68 Pa.C.S. Ch. 41

in effect

68 Pa.C.S. § 4101 Short title of subpart.

This subpart shall be known and may be cited as the Real Estate Cooperative Act.

68 Pa.C.S. § 4102 Applicability of subpart.

(a) General rule.--This subpart applies to all cooperatives created within this Commonwealth after the effective date of this subpart, but, if such a cooperative contains only units restricted to nonresidential use, it is subject only to sections 4106 (relating to applicability of local ordinances, regulations and building codes) and 4107 (relating to eminent domain) unless the declaration provides that the entire subpart is applicable. (b) Existing cooperatives.--Except as provided in subsection (c), sections 4106, 4107, 4203 (relating to construction and validity of declaration and bylaws), 4219 (relating to master associations), 4220 (relating to merger or consolidation of cooperatives), 4302(a)(1) through (6) and (11) through (17) (relating to powers of association), 4311 (relating to tort and contract liability), 4315 (relating to lien for assessments), 4317 (relating to association records), 4319 (relating to termination of cooperative interest), 4409 (relating to resales of cooperative interests) and 4415 (relating to effect of violations on rights of action), and section 4103 (relating to definitions) to the extent necessary in construing any of those sections, apply to all cooperatives created in this Commonwealth before the effective date of this subpart, but those sections apply only with respect to events and circumstances occurring after the effective date of this subpart and do not invalidate existing provisions of the cooperative documents of those cooperatives. By compliance with the requirements of section 4201 (relating to creation of cooperative ownership), a cooperative created in this Commonwealth before the effective date of this subpart may be made subject to all of the provisions of this subpart, effective as of the date of recordation of the document or documents specified in section 4201, without in any way terminating the cooperative status of the property or in any way affecting any lien or encumbrance on the property, if the terms of such document or documents have been approved by all the persons whose actions would have been required to effect the termination of the cooperative pursuant to its governing documents in effect at the time such approval is given, provided, however, that such action shall not increase the obligations or responsibilities of a declarant, as such and not as a proprietary lessee, without the joinder of the declarant in the document or documents required by section 4201. (b.1) Retroactivity.-- (1) Sections 4103, 4108 (relating to supplemental general principles of law applicable), 4112 (relating to obligation of good faith), 4216 (relating to amendment of declaration), 4217(g) (relating to termination of cooperative ownership), 4302(a)(8)(i) and (9), 4303(a), (b) and (c) (relating to executive board members and officers), 4307 (relating to upkeep of cooperative), 4314 (relating to assessments for common expenses) and 4316 (relating to other liens affecting cooperative), to the extent necessary in construing any of those sections, apply to all cooperatives created in this Commonwealth before the effective date of this subpart, but those sections apply only with respect to events and circumstances occurring after the effective date of this subsection and do not invalidate existing provisions of the cooperative documents of those cooperatives. (2) Section 4303(d), to the extent necessary in construing that subsection, applies to all cooperatives created in this Commonwealth before the effective date of this subpart, but the subsection applies only with respect to events and circumstances occurring 180 days after the effective date of this subsection and does not invalidate specific provisions contained in existing provisions of the declaration, bylaws or plats and plans of those cooperatives. (c) Units restricted to nonresidential use.--If a cooperative created within this Commonwealth before the effective date of this subpart contains only units restricted to nonresidential use, it is subject only to sections 4106 and 4107 unless the declaration is amended in conformity with applicable law and with the procedures and requirements of the declaration to take advantage of the provisions of subsection (d), in which case all the sections enumerated in subsection (b) apply to that cooperative from the date such amended declaration is recorded as required for a declaration under section 4201. (d) Amendments to declaration and bylaws.--In the case of amendments to the declaration and bylaws of any cooperative created before the effective date of this subpart: (1) If the result accomplished by the amendment was permitted by law prior to this subpart, the amendment may be made either in accordance with that law, in which case that law applies to that amendment, or may be made pursuant to this subpart. (2) If the result accomplished by the amendment is permitted by this subpart and was not permitted by law prior to this subpart, the amendment may be made pursuant to this subpart. An amendment to the declaration or bylaws authorized by this subsection to be made under this subpart must be adopted in conformity with applicable law and with the procedures and requirements specified by the declaration and bylaws being amended. If any such amendment grants to any person any rights, powers or privileges permitted by this subpart, all correlative obligations, liabilities and restrictions in this subpart also apply to that person. (e) Cooperative interests outside Commonwealth.--This subpart does not apply to cooperative interests located outside this Commonwealth, but the public offering statement provisions (sections 4401 through 4408) apply to all cooperative interests offered within this Commonwealth for which either the contract for disposition is executed by any party within this Commonwealth or the disposition is effectuated within this Commonwealth unless exempt under section 4401(b) (relating to applicability; waiver). (f) Liens and security interests.--The enactment of this subpart shall not affect any lien upon a cooperative or any lien upon or security interest in any property of the association or in any cooperative interest if such lien or security interest shall have been perfected prior to the effective date of this subpart. (Nov. 30, 2004, P.L.1499, No.190, eff. 60 days) 2004 Amendment. Act 190 added subsec. (b.1). Cross References. Section 4102 is referred to in section 4403 of this title.

