The Abandoned and Blighted Property Conservatorship Act came into effect on Feb. 26, 2009 and could have far-reaching consequences for owners of residential, commercial and industrial properties in Pennsylvania. The act allows a court to appoint a conservator to rehabilitate a deteriorating building, thereby incurring debt that may ultimately be the owner’s responsibility. The conservator is responsible for bringing buildings into municipal code compliance when owners fail to do so.
The act’s purpose is to prevent demolition of deteriorating structures. However, as written, the act can provide potentially broad and ill-defined power to neighboring residents and business owners who may have themselves appointed as conservator and interfere with a legitimate property owner’s interest. But property owners can take steps to minimize the risk that their properties become subject to this act.
Who Can Be Appointed Conservator?
The owner, a lien-holder or other secured creditor, a non-profit corporation, a redevelopment authority, a school district, a municipality, and residents and business owners within 500 feet of the building all can petition the Court of Common Pleas to have themselves or someone else appointed as a conservator under the act. Tenants of the building in question, even those on a month-to-month lease, also can petition the court. But a property owner who wants to participate and contest the petition must petition the court for permission to intervene – an owner is not automatically included in the proceedings. And if the property is owned by more than one individual or entity, owners with conflicting priorities with regard to their building may find their property subject to conservatorship without their consent.
Conditions for Appointing a Conservator
The act’s four initial conditions for appointing a conservator include:
- the property was not legally occupied for the previous 12 months
- the property was not actively marketed for sale during the 60 days before filing the petition
- the property is not subject to an existing foreclosure, and
- the property was not acquired within the preceding six months.
The term ‘not legally occupied’ includes illegality due to non-compliance with an occupancy permit, so even a fully-occupied property may be vulnerable to conservatorship. Under the ‘active marketing’ condition, advertising a property for lease does not qualify. Finally, a transfer between related persons (including family-owned businesses) does not qualify as an acquisition under the act.
Three of the act’s nine additional conditions must be met before a conservator will be appointed. Namely, the building:
- is a public nuisance
- is in need of substantial rehabilitation and none has taken place in the previous 12 months
- is unfit for human habitation, occupancy or use
- is in a condition that materially increases the risk of fire
- is subject to unauthorized entry, and owner failed to secure the building or the municipality has secured the building
- is an attractive nuisance to children
- is an attractive nuisance for illicit purposes
- poses potential health and safety hazards (including from uncut vegetation and vermin), or
- negatively affects the economic well-being of nearby residents and businesses.
Once a petition is filed, a notice of lis pendens or a notice of pending lien is required to be filed, which will cloud the title to the property until the conservatorship is dissolved by court order. The property owner may be allowed to remedy the conditions, but as a condition to retaining possession, the court may require the owner to post a bond. Moreover, the owner has only six months to successfully petition the court to terminate the conservatorship before the court may sell the property free and clear of all liens without the owner’s consent.
A Conservator Is Appointed
If appointed, the conservator will be tasked with rehabilitating the building, and will have the power to take immediate possession and control of the building and its contents, including any associated bank or operating accounts. The conservator will have the power to:
- collect receivables
- pursue any legal claims associated with the building
- contract for repair
- borrow money
- enter into leases
- secure insurance coverage
- engage and pay legal, accounting, appraisal and other professionals
- consult with historical commissions, and
- exercise all authority of an owner.
A conservator is the owner for the purposes of filing plans, seeking permits, and submitting applications. However, this act does not relieve the actual property owner of any liability or obligation with respect to the property. Moreover, the property owner may become responsible for any debts incurred as a result of the conservatorship.
How to Protect Your Property Interests
Under the act, an unhappy neighbor, tenant or perhaps a business competitor, for instance, could take action and potentially cause an owner to lose control of their property. Property owners should consider the following steps to protect their interests. First, if the property is for sale, it must be actively marketed as such. Cure any outstanding municipal code violations (remember that a violation of any building-related code, such as health, fire or occupancy, will qualify under the act) and completely secure (board-up) any abandoned property. If you have any questions regarding the act, or any other issues with your real estate, please contact the authors.
Dusty Elias Kirk and Zeina F. Kazour