Condo & Homeowners’ Associations Do Not Need Unanimous Approval To Limit Or Prohibit Leasing
Governor Wolf recently signed a Bill that makes it much easier for condominium and homeowners’ associations to limit leasing in their communities. House Bill 1340 makes it clear that a leasing restriction can be passed without unanimous approval of all unit owners. This means that an amendment to limit or even prohibit leasing in the community can be enacted the same way as any other amendment to the governing documents. It can be passed by the affirmative vote of sixty-seven percent of all unit owners (unless the Declaration provides for a larger percentage).
We have worked with many condominium and homeowners’ associations to enact amendments that would limit the number of units that are leased in a community. In many cases, opponents of these amendments have argued that preventing a unit owner from leasing their unit is a “change in the use of a unit.” Section 3319 of the Pennsylvania Uniform Condominium Act (and Section 5319 of the Pennsylvania Uniform Planned Communities Act) provides that an amendment that changes the use of a unit can only be enacted with unanimous consent of all unit owners. This led to the question of whether prohibiting a unit owner from leasing their unit was a change to the use of the unit or not. No Pennsylvania Court had ever ruled on the issue, however, there have been a number of rulings in the condominium setting from other states. These rulings have been split. Some states have said leasing amendments require unanimous approval, while others have said they do not.
House Bill 1340, supported by the Community Associations Institute answers this question for Pennsylvania. Section 3312(d)(2) provides “as used in this subsection the term ‘uses to which any unit is restricted’ shall not include leasing of units.” This means that an amendment that deals with the leasing of units does not require unanimous approval and opponents cannot complain that it is a change of use.
Leasing of units is still probably the biggest topic of discussion among condominium and homeowners’ associations across the country. Thankfully, the Pennsylvania General Assembly has made it clear how an association can enact one of these restrictions.