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After receiving a favorable zoning or land use decision, such as a passed ordinance amendment or a granted variance from the zoning hearing board, you should take steps to protect yourself from any validity appeals by publishing notice of the decision.  Section 108 of the Municipalities Planning Code (“MPC”) provides that notice of municipal action to adopt an ordinance or enter a decision may be provided through publication, at any time, “once each week for two successive weeks in a newspaper of general circulation in the municipality.”  This notice can be published by the governing body of the municipality, by any resident or landowner in the municipality (in the case of an ordinance), or by the applicant requesting the decision, the landowner or successor in interest of the property subject to or affected by the decision (in the case of a decision).  The notice must contain certain elements and statements, as provided in Section 108 of the MPC.

Once the second publication of the notice is published, any appeal or action contesting the validity of an ordinance based on procedural defect in the process of enactment, or contesting the validity of a decision based on procedural or substantive defect shall be dismissed, with prejudice, as untimely filed if not filed within the 30th day following the second publication of the notice.  Only an appeal establishing an “unconstitutional deprivation of due process” will be permitted after this 30-day period following the second notice publication.

Therefore, no appeal or action can be taken to contest the validity of an ordinance or decision after the 30th day following the second publication of the notice. This extra step of publishing the Section 108 notice ensures that you can proceed with the purchase and/or development of a property pursuant to the ordinance or decision without any uncertainty as to its validity after the 30-day period.

On November 21, 2016, the Pennsylvania House of Representatives signed into law legislation that became known as Act 170 (the “Act”) which adopted the newly revised Uniform Partnership Act, Uniform Limited Partnership Act, and Uniform Limited Liability Act.  The Act made important revisions to the laws of partnerships, limited partnerships, and limited liability companies.  In this piece, I will only focus on some of the changes in the Act that will affect a limited liability company (“LLC”).

Limited Liability Companies (LLCs)
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The Act took effect in two stages:

  • On February 21, 2017 for all entities that are formed on or after February 21, 2017; and
  • April 1, 2017 for all entities formed before February 21, 2017, unless they elect to be subject to the new law by amending their partnership/operating agreement to do so.

The Act highlights the operating agreement’s role in governing the LLC and the rights and obligation of its members.  The Act now allows the operating agreement to create the status of a member-managed, or manager-managed LLC.  Previously, if an LLC wanted to be considered manager-managed, it would need to be declared on the certificate of organization filed with the Commonwealth.  The Act also allows the LLC and its members to modify some aspects of the duty of loyalty and duty of care, but does not allow it to eliminate the duties altogether.  The operating agreement may alter aspects of the duty of care and duty of loyalty, or identify specific types of actions and transactions that do not violate duties, and which are not “manifestly unreasonable.”

The Act also eliminates the concept of “statutory apparent authority.”  Previously, under Pennsylvania law, a member of an LLC, solely by being a member, was considered an agent of the LLC.  This is no longer the case.  Now, an LLC may file a certificate of authority which states the “authority, or limitations on the authority” of a specific person or a person holding a certain position within the LLC,  to transfer real property held by the LLC, or enter into transactions, and otherwise bind the LLC.

Finally, the Act addresses the method for which a judgement creditor can execute against a member’s interest in an LLC.  The Act states that a charging order is the sole method by which a judgment creditor can obtain any value from a member’s interest in an LLC.  The charging order would give the creditor a lien on the member’s transferable interest, which is the member’s right to receive any distributions from the LLC, but it does not confer upon them any rights to manage the LLC that a member would possibly have.  If the charging order does not satisfy the creditor’s judgment in full, the creditor may foreclose on the member’s interest.  As with the charging order, the purchaser in foreclosure would only acquire the transferable interest, and would not be considered a member of the LLC.

April, 2017

Are the real property taxes assessed against your property by the county board of assessment for county, municipality and school district taxes out of proportion to the actual value of your property or the value attributable to your property by capitalizing the income you receive from the property?

What Should You Do If You Think Your Real Estate Taxes Are too High?

First, you need to determine whether to file an appeal to the county board of assessment for your property. To do so, you need an experienced real estate assessment attorney and a qualified appraiser.

On commercial and industrial properties, as well as rental residential properties, two calculations often make the determination as to whether or not to appeal. Capitalization of income and comparable sales gives us the ability to make a preliminary determination as to whether a particular tax assessment is out of line.