68 Pa.C.S. § 4103 Definitions.

Subject to additional definitions contained in subsequent provisions of this subpart which are applicable to specific provisions of this subpart, the following words and phrases when used in this subpart and in the declaration and bylaws shall have the meanings given to them in this section unless the context clearly indicates otherwise: "Affiliate of a declarant." Any person who controls, is controlled by or is under common control with a declarant. (1) A person "controls" a declarant if the person: (i) is a general partner, officer, director or employer of the declarant; (ii) directly or indirectly or acting in concert with one or more other persons, or through one or more subsidiaries, owns, controls, holds with power to vote or holds proxies representing more than 20% of the voting interest in the declarant; (iii) controls in any manner the election of a majority of the directors of the declarant; or (iv) has contributed more than 20% of the capital of the declarant. (2) A person "is controlled by" a declarant if the declarant: (i) is a general partner, officer, director or employer of the person; (ii) directly or indirectly or acting in concert with one or more other persons, or through one or more subsidiaries, owns, controls, holds with power to vote or holds proxies representing more than 20% of the voting interest in the person; (iii) controls in any manner the election of a majority of the directors of the person; or (iv) has contributed more than 20% of the capital of the person. (3) Control does not exist if the powers described in paragraph (1) or (2) are held solely as security for an obligation and are not exercised. "Allocated interests." The common expense liability and the ownership interest and votes in the association allocated to each cooperative interest. "Alternative dispute resolution." A procedure for settling a dispute by means other than litigation, such as arbitration or mediation. "Association" or "proprietary lessees' association." The proprietary lessees' association organized under section 4301 (relating to organization of association). "Common elements." All portions of a cooperative other than the units. "Common expense liability." The liability for common expenses allocated to each cooperative interest pursuant to section 4207 (relating to allocation of ownership interests, votes and common expense liabilities). "Common expenses." Expenditures made by or financial liabilities of the association, together with any allocations to reserves. "Conversion building." A building that, at any time before the conversion notice date with respect to a cooperative in which that building is located, was occupied wholly or partially by persons other than purchasers and persons who occupy with the consent of purchasers. "Conversion notice." The notice to be given to certain tenants or subtenants by the terms of section 4412(a) (relating to cooperatives containing conversion buildings). "Conversion notice date." The date on which the notice is placed in the United States mail or is delivered to the unit leased by the recipient, depending upon whether the conversion notice is mailed or hand delivered. "Cooperative." Real estate owned by an association, each of whose members is entitled, by virtue of his ownership interest in the association, to exclusive possession of a unit. "Cooperative interest." An ownership interest in the association coupled with a possessory interest in a unit under a proprietary lease. For the purposes of this subpart, a declarant is treated as the owner of any cooperative interests or potential cooperative interests to which allocated interests have been allocated pursuant to section 4207 (relating to allocation of ownership interests, votes and common expense liabilities) until that cooperative interest has been created and conveyed to another person. "Declarant." Any person or group of persons acting in concert who: (1) as part of a common promotional plan, offers to dispose of his or its cooperative interest not previously disposed of; or (2) reserves or succeeds to any special declarant right. "Declaration." Any instruments, however denominated, that create a cooperative and any amendments to those instruments. "Development rights." Any right or combination of rights reserved by a declarant in the declaration to: (1) add real estate to a cooperative; (2) create units, common elements or limited common elements within a cooperative; (3) subdivide units or convert units into common elements; or (4) withdraw real estate from a cooperative. "Dispose" or "disposition." A voluntary transfer to a purchaser of any legal or equitable interest in a cooperative interest. The term does not include the creation, transfer, satisfaction or release of a security interest. "Executive board." The body, regardless of name, designated in the declaration to act on behalf of the association. "Identifying number." A symbol or address that identifies only one unit in a cooperative. "Immediate family." A parent, spouse, child, brother or sister. "Independent reviewer." A person who is selected by the executive board of a cooperative and satisfies all of the following: (1) Holds a certificate as a certified public accountant issued by the Commonwealth, is