Does a Residential Subdivision = a Planned Community?

Rybarchyk v. Pocono Summit Lake Property Owners Association, Inc., 2012 Pa. Commw. LEXIS 212 (2012)

Frank Kosir, Jr., Esquire
fk@muslaw.com

This matter addressed the issue of whether a residential subdivision constituted a “planned community,” thereby authorizing a private, voluntary homeowners association comprised of certain property owners within the subdivision to assess all property owners for the costs of maintaining certain improvements therein. During the 1950s, Pocono Summit Lakes, Inc. (“Developer”) created the Pocono Summit Lakes Subdivision (“Subdivision”) in Monroe County, Pennsylvania through three separate subdivision plans. Each deed out of the Developer to the individual lot owners in the Subdivision included a provision granting each respective owner “the right and privilege of boating, bathing, fishing and ice skating in the lake of the party of the first part, known as Pocono Summit Lake No. 2,” (“Lake.”) In October of 1959, a group of property owners within the Subdivision created the Pocono Summit Lake Property Owners Association (“Association”), membership in which was voluntary. In the late 1950s, the Developer gave a group of property owners within the Subdivision permission to construct a clubhouse adjacent to the Lake, a clubhouse that was financed solely through private donations. In 1962, the Developer conveyed three parcels of undeveloped land in the vicinity of the Lake to the Association and, in 1979, the Lake itself was conveyed to Association.

In January of 2009, the Association sent notice to all owners of property within the Subdivision informing them of the imposition of mandatory assessments for the maintenance and up keep of the Lake, beaches and clubhouse. In response, a group of property owners(“Owners”) commenced an action in the Monroe County Court of Common Pleas seeking a declaratory judgment that the Association lacked the authority to levy assessments against non-member property owners. In response, the Association asserted that the Development was a “planned community” pursuant to the Pennsylvania Uniform Planned Community Act (“Act”) (68 Pa.C.S. § 5101 et seq) and that the Lake, beach and clubhouse areas are “common facilities,” thereby authorizing it to collect assessments from all owners in the Subdivision for use in maintaining and upkeeping these “common facilities.” The trial court granted declaratory judgment for the Owners concluding that, as the beach and pavilion areas are private property titled in the Association, and the Association is a private entity formed by members with exclusive rights and privileges, the Association has no authority under the Act to assess non-member property owners for maintenance and upkeep costs.

On appeal, our Commonwealth Court affirmed. In issuing its ruling, the court concluded that, while the Act does apply to subdivisions existing prior to its enactment to the extent necessary to effectuate the intentions of the parties to that subdivision, there was no evidence in the record that the Developer intended for the Subdivision to be a planned community. First, the recorded subdivision plans made no provision for common areas. Secondly, the deeds of conveyance from the Developer to the individual lot owners did not include any covenants requiring property owners to pay any maintenance or upkeep costs for common areas. Thirdly, title to the Lake was not conveyed to the Association for more than twenty years after the creation of the Subdivision. Finally, the Association itself was not created by the Developer but, rather, was created through a voluntary affiliation of certain property owners within the Subdivision.  As such, the Subdivision was not a planned community under the Act, and the Association had no authority to assess non-member property owners. Furthermore, as each of the deeds of conveyance out of the Developer included a right to use the Lake, the Association could not preclude property owners who refused to pay the assessments from using the Lake.