The capitalization of income approach is the easiest and quickest test to determine the value of your property. The comparable sales approach requires information from an appraiser. Up to date information on rents, expenses, square footage, occupancy, necessary to complete the capitalization approach. As to comparable sales, it is important to determine whether the sale is an arm’s length sale or was the result of a mortgage foreclosure or workout agreement. For residential properties, the most reliable determination is of course comparable sales of similar homes within a reasonable distance from the subject property.

With the above in mind, now is the time of year to review your real estate tax assessment on any and all property owned. If the market value utilized by the board of assessment is inconsistent with the market value of your property, or if you have experienced rental income problems over the last few years, then an appeal to your assessment this year may be in order. We can help you make that determination in short order. In Pennsylvania, appeals in Bucks, Chester, Delaware and Montgomery Counties need to be filed on or before August 1, 2017. The deadline for filing an appeal in Philadelphia County is October 2, 2017

If you would like more information, please contact Rob Gundlach at 215-918-3636 or rgundlach@foxrothschild.com.

Copyright: ymgerman / 123RF Stock Photo
Copyright: ymgerman / 123RF Stock Photo

Before you rush to file a land development application with a municipality, make sure that the proposed work actually constitutes land development requiring municipal approval. In certain circumstances, municipal land development approval is not required.

For example, Pennsylvania courts have held that the construction of a roof over a previously-approved structure, such as a patio, does not constitute land development under the Municipalities Planning Code (“MPC”).  Per the Pennsylvania Commonwealth Court, land development typically involves a large tract of land being divided into smaller parcels for construction of residential or commercial buildings, which is the kind of large-scale development of land, “with an inevitable and concomitant effect on the public generally,” that is contemplated by the MPC.  The Commonwealth Court determined that a patio was only one component of a building, and construction of the roof over the patio is certainly not the type of “large-scale development of land” contemplated by the MPC. The construction of the roof would not increase parking, storm sewer needs, or sewer and water use at the building, nor would it change the amount of impervious surface, result in any increase of water runoff or sewage, increase parking areas, traffic or stormwater, or increase the square footage of the patio itself.  Mere construction of a roof over a previously-approved patio does not transform the patio, which would not otherwise require the submission and approval of land development plans, into a patio requiring such approval.

Similarly, the Pennsylvania Supreme Court has also determined that the construction of a billboard does not constitute land development within the meaning of the MPC.  The MPC, when viewed as a whole, clearly is intended “to apply to the allocation of land in such a way that issues related to public use, water management, sewers, streets and the like must be addressed.” The construction of a billboard, like raising the roof of an existing building or constructing a roof above a previously-approved structure, does not give rise to concerns relating to sanitary sewer, water, storm water management, parking, driveways, roadways, curbs and sidewalks, and does not increase the footprint, square footage, necessary parking, curbing, sidewalks, sewer, water, or stormwater relating to any existing buildings or structures. Because of these factors, this type of work should not constitute land development.

Therefore, the construction of a roof over an already-paved surface, or other similar work with no effect on issues such as public use, stormwater management, sewers, streets, parking or expansion of building size, may not require municipal land development approval.

In an Opinion and Order dated March 1, 2017, Pennsylvania Environmental Hearing Board Judge Richard Mather questioned whether PADEP can allow a site developer to bring regulated fill material to a site for construction purposes for a project lasting over one year.

The case involved a township appealing PADEP’s decision to allow Coplay Aggregates to use regulated fill as construction material for a construction project in Whitehall Township.  In ruling against a motion for partial summary judgment, Judge Mather pointed to language in the PADEP’s relevant guidance document and the General Information Form for GP-096 which states that PADEP will not approve an application where fill placement extends beyond one year or construction is not proposed to start within the one-year time period.  Apparently, in response, PADEP said that the language in its own form was “in error” and that the one year limitation on fill placement is not really applicable.

Those of us who work on construction projects and use GP-096 would agree with PADEP that you can and should be able to use that GP to bring regulated fill to a site for the entire duration of the construction project, even if it lasts over one year.  Given Judge Mather’s questioning of that in the Whitehall case, it probably makes sense for PADEP to revise its form and provide clarification for site developers.  Otherwise, new projects using GP-096 may run into this same issue if those approvals are appealed.  If you have any questions, please contact Joel Bolstein at 215-918-3555.