Does Your Planned Community Need Subdivision Approval? By: George Asimos As originally published as a Special to the Legal Intelligencer, PLW, April 20, 2009 ______

GEORGE ASIMOS, an attorney and partner with Saul Ewing, has practiced transactional real estate and land use law exclusively for more than 20 years. He represents developers, telecommunications companies, industrial operators and other land owners in acquiring and obtaining project approvals from municipal boards and commissions in matters relating to zoning, subdivision and land development. Asimos works out of the offices in Chesterbrook, Pa., and Harrisburg, Pa., and can be reached at [email protected].

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With the case of Frank N. Shaffer Family Limited Partnership v. Zoning Hearing Board of Chanceford Township, the Commonwealth Court has shaken up the world of planned community and condominium practitioners as it has addressed, for the first time, the question of whether the Uniform Planned Community Act (and by reference the Uniform Condominium Act) supersede the Pennsylvania Municipalities Planning Code subdivision requirements. Here is how the case arose.

The Shaffer Family Limited Partnership owned 25 acres of vacant land. In June 2005, the partnership applied for a building permit for a single-family dwelling on the northwest corner of the property. Zoning and construction permits were later issued and, thereafter, a certificate of occupancy was secured. In October 2006, the partnership created the “Shaffer Planned Community” out of the entire property under the Uniform Planned Community Act by recording a declaration and plat, according to the opinion. The plat showed the property divided into three areas: “Unit 1” containing the house on one acre; “Unit A” containing approximately 22 acres of vacant land; and “Common Open Space,” a narrow strip of approximately two acres of vacant land located along the southern border of the property. The declaration defined a unit “as being a separate and distinct parcel of real property, the location and dimensions of the vertical boundaries of which (the equivalent of “lot lines”) are shown on the plat and the horizontal unit boundaries of which a coextensive with the horizontal boundaries of the subject property.” Immediately after recording the declaration, the partnership conveyed, by deed, Unit 1 with a separate tax parcel number to the Shaffers’.

The Chanceford Township Zoning Hearing Board upheld the township’s issuance of an enforcement notice citing the appellants’ violation of the township’s Subdivision and Land Development Ordinance, or SALDO, by reason of appellants’ failure to submit a land development plan and for unlawful subdivision. The Common Pleas Court of York County upheld the decision of the Zoning Hearing Board.

On appeal the appellants questioned:

• Whether a planned community “unit” interest is less than the full bundle-of-rights property interest, such that creation and division of a unit interest is not subdivision or land development;

• Whether a unit is a portion of a parcel of real property with rights of ownership or occupancy that cannot exist separately from a planned community and therefore incapable of being a divided lot;

• Whether creation of a planned community out of the entire parcel and later conveyance of a unit is not a subdivision or land development under §5106(c) of the UPCA, and

• Whether §5106(c) of the UPCA is inconsistent with §107(a) of the Pennsylvania Municipalities Planning Code.

The statutory language that has motivated planned community and condominium practitioners to approach some plats and declarations from the perspective that they are not subject to subdivision approval by municipal government is contained in Section 5106 of the UPCA, which corresponds almost verbatim with Section 3106 of the Uniform Condominium Act. Those statutes make the following three statements:

• A zoning, subdivision, building code or other real estate use law, ordinance or regulation may not prohibit a planned community form of ownership or impose any requirement upon any structure in a planned community which it would not impose upon a physically identical structure under a different form or ownership.

• Except as provided above, no provision of the sub-part invalidates or modifies any provision of any zoning, subdivision, building code.

• The creation of a planned community under Section 5201 (relating to creation of planned communities) out of an entire lot, parcel or tract of real estate shall not, in and of itself, constitute a subdivision or land development for the purpose of laws, ordinances and regulations.

Also relevant is the definition of “subdivision” in §107(a) of the Municipalities Planning Code 53.P.S.§10107(a): “The division or re-division of a lot, tract or parcel of land by any means into two or more lots, tracts, parcels or other divisions of land including changes in existing lot lines for the purpose, whether immediate or future of lease, … transfer of ownership or building or lot development.”

