Pennsylvania House backs bill to protect condo and co-op groups

A bill aimed at protecting self-governing communities from adverse effects of a recent court decision now moves to the Pennsylvania Senate.
A bill aimed at protecting self-governing communities from adverse effects of a recent court decision now moves to the Pennsylvania Senate.
To protect self-governing communities from adverse effects of a recent court decision, the Pennsylvania House approved a bill Wednesday to potentially assist condo and co-op dwellers with mortgage management. 

House Bill 1340, which advances to the Senate, would amend a Pennsylvania statute governing the establishment and modification of condominiums and cooperatives, providing clarification in their management.

The measure, sponsored by Rep. Martina White (R-Philadelphia), would protect unit owners from limitations imposed by new federal mortgage underwriting guidelines stipulating that a condominium might be ineligible for mortgage financing if the amount of rental units in the community exceeds 50 percent.

In order to preserve eligibility, many condominium associations have adopted amendments to their bylaws to limit the number of rental units in a complex, White said.

Additionally, a recent U.S. Court of Appeals decision said that a personal judgment obtained by a community association does not preserve the statutory lien. The upshot of this ruling, for condo owners, would be that their homeowner associations would be forced to endure expensive and punitive foreclosure proceedings in the event of delinquency, with the costs inevitably passed on to the homeowners. To ensure that associations can comply with federal underwriting standards, the law must be amended to make it clear that the term “uses to which any unit is restricted” does not include the leasing of units.

Condominium and homeowner associations rely on owner assessments to pay for maintenance, services and infrastructure improvements; consistent payment of assessments is vital to such communities.