  A nonprofit corporation that has as
    20080H2188B4061                  - 3 -     

     1  one of its purposes community development activities, including
     2  economic development, historic preservation or the promotion or
     3  enhancement of affordable housing opportunities.
     4     "Owner."  The holder or holders of title to, or of a legal or
     5  equitable interest in, a residential, commercial or industrial
     6  building. The term shall include an heir, assignee, trustee,
     7  beneficiary and lessee provided the ownership interest is a
     8  matter of public record.
     9     "Party in interest."  A person or entity who has a direct and
    10  immediate interest in a residential, commercial or industrial
    11  building, including:
    12         (1)  The owner.
    13         (2)  A lienholder and other secured creditor of the
    14     owner.
    15         (3)  A resident or business owner within 500 feet of the
    16     building.
    17         (4)  A nonprofit corporation within the municipality
    18     where the building is located, including a redevelopment
    19     authority.
    20         (5)  A municipality or school district in which the
    21     building in located.
    22     "Public nuisance."  A property that, because of physical
    23  condition or use, has been declared a public nuisance in
    24  accordance with the local housing, building, health, fire or
    25  related code or is determined to be a public nuisance by the
    26  court.
    27  Section 4.  Initiation of action.
    28     (a)  Filing of petition.--A petition for the appointment of a
    29  conservator to take possession and to undertake the
    30  rehabilitation of a building may be filed by a party in interest
    20080H2188B4061                  - 4 -     

     1  in a court in the county in which the building is located. The
     2  proceeding on the petition shall constitute an action in rem.
     3     (b)  Contents.--The petition submitted to the court shall
     4  include a concise statement of the reasons a conservator should
     5  be appointed and, to the extent available to the petitioner:
     6         (1)  A copy of any citation charging the owner with being
     7     in violation of municipal code requirements or declaring the
     8     building to be a public nuisance.
     9         (2)  A recommendation as to which person or entity should
    10     be appointed conservator.
    11         (3)  A preliminary plan with initial cost estimates for
    12     rehabilitation of the building to bring it into compliance
    13     with all municipal codes and duly adopted plans for the area
    14     in which the building is located and anticipated funding
    15     sources.
    16     (c)  Notice of lis pendens.--The petitioner shall file a
    17  notice of lis pendens in the office of the recorder of deeds for
    18  the county in which the property is located.
    19     (d)  Notification of owner, political subdivisions and
    20  lienholders.--
    21         (1)  Upon filing the petition with the court, the
    22     petitioner shall notify the current owner of the property,
    23     all political subdivisions in which the property is located
    24     and all lienholders of the filing by registered or certified
    25     mail to the last known address of each and by posting a copy
    26     of the notice on the building.
    27         (2)  In the event the registered or certified mail is
    28     returned with notation by the postal authorities that the
    29     recipient refused to accept the mail, the petitioner may mail
    30     a copy to the recipient at the same address by ordinary mail
    20080H2188B4061                  - 5 -     

     1     with the return address of the petitioner appearing thereon.
     2         (3)  Service by ordinary mail shall be presumed complete
     3     if the mail is not returned to the petitioner within 15 days
     4     after mailing.
     5         (4)  In the event the registered or certified mail is
     6     returned with the notation by the postal authorities that it
     7     was unclaimed, the notice shall be personally served.
     8         (5)  In the event that the personal service is not able
     9     to be made after two such attempts, then the petitioner shall
    10     mail the petition to the recipient at the same address by
    11     ordinary mail with the return address of the petitioner
    12     appearing thereon with service by ordinary mail deemed
    13     complete if the mail is not returned to the petitioner within
    14     15 days after the mailing.
    15         (6)  The petitioner shall also notify the owner and each
    16     lienholder of the hearing date and provide notice that the
    17     owner and lienholders may petition to intervene in the
    18     action.
    19  Section 5.  Appointment of conservator.
    20     (a)  General rule.--The court shall act upon a petition
    21  submitted by holding a hearing within 120 days of receipt of the
    22  petition and rendering a decision no later than 30 days after
    23  completion of the hearing.
    24     (b)  Intervention.--Subject to the court's discretion, a
    25  party in interest may intervene in the proceeding and be heard
    26  with respect to the petition, the requested relief or any other
    27  matter which may come before the court in connection with the
    28  proceeding.
    29     (c)  Hearing.--At the hearing, any party in interest shall be
    30  permitted to present evidence to support or contest the
    20080H2188B4061                  - 6 -     