The court concluded that: “the Partnership’s division of the property into three units [actually two units and common open space] 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.”

The court also concluded that the creation of the units was the division or allocation of the 25- acre parcel “into planned community units, either as land or space, and that [t]hese actions unquestionably fall within the meaning of subdivision and land development under §303.” The

-2- court further stated that nothing in §5106(c) supports the notion that creation of a UPCA unit from a lot, parcel or tract of land shall not constitute a subdivision or land development. Rather, the court said, §5106(c) “merely provides that declaring a planned community form of ownership does not in and of itself establish a subdivision or land development.”

The court also implicated the Uniform Condominium Act, insofar as it cited Robert S. Ryan in “Pennsylvania Zoning Law and Practice” § 11.3.10, which states that “filing a condominium declaration for an existing structure already in compliance with subdivision requirements would not of itself require second subdivision approval, but that the owner has no favorite status when converting a new structure or subdivision of the tract.”

The court’s use –– or misuse –– of certain terms makes it difficult to discern its reasoning. For example, the court states that “appellants’ §5106(c) argument appears to confuse the act of declaring a planning community form or ownership [which presumably the court is saying is protected from subdivision regulation under §5106(c)] with creating new units of real property [which is presumably is not protected].”

Since it is the declaration of the planned community that establishes the units by description in the declaration and the attached plat, it seems that these two acts are one and could not be the basis for a legal distinction between what is permitted without subdivision approval, on the one hand, and not permitted without subdivision approval, on the other. Perhaps the court is saying that the declaration and establishment of the units by plat does not require subdivision approval but that the conveyance of the units does.

Clear, however, is the court’s focus on the description of the unit. While the land owner relies on the theoretical notion that a planned community is a common interest form of ownership and that a planned community unit is somehow inseparable from the remainder of the property from which it is created (and therefore not a subdivision) the court did not seemed persuaded. Relying on the declaration description of the “unit” as if it was an admission of the applicability of subdivision regulation, the court concludes “even the declaration defines a unit as a parcel.” Further reinforcing this point, the court then proceeded to compare the similarity of the unit boundaries to lot lines along with the cases decided under the Condominium Act, Brookhaven Borough v. Iacobucci and Bensalem Township v. Salem Harbour Joint Venture, which involve the conversion of existing apartment buildings into condominiums.

So, it is fair to say that the Shaffer court’s decision ran contrary to the expectations and understanding of many practitioners based, as they were, upon years of following the commonly accepted practice of splitting ownership within developments simply by means of the imposition of planned communities or land condominium regimes. The uncertainty suddenly created by this case has impacted some transactions midstream. In order to keep projects on track, some parties may be well-advised to seek an official determination from the appropriate municipal officials that the grant of a land development plan, for example, pertaining to a given planned community or condominium project does not also require subdivision approval. I believe that such a determination can be issued consistent with both Shaffer and the MPC definition of subdivision in some instances, particularly those where the development has a plainly unified layout and the division of ownership into units is more a function of dividing ownership of buildings or parts of

-3- building rather than the traditional subdivision by lot separation. I am aware of one instance in which such a municipal determination has been successfully obtained.

While practitioners of condominium and planned community law are certain to conclude that the Shaffer court did not fully consider the common interest theories that underlie condominium and planned community forms of ownership and will quickly call to mind many examples of the creation and conveyance of units which should not be subject to municipal subdivision, it would appear that great care is now warranted on new transactions. The Shaffer case presents questions concerning what can be accomplished by means of the UPCA and the Uniform Condominium Act without subdivision approval.

T h is a rtic le is re p rin te d w ith p e rm is s io n fro m th e A p ril 2 0 , 2 0 0 9 is s u e o f T h e Legal Intelligencer. (c ) 2 0 0 9 A L M P ro p e rtie s In c . F u rth e r d u p lic a tio n w ith o u t p e rm is s io n is p ro h ib ite d . A ll rig h ts re s e rv e d .

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