Court Examines Condo Conversion in Relation to Real Estate Ordinances

CMI thereafter sold them to third parties.

In late 2018, the township sent a violation letter to the unit owners, announcing that, because no subdivision and land development plan had been approved, the property was in violation of Pennsylvania’s Municipalities Planning Code (MPC), the township’s subdivision and land development ordinance (SALDO), and Pennsylvania’s Uniform Condominium Act (UCA).

The violation letter provided the unit owners with a 30-day window remedy for the violations by submitting certain governmental applications.

None of the unit owners complied with the first letter and a second letter was issued to them several months later, the opinion said.

Later that year, the township filed a complaint against CMI and the unit owners in the Chester County Common Pleas Court, alleging that the property had been illegally converted to condominium ownership without the approval of township.

The complaint sought to nullify the unit owners’ deeds, directing the Chester County recorder of deeds to strike the condominium declaration and the deeds for the condominium units from Chester County’s property records.

The parties to the litigation ultimately filed summary judgment motions.

In response to the filed summary judgment motions, the trial court granted summary judgment in favor of CMI and the unit owners and against the township.

In doing so, the trial court determined that “the property was a lawful, nonconforming use and that the conversion of the property to condominium ownership without a redivision of boundary lines or changes to any existing structures did not constitute a subdivision subject to the requirements of the MPC or the township’s SALDO and was not otherwise affected by the UCA.”

The township then filed for appeal with the Commonwealth Court, claiming that the trial court erred by concluding that the conversion of the property to condominium ownership was not a subdivision of land requiring township’s approval, and that the condominium conversion violated the MPC, the township’s SALDO, and the UCA.

The Commonwealth Court in CMI Hartman ultimately affirmed the trial court’s ruling.

Citing to Ludwig v. Zoning Hearing Board of Early Township, 658 A.2d 836 (Pa. Cmwlth. 1995), the Commonwealth Court in CMI Hartman pointed out that, “if a use is permitted, a municipality may not regulate the manner of ownership of the legal estate” and that “a condominium, as a method of ownership, is not a property use subject to zoning regulation.”

Further, the Commonwealth Court in CMI Hartman, relying upon Pennsylvania Northwestern Distributions v. Zoning Hearing Board Township of Moon, 584 A.2d 1372 (Pa. 1991), noted that a “lawful nonconforming use establishes in the property owner a vested property right which cannot be abrogated or destroyed, unless it is a nuisance, it is abandoned, or it is extinguished by eminent domain.”

Citing to Baer v. Zoning Hearing Board of Quincy Township, 782 A.2d 597 (Pa. Cmwlth 2001), the Commonwealth Court in CMI Hartman emphasized that the preexisting nonconforming use doctrine is premised on the concern that retroactive enforcement of zoning to extinguish a use that was legal at the time it came into existence may amount to a taking without compensation.

As noted in the opinion, another panel of the Commonwealth Court in Hager v. W. Rockhill Township Zoning Hearing Board, 795 A.2d 1104 (Pa. Cmwlth. 2002) concluded that “a preexisting nonconforming use ‘arises when a lawful existing use is subsequently barred by a change in the zoning ordinance.’”

In Hager, the Commonwealth Court pointed out that “the right to maintain a preexisting nonconforming use is available for uses that were lawful when they came into existence prior to when the prohibitory ordinance took effect.”

Quoting its previous ruling in Hunterstown Ruritan Club v. Straban Township Zoning Hearing Board, 143 A.3d 538 (Pa. Cmwlth. 2016), the Commonwealth Court in CMI Hartman reiterated that the right to continue a legal nonconforming use is entitled to the constitutional protect of due process.

The Commonwealth Court in CMI Hartman agreed with the trial court’s ruling that the use of the four building structures as single-family homes preceded the zoning ordinance and represented a lawful nonconforming use.

The Commonwealth Court in CMI Hartman did caution that this vested property right can be extinguished if the nonconforming use is a nuisance or abandoned or by way of eminent domain. However, since none of the elements to eliminate a lawful nonconforming use were present, the Commonwealth Court in CMI Hartman found that the condominium declaration represented a lawful change in the manner of ownership of the four building structures.

The Commonwealth Court in then turned its attention to the MPC’s and the SALDO’s shared definition of subdivision—“the division or redivision of a lot, tract or parcel of land into two or more lots, tracts, parcels or other division of land including changes in existing lot lines for the purpose, whether immediate or future, or lease partition by the court for distribution to heirs or devisees, transfer of ownership or building or lot development.”

Citing to the UCA, the Commonwealth Court in CMI Hartman explained that “a declaration of condominium results in the creation of condominium units, not property lots” and, therefore, the creation of a condominium did not constitute a subdivision of property for purposes of the application and approval process set forth in the MPC.

Furthermore, the Commonwealth Court in CMI Hartman noted that “the division of a parcel into separate tax parcels does not subdivide for zoning purposes the lot on which the separate tax parcels have been created.”

In CMI Hartman, “the trial court also observed that no lots were created or changed when the declaration was recorded.”

As such, the Commonwealth Court in CMI Hartman agreed with the trial court’s rationale that no subdivision took place when the condominium declaration was filed since, by definition under the MPC and the SALDO, “changes in existing lot lines” must occur for a definition to take place thereunder.

Furthermore, the Commonwealth Court in CMI Hartman believed the filing of the condominium declaration did not constitute a “land development” under the definition of that term in the MPC and the SALDO, as the condominium declaration itself did not contemplate the alteration or improvement of land in any way.

The Commonwealth Court in CMI Hartman then analyzed whether application of Section 3106 of the UCA would compel a different result.

The UCA was adopted in 1980 to govern the formation and operation of condominiums in the Commonwealth of Pennsylvania.

Under Section 3106(a) of the UCA, there is a general rule which prohibits discrimination against the condominium form of ownership for identical developments. As stated previously, the physical nature of the property before and after the filing of the condominium declaration was indistinguishable, and the Township even conceded that it would have no issue with the property if it was to remain four single-family rental dwellings.

Agreeing with the trial court’s assessment, the Commonwealth Court in CMI Hartman found that the township violated Section 3106(a) of the UCA through its unlawful bias against the condominium form of ownership.

As for subsections (b) through (d) of Section 3106 of the UCA, it essentially confirms that land use and zoning rules, regulations, and laws are not overridden by the UCA.

The Commonwealth Court in CMI Hartman stated that the condominium declaration does not implicate Section 3106(b) because the property fits definition of a lawful, nonconforming use under the SALDO and other local zoning rules, regulations and laws.

Additionally, the Commonwealth Court in CMI Hartman indicated that Section 3106(c) does not affect the status of the lawful, nonconforming use of the property simply through “the creation of a condominium out of a lot that had previous land development or subdivision approval.”

Finally, since the property is in compliance with local zoning rules, regulations, and laws as a lawful, nonconforming use and did not require the construction of any structure or building on any unit or common facility of the property, the Commonwealth Court in CMI Hartman concluded that the property is in compliance with Section 3106(d) of the UCA.