     1  petition.
     2     (d)  Conditions for conservatorship.--If a petition is filed
     3  under section 4, the court may appoint a conservator if all of
     4  the following apply:
     5         (1)  The building has not been legally occupied for at
     6     least the previous 12 months.
     7         (2)  The building has not been actively marketed during
     8     the 60 days prior to the date of the petition.
     9         (3)  The building is not subject to an existing
    10     foreclosure action.
    11         (4)  The current owner fails to present sufficient
    12     evidence that he has acquired the property within the
    13     preceding six months. The evidence shall not include
    14     instances where the prior owner is a member of the immediate
    15     family of the current owner, UNLESS THE TRANSFER OF TITLE      <--
    16     RESULTS FROM THE DEATH OF THE PRIOR OWNER, or where the
    17     current or prior owner is a corporation, partnership or other
    18     entity in which either owner or the immediate family of
    19     either owner has an interest in excess of 5%.
    20         (5)  The court finds at least three of the following:
    21             (i)  The building or physical structure is a public
    22         nuisance.
    23             (ii)  The building is in need of substantial
    24         rehabilitation and no rehabilitation has taken place
    25         during the previous 12 months.
    26             (iii)  The building is unfit for human habitation,
    27         occupancy or use.
    28             (iv)  The condition and vacancy of the building
    29         materially increase the risk of fire to the building and
    30         to adjacent properties.
    20080H2188B4061                  - 7 -     

     1             (v)  The building is subject to unauthorized entry
     2         leading to potential health and safety hazards and one of
     3         the following applies:
     4                 (A)  The owner has failed to take reasonable and
     5             necessary measures to secure the building.
     6                 (B)  The municipality has secured the building in
     7             order to prevent such hazards after the owner has
     8             failed to do so.
     9             (vi)  The property is an attractive nuisance to
    10         children, including, but not limited to, the presence of
    11         abandoned wells, shafts, basements, excavations and
    12         unsafe structures.
    13             (vii)  The presence of vermin or the accumulation of
    14         debris, uncut vegetation or physical deterioration of the
    15         structure or grounds has created potential health and
    16         safety hazards and the owner has failed to take
    17         reasonable and necessary measures to remove the hazards.
    18             (viii)  The dilapidated appearance or other condition
    19         of the building negatively affects the economic well-
    20         being of residents and businesses in close proximity to
    21         the building, including decreases in property value and
    22         loss of business, and the owner has failed to take
    23         reasonable and necessary measures to remedy appearance or
    24         the condition.
    25             (ix)  The property is an attractive nuisance for
    26         illicit purposes, including, prostitution, drug use and
    27         vagrancy.
    28     (e)  Appointment.--
    29         (1)  If the court determines after a hearing that the
    30     property has met the conditions of subsection (d), the court
    20080H2188B4061                  - 8 -     

     1     may appoint a conservator and grant such other relief as may
     2     be just and appropriate.
     3         (2)  The court shall give first consideration for
     4     appointment as conservator to the senior lienholder on the
     5     property.
     6         (3)  In the event the senior lienholder is found to be
     7     not competent or declines the appointment, the court may
     8     appoint a nonprofit corporation or other competent entity. In
     9     appointing a conservator, the court shall:
    10             (i)  consider any recommendations contained in the
    11         petition or otherwise presented by a party in interest;
    12         and
    13             (ii)  give preference to the appointment of a
    14         nonprofit corporation or governmental unit over an
    15         individual.
    16     (f)  Conditional relief.--
    17         (1)  If the court finds after a hearing that the
    18     conditions for conservatorship set forth in subsection (d)
    19     have been established, but the owner represents that the
    20     violations or nuisance or emergency condition will be abated
    21     in a reasonable period, the court may allow the owner to
    22     proceed to remedy the conditions.
    23         (2)  If the conditions set forth in paragraph (1) have
    24     been satisfied, the court shall enter an order providing
    25     that, in the event that the violations or nuisance or
    26     emergency conditions are not abated by the owner by a
    27     specific date or that other specified remedial activities
    28     have not occurred by a specific date or dates, an order
    29     granting the relief requested in the petition shall be
    30     entered.
    20080H2188B4061                  - 9 -     

