Condominiums: To Subdivide or Not Subdivide

May 2010Newsletters In the Zone

For more than 20 years, developers and builders have used the condominium form of ownership to avoid subdivision approval under the Pennsylvania Municipalities Planning Code (MPC). The Pennsylvania Supreme Court's recent decision in Frank N. Shaffer Family Limited Partnership, et al v. Zoning Hearing Board of Chanceford Township, et al, 989 A.2d 5 (Pa. 2010), has raised the question of whether this strategy is permitted.

In Shaffer, the Frank N. Shaffer Family Limited Partnership (the Partnership) owned 25 acres of vacant land in Chanceford Township, York County. The Partnership submitted the property to the planned community form of ownership under the Pennsylvania Uniform Planned Community Act (UPCA). The declaration plat recorded with the county created three units on the property, which were shown on the plat as three separate parcels of property (i.e., Unit 1, Unit A and Common Open Space). Subsequently, the Partnership, as the declarant, conveyed one of the units to a third party.

The township issued an enforcement notice based upon the Partnership's failure to submit subdivision and land development plans, arguing that they created an unlawful subdivision of the property when it created the three units in the planned community. The township stated that the creation of a planned community falls within the definition of land development under its Subdivision Land Development Ordinance. The township went on further to state that the creation of the planned community itself does not constitute a subdivision, but that the subsequent transfer of the unit constitutes a subdivision. In affirming the enforcement notice, the zoning hearing board determined that:

The filing of the Declaration and the plat divided the land into three "units"…. These three units of land did not exist as separate "units" prior to the filing of the Declaration and plat. It is … unquestionable that the filing of the Declaration constituted a division or change in lot lines relative to the 25 acres, and this is a "subdivision" and "land development" within the purview of the definition of the MPC and the Chanceford SALDO.

The Partnership appealed the zoning hearing board's decision, which was upheld by the Court of Common Pleas of York County and the Commonwealth Court of Pennsylvania. In affirming the enforcement notice, the Commonwealth Court specifically stated that:

"The Partnership's division of the Property into three units and subsequent conveyance of a unit without Township approval established unlawful subdivision and land development under the SALDO, which required the Partnership to submit a final plan for subdivision or land development to the Township. A subdivision is defined as 'the division or redivision of a lot, tract or parcel of land by any means into two or more lots … including changes to existing lot lines.' Section 303 of the SALDO. A land development is defined as the "division or allocation of land or space … for the purposes of streets, common areas, leaseholds, condominiums … as well as 'a subdivision of land'. Id. It is undisputed that the Partnership divided or allocated a twenty-five acre parcel into planned community units, either as land or space, and the conveyed a unit to the Shaffers withoutTownship approval. These actions unquestionably fall within the meaning of subdivision and land development under Section 303."

On appeal, the Supreme Court affirmed the decision of the Commonwealth Court.

Since the Commonwealth Court's decision in Shaffer, many questions have been raised by developers,municipalities and lawyers as to whether this case also applies to condominiums. The Pennsylvania Uniform Condominium Act was a model for the Pennsylvania Uniform Planned Community Act and, therefore, the two Acts are nearly identical. As such, planned communities and condominiums are treated similarly.

However, in June 2009, the Commonwealth Court made a different determination as to whether condominiums require subdivision approvals. See Cunius v. Bd. Of Assessment Appeals of Chester County, 976 A.2d 635 (Pa. Cmwlth. 2009). In Cunius, two individuals owned a piece of property as tenants-in-common. The property was approximately 2.1 acres in size with an apartment building constructed on it. The owners submitted the property to the condominium form of ownership under the Pennsylvania Uniform Condominium Act and created two units. Subsequently, each unit was conveyed to each owner separately. The case arises from a tax assessment appeal; however, those facts are not relevant to this subject matter and, therefore, are not discussed herein. What is important to note is that the Commonwealth Court, after its decision in Shaffer, specifically stated in its decision in Cunius the following:

"the creation of or conversion to a condominium does not constitute a subdivision of property for purposes of the application and approval process set forth in the MPC, it does constitute a division of land for purposes of whether a new assessment is permitted."

Id. 976 A.2d at 641. As a result, although planned communities and condominiums are often treated the same, the Commonwealth Court appears to make a distinction between the two regarding the requirement to obtain subdivision approval under the MPC. Our firm has been successful in assisting developers in creating condominiums without having to comply with subdivision requirements.

For more information, please contact Carrie B. Nase at 215.299.2030 or [email protected].com.