Daily Development for
Monday, August 11, 1997

by: Patrick A. Randolph, Jr.
Professor of Law
UMKC School of Law

ASSOCIATIONS; ASSESSMENTS; SPECIAL ASSESSMENTS: Property owner's association does not exceed its authority under deed covenant by imposing special assessment on owners for capital improvements where deed covenant does not restrict association's authority under its by-laws, and capital improvements would benefit all association members.

Fogarty v. Hemlock Farms Community Association, Inc., 685 A.2d 241 (Pa.Commw. 1996).

The deed covenants required grantees within the association's area to join the association, and to pay assessments for "repair and maintenance of roads and for the control, maintenance and administration of beach and recreational facilities." The assessment in question admittedly did not fit within these identified purposes. It was for construction of a community mail office, an administration building and a community clubhouse

Homeowners argued that assessments for suc capital improvements, were beyond the scope of authority that the association had to impose assessments. Relying on the state nonprofit corporation statute and the broad powers granted to the association pursuant to its by-laws, the court ruled that by joining the association, owners are bound by its by-laws, and since the deed restriction did not narrow the association's authority under the by-laws, owners were required to pay assessments levied for capital improvements.

The court relied upon an earlier decision that had held that, absent an express agreement prohibiting assessments, when an association of property owners in a private development is referred to in the chain of title and has the authority to regulate each property owner's use of common facilities, inherent in that authority is the ability to impose reasonable assessments on the property owners to fund the maintenance of those facilities. Although the purposes for the instant assessments went beyond maintenance of existing facilities, the court basically concluded that the association had the ability to make assessments for any facilities that would benefit the association members at large.

Reporter's Comment: In the future, questions like these will be guided by Pennsylvania's recently enacted Uniform Planned Community Act, (68 Pa.C.S. § 5101 et.seq.), applicable to planned communities, and which, among other things, regulates the organization of owners associations, powers of the association, by-laws, and common expense assessments.

Editor's Comment: Note that this is not a question of whether there are implicit limits on powers conferred by the Declaration. Quite the opposite. The court here concludes that there are implicit *expansions* on that power.

Older decisions sometimes addressed the implicit powers question by asking whether the purpose of the assessments "touched and concerned." Clearly this was not a descriptive or adequate test. But shouldn't there be some test other than general benefit? Associations often fall under the control of a majority (or even a controlling minority) that has special interests not shared by all owners. When the owners buy in to the planned area, are they implicitly signing a blank check to this majority?

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