     1         (3)  The court may also require the owner to post a bond
     2     in the amount of the repair costs estimated in the petition
     3     as a condition to retaining possession of the building.
     4     (g)  Hearing on conservator's final plan for abatement.--At    <--
     5  the time the court appoints a conservator, the court shall set a
     6  date for hearing on the conservator's final plan for abatement
     7  to be held within 120 days.
     8     (h) (G)  Conservator's lien.--The conservator may file a lien  <--
     9  against the property in an amount based on the costs incurred
    10  during the conservatorship. The lien amount may be adjusted from
    11  time to time.
    12     (i) (H)  Immediate possession.--The conservator shall          <--
    13  promptly take possession of the building and other property
    14  subject to the conservatorship and shall immediately be
    15  authorized to exercise all powers of this act.
    16     (j) (I)  Removal by court.--A conservator may be removed by    <--
    17  the court at any time upon the request of the conservator or
    18  upon a showing by a party to the action that the conservator is
    19  not carrying out its responsibilities under this act.
    20  Section 6.  Powers and duties of conservator.
    21     (a)  Full powers and duties.--The conservator shall have all
    22  powers and duties necessary or desirable, from time to time, for
    23  the efficient operation, management and improvement of the
    24  building in order to bring it into compliance with all municipal
    25  building and housing code requirements and to fulfill the
    26  conservator's responsibilities under this act. Such powers and
    27  duties shall include, but not be limited to, the power to:
    28         (1)  Take possession and control of the building,
    29     appurtenant land and any personal property of the owner used
    30     with respect to the building, including any bank or operating
    20080H2188B4061                 - 10 -     

     1     account for the building.
     2         (2)  Collect outstanding accounts receivable.
     3         (3)  Pursue all claims or causes of action of the owner
     4     with respect to the building and all other property subject
     5     to the conservator.
     6         (4)  Contract for the repair and maintenance of the
     7     building. The contracts shall be appropriately documented and
     8     included in the reports and accounting which the conservator
     9     is required to submit or file under the provisions of this
    10     act.
    11         (5)  Borrow money and incur credit in accordance with
    12     section 8.
    13         (6)  Contract and pay for the maintenance and restoration
    14     of utilities to the building.
    15         (7)  Purchase materials, goods and supplies to accomplish
    16     repairs and operate the building.
    17         (8)  With the court's approval, enter into new rental
    18     contracts and leases for a period not to exceed one year.
    19         (9)  Affirm, renew or enter into contracts providing for
    20     insurance coverage on the building.
    21         (10)  Engage and pay legal, accounting, appraisal and
    22     other professionals to aid the conservator in the conduct of
    23     the conservatorship.
    24         (11)  When the building has been designated a historic
    25     property, consult with the municipality's historical
    26     commission or board of historical and architectural review, a
    27     local historic preservation organization or, in the absence
    28     thereof, the Pennsylvania Historical and Museum Commission
    29     for recommendations on preserving the property's historic
    30     character.
    20080H2188B4061                 - 11 -     

     1         (12)  Apply for and receive public grants or loans.
     2         (13)  Sell the building in accordance with section 9.
     3         (14)  Exercise all authority that an owner of the
     4     building would have to improve, maintain and otherwise manage
     5     the building.
     6     (b)  Affirmative duty.--While in possession of the building,
     7  the conservator shall:
     8         (1)  Maintain, safeguard and insure the building.
     9         (2)  Apply all revenue generated from the building
    10     consistent with the provisions of this act.
    11         (3)  (i)  Develop a final plan for abatement of the
    12         conditions which caused the petition to be granted or, if
    13         no such feasible final plan can be developed, to develop
    14         alternatives, including the closing, sealing or
    15         demolition of all or part of the building.
    16             (ii)  When the building has been designated a
    17         historic property, rehabilitate architectural features
    18         that define the property's historic character.
    19             (iii)  When demolition of a property in a historic
    20         district is necessary, design any replacement
    21         construction on the site to comply with applicable
    22         standards under current law.
    23         (4)  Implement the final plan referred to in paragraph
    24     (3) upon approval by the court.
    25         (5)  Submit a status report to the court and parties to
    26     the action annually or more frequently as the court may deem
    27     appropriate. The status report shall include:
    28             (i)  A copy of any contract entered into by the
    29         conservator regarding the improvement of the building.
    30             (ii)  An account of the disposition of all revenue
    20080H2188B4061                 - 12 -     

