The Pennsylvania Commonwealth Court recently issued a reported decision in River Park House Owner’s Association (“River Park”) v. Crumley, No. 1105 C.D. 2011. The court reviewed whether River Park could assess cable television fees as a common fee within the Pennsylvania Uniform Condominium Act (the “Act”) and the Association By-Laws against each owner. River Park had secured a significant rebate in the overall cable television fees based upon the number of units involved and had negotiated the bulk services contract directly with the cable television provider.
The previous, expiring cable television contract did not require all residents to purchase cable. Council for River Park entered a new contract that required all residents to purchase cable. The initial defendant, owner William Crumley (“Crumley”), refused to pay the added unit owner monthly fee and River Park sued Crumley for unpaid assessments, late fees, and legal fees.
The testimony established that approximately 75% of the 354 units were using cable television. The unit owner assessments were used to pay for trash removal, water, doorman services, 24 hour security, landscaping and an open parking lot, among other matters. Residents that wanted expanded cable service, internet or phone service were billed separately by the provider.
The Commonwealth Court determined that the issue was not whether the contract was in the best interest of the residents, but whether River Park’s Council had the authority to enter the agreement under the Act or its By-Laws, where the contract did not benefit all residents and was a luxury.
The Commonwealth Court held that nothing in the Act precluded River Park from entering the contract for cable television. However, River Park’s By-Laws were narrow and limited the common expenses to matters regarding the operational health, maintenance and safety decisions affecting all units of the building. The court held that River Park acted in good faith but outside the scope of its authority in entering the bulk sale cable television contract and that the By-Laws could be amended to allow bulk cable television services upon majority vote. Crumley, however, could not be retroactively liable for cable fees if the By-Laws were amended.
Condominium Associations, under River Park, might be held to the specific language in their operational documents where the Association documents are more narrowly defined than the provisions in the Act. In light of this decision, Associations should carefully review its By-Laws and other governing documents before imposing any similar assessments.
For more information on Real Estate Representation and HOA Laws contact Benner and Wild Attorneys at Law. Benner and Wild, located in Doylestown PA, services Bucks, Montgomery, Lehigh, Northampton and Philadelphia County.