     1         generated from the building.
     2             (iii)  An account of all expenses and improvements.
     3             (iv)  The status of developing and implementing the
     4         final plan pursuant to this subsection.
     5             (v)  A description of any proposed actions to be
     6         taken in the next six months to improve the building.
     7     (c)  Submission of final plan.--                               <--
     8         (1)  The final plan referred to under subsection (b)(3)
     9     shall be submitted to the court and to all parties to the
    10     action.
    11         (2)  After notice and an opportunity for a hearing, the
    12     court may amend the final plan.
    13     (C)  HEARING ON CONSERVATOR'S FINAL PLAN FOR ABATEMENT.--      <--
    14         (1)  AT THE TIME THE COURT APPOINTS A CONSERVATOR, A
    15     HEARING DATE ON THE CONSERVATOR'S FINAL PLAN FOR ABATEMENT
    16     SHALL BE SET WITHIN 120 DAYS OF THE APPOINTMENT.
    17         (2)  THIRTY DAYS PRIOR TO THE DATE OF THE HEARING, THE
    18     CONSERVATOR SHALL SUBMIT THE PLAN TO THE COURT AND TO ALL
    19     PARTIES TO THE ACTION.
    20         (3)  THE PLAN SHALL INCLUDE A COST ESTIMATE, A FINANCING
    21     PLAN AND EITHER A DESCRIPTION OF THE WORK TO BE DONE FOR THE
    22     REHABILITATION OF THE BUILDING OR, IF REHABILITATION IS NOT
    23     FEASIBLE, A PROPOSAL FOR THE CLOSING, SEALING OR DEMOLITION
    24     OF THE BUILDING.
    25         (4)  THE PLAN SHALL CONFORM WITH ALL EXISTING MUNICIPAL
    26     CODES, DULY ADOPTED PLANS FOR THE AREA AND HISTORIC
    27     PRESERVATION REQUIREMENTS.
    28         (5)  AT THE TIME OF THE HEARING, ALL PARTIES SHALL BE
    29     ALLOWED TO COMMENT ON THE PLAN, AND THE COURT SHALL TAKE ALL
    30     COMMENTS INTO CONSIDERATION WHEN ASSESSING THE FEASIBILITY OF
    20080H2188B4061                 - 13 -     

     1     THE PLAN AND THE PROPOSED FINANCING.
     2         (6)  WITHIN 15 DAYS OF THE HEARING, THE COURT SHALL ISSUE
     3     A DECISION APPROVING THE PLAN OR REQUIRING THAT THE PLAN BE
     4     AMENDED.
     5         (7)  IF THE COURT DECISION REQUIRES THAT THE PLAN BE
     6     AMENDED, A HEARING DATE SHALL BE SET WITHIN 60 DAYS FROM THE
     7     DATE OF THE DECISION.
     8     (d)  Accounting.--Upon the implementation of the final plan
     9  approved by the court, the conservator shall file with the court
    10  a full accounting of all income and expenditures during the
    11  period of time it took to implement the final plan.
    12  Section 7.  Ownership of property.
    13     (a)  Ownership interest of conservator.--A conservator
    14  appointed under section 5 shall be deemed to have an ownership
    15  interest in and legal control of the property for the purposes
    16  of filing plans with public agencies and boards, seeking and
    17  obtaining construction permits and other approvals and
    18  submitting applications for financing or other assistance to
    19  public or private entities.
    20     (b)  Liability of owner.--Notwithstanding the appointment of
    21  a conservator under section 5, nothing in this act shall be
    22  construed to relieve the owner of any civil or criminal
    23  liability or of any obligation to pay taxes, municipal liens and
    24  charges, mortgages, private liens or other fees or charges,
    25  whether incurred before or after the appointment of the
    26  conservator and no such liability shall transfer to the
    27  conservator.
    28     (c)  Limitation of conservator's environmental liability.--
    29         (1)  Notwithstanding any law to the contrary, the
    30     conservator shall not be held liable for any environmental
    20080H2188B4061                 - 14 -     

     1     damage to the building or the real property upon which the
     2     building is located that existed prior to the appointment by
     3     the court of the conservator.
     4         (2)  Paragraph (1) does not apply to the owner or any
     5     other person or entity regarding the building and its real
     6     property that is subject to an appointed conservator under
     7     this act.
     8  Section 8.  Incurring indebtedness.
     9     (a)  Borrowing.--From time to time a conservator may borrow
    10  money or incur indebtedness in order to cover the cost of         <--
    11  rehabilitation, improve, preserve, insure, manage or operate the
    12  building COSTS OF REHABILITATION or to otherwise fulfill the      <--
    13  conservator's obligations under this act.
    14     (b)  Liens.--In order to facilitate the borrowing of funds
    15  for the rehabilitation of the building COSTS OF REHABILITATION,   <--
    16  the court may grant a lien or security interest with priority
    17  over all other liens with the exception of municipal or other
    18  governmental liens, provided, however, that prior to granting a
    19  priority lien, the court has found that:
    20         (1)  The conservator sought to obtain the necessary
    21     financing from the senior lienholder, but the lienholder
    22     declined to provide financing for reasonable improvements OR   <--
    23     OTHER COSTS OF REHABILITATION on reasonable terms.
    24         (2)  Lien priority is necessary in order to induce
    25     another lender to provide financing on reasonable terms.
    26     (c)  Lien status of rehabilitation expenses.--Should the
    27  senior lienholder agree to provide financing for the
    28  rehabilitation on the building COSTS OF REHABILITATION, any       <--
    29  funds lent to cover the costs of such rehabilitation shall be     <--
    30  deemed to be added to the senior lienholder's preexisting first
    20080H2188B4061                 - 15 -     

     1  lien.
     2     (D)  APPROVAL OF FINANCING.--THE COURT MAY APPROVE FINANCING   <--
     3  FOR THE COSTS OF REHABILITATION, THE TERMS OF WHICH MAY INCLUDE
     4  DEFERRED REPAYMENT AND USE RESTRICTIONS. THE TERMS OF THE
     5  FINANCING MAY REMAIN WITH THE PROPERTY AFTER THE CONSERVATORSHIP
     6  HAS ENDED AND BE ASSUMED BY ANY OF THE FOLLOWING:
     7         (1)  THE OWNER, IF THE OWNER REGAINS POSSESSION OF THE
     8     PROPERTY UNDER SECTION 10(2).
     9         (2)  THE BUYER WHO TAKES TITLE UNDER SECTION 9.
    10  Section 9.  Sale of property.
    11     (a)  Sale by owner or lienholder.--If a property subject to
    12  conservatorship is sold by the owner or foreclosed upon by a
    13  lienholder or if any interest therein is transferred, such sale,
    14  foreclosure or transfer shall be subject to the conservatorship.
    15     (b)  Sale by conservator.--Upon application of the
    16  conservator, the court may order the sale of the property if the
    17  court finds that:
    18         (1)  Notice was given to each record owner of the          <--
    19     building and each lienholder of record.
    20         (1)  NOTICE AND AN OPPORTUNITY TO PROVIDE COMMENT TO THE   <--
    21     COURT WAS GIVEN TO EACH RECORD OWNER OF THE PROPERTY AND EACH
    22     LIENHOLDER.
    23         (2)  The conservator has been in control of the building
    24     for more than six months and the owner has not successfully
    25     petitioned to terminate the conservatorship under section 10.
    26         (3)  THE TERMS AND CONDITIONS OF THE SALE ARE ACCEPTABLE   <--
    27     TO THE COURT, AND THE BUYER HAS A REASONABLE LIKELIHOOD OF
    28     MAINTAINING THE PROPERTY.
    29     (c)  Sale free and clear.--
    30         (1)  The court may authorize the conservator to sell the
    20080H2188B4061                 - 16 -     

     1     building free and clear of all liens, claims and
     2     encumbrances, provided that the proceeds of the sale are
     3     distributed pursuant to subsection (d) at settlement.
     4         (2)  In the event that the proceeds of the sale are
     5     insufficient to pay all existing liens, claims and
     6     encumbrances, the proceeds shall be distributed according to
     7     the priorities set forth in subsection (d) and all unpaid
     8     liens, claims or encumbrances WHICH HAVE NOT BEEN ASSUMED      <--
     9     UNDER SECTION 8(D) shall be extinguished.
    10     (d)  Distribution.--The proceeds of the sale shall be applied
    11  in accordance with the following priorities to:
    12         (1)  All court costs.
    13         (2)  Municipal or other governmental liens.
    14         (3)  Costs and expenses of sale.
    15         (4)  Principal and interest on any borrowing or
    16     incurrence of indebtedness granted priority over existing
    17     liens and security interest under section 8(b).
    18         (5)  Costs of rehabilitation and any fees and expenses
    19     incurred by the conservator in connection with the sale or
    20     the safeguarding, insuring or maintaining of the property and  <--
    21     OF THE PROPERTY for which the lien authorized under section    <--
    22     5(h) (5)(G) was filed.                                         <--
    23         (6)  Valid liens and security interests in accordance
    24     with their priority.
    25         (7)  Any unpaid obligations of the conservator.
    26         (8)  Costs incurred by the petitioner in requesting the
    27     court to place the property in conservatorship.
    28         (9)  The owner.
    29     (e)  Owner's proceeds as unclaimed property.--In the event
    30  the owner cannot be located, any proceeds from the sale which
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     1  belong to the owner shall be presumed to be abandoned and
     2  unclaimed and shall be subject to the custody and control of the
     3  Commonwealth pursuant to Article XIII.1 of the act of April 9,
     4  1929 (P.L.343, No.176), known as The Fiscal Code.
     5  Section 10.  Termination of conservatorship.
     6     Upon request of a party in interest or the conservator, the
     7  court may order the termination of the conservatorship if it
     8  determines:
     9         (1)  the conditions that were the grounds for the
    10     petition and all other code violations have been abated or
    11     corrected, the obligations, expenses and improvements of the
    12     conservatorship, including all fees and expenses of the
    13     conservator, have been fully paid or provided for and the
    14     purposes of the conservatorship have been fulfilled;
    15         (2)  the owner, mortgagee or lienholder has requested the
    16     conservatorship be terminated and has provided adequate
    17     assurances to the court that the conditions that constituted
    18     grounds for the petition will be promptly abated, all
    19     obligations, expenses and improvements of the
    20     conservatorship, including all fees and expenses of the
    21     conservator, have been fully paid or provided for and the
    22     purposes of the conservatorship have been fulfilled;
    23         (3)  the building has been sold by the conservator and
    24     the proceeds distributed in accordance with section 9(d); or
    25         (4)  the conservator has been unable after diligent
    26     effort to present a plan that could be approved under section
    27     6(b)(3) or implement a previously approved plan or, for any
    28     reason, the purposes of the conservatorship cannot be
    29     fulfilled.
    30  Section 11.  Inapplicability to service members.                  <--
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     1     This act shall not be applicable if the property owner is a
     2  member of the Pennsylvania National Guard or other reserve
     3  component of the armed forces of the United States who is called
     4  or ordered to active duty, other than active duty for training,
     5  and who has vacated the property in order to perform the
     6  military service.
     7  SECTION 11.  APPLICABILITY.                                       <--
     8     (A)  GENERAL INAPPLICABILITY.--THIS ACT SHALL NOT APPLY TO
     9  COMMERCIAL AND RESIDENTIAL BUILDINGS, STRUCTURES OR LAND OWNED
    10  BY OR HELD IN TRUST FOR THE FEDERAL GOVERNMENT AND REGULATED
    11  UNDER THE UNITED STATES HOUSING ACT OF 1937 (PUBLIC LAW 75-412,
    12  50 STAT. 888, 42 U.S.C. § 1437 ET SEQ.) AND REGULATIONS
    13  PROMULGATED UNDER THAT ACT.
    14     (B)  INAPPLICABILITY TO SERVICE MEMBERS.--THIS ACT SHALL NOT
    15  APPLY IF THE PROPERTY OWNER HAS VACATED THE PROPERTY IN ORDER TO
    16  PERFORM MILITARY SERVICE IN TIME OF WAR OR ARMED CONFLICT AS A
    17  MEMBER OF THE UNITED STATES ARMED FORCES OR ITS RESERVE
    18  COMPONENT.
    19  Section 20.  Effective date.
    20     This act shall take effect in 90 days.







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