licensed to practice law in this Commonwealth or is a vote management system. (2) Is not a proprietary lessee of the cooperative, directly or indirectly. (3) Has no immediate family relationship with a proprietary lessee of the cooperative or the cooperative manager. (4) Has no financial interest shared with a proprietary lessee of the cooperative or the cooperative manager. (5) If compensated by the declarant, a director, the association or the cooperative manager, has disclosed the terms of the compensation to all proprietary lessees of the cooperative at a scheduled meeting. "Leasehold cooperative." A cooperative in which all or a portion of the real estate is subject to a lease, the expiration or termination of which will terminate the cooperative or reduce its size. "Limited common element." A portion of the common elements allocated by the declaration or by operation of section 4202(2) or (4) (relating to unit boundaries) for the exclusive use of one or more but fewer than all of the units. "Limited equity cooperative." A cooperative whose declaration and bylaws impose a restriction or limitation, in a specified amount or in an amount determined pursuant to a specified formula, upon the consideration that may be paid to the transferor of a cooperative interest. The formula may not include the fair market value of the cooperative interest as a factor in establishing the restriction or limitation. "Limited equity cooperative association." An association for a limited equity cooperative. "Low-income and moderate-income persons." Persons who are members of households and whose incomes are less than 80% of the median household income in the area which the cooperative is located, as established by the United States Department of Housing and Urban Development or a successor organization, for the smallest geographic area which includes the cooperative and for which such income data is established by such organization. "Master association." An organization described in section 4219 (relating to master associations), whether or not it is also an association described in section 4301 (relating to organization of association). "Offer" or "offering." Any advertisement, inducement, solicitation or attempt to encourage any person to acquire any interest in a cooperative interest, other than as security for an obligation. An advertisement in a newspaper or other periodical of general circulation or in any broadcast medium to the general public of a cooperative not located in this Commonwealth is not an offer or offering if the advertisement states that an offer or offering may be made only in compliance with the law of the jurisdiction in which the cooperative is located. "Original lease termination date." The date on which the lease or sublease of a residential tenant or subtenant in possession of a unit in a conversion building will expire by the terms of such lease or sublease after taking into account any renewal or extension rights that may have been exercised prior to the conversion notice date. "Person." A natural person, corporation, business trust, estate, trust, general or limited partnership, association, joint venture, government, governmental subdivision or agency, other legal or commercial entity or any combination of the foregoing. In the case of a land trust, the term means the beneficiary of the trust rather than the trust or the trustee. "Proprietary lease." An agreement with the association pursuant to which a proprietary lessee has a possessory interest in a unit. "Proprietary lessee." A person who owns a cooperative interest, other than as security for an obligation, and the declarant with respect to cooperative interests or potential cooperative interests to which allocated interests have been allocated pursuant to section 4207 (relating to allocation of ownership interests, votes and common expense liabilities) until that cooperative interest has been created and conveyed to another person. "Proprietary lessee in good standing." A proprietary lessee who is current in payment of assessments and fines, unless the assessments or fines are directly related to a complaint filed with the Bureau of Consumer Protection in the Office of Attorney General regarding section 4308 (relating to meetings), 4309 (relating to quorums), 4310 (relating to voting; proxies) or 4317 (relating to association records). "Purchaser." Any person, other than a declarant or a person in the business of selling cooperative interests for his own account, who, by means of a disposition, acquires or contracts to acquire a cooperative interest other than as security for an obligation. "Real estate." Any fee, leasehold or other estate or interest in, over or under land, including structures, fixtures and other improvements and interests which by custom, usage or law pass with a conveyance of land though not described in the contract of sale or instrument of conveyance. The term includes parcels with or without upper or lower boundaries and spaces that may be filled with air or water. "Residential purposes." Use for dwelling or recreational purposes or both. "Residential tenant" or "residential subtenant." A tenant or subtenant, respectively, who is a natural person lawfully occupying real estate for residential use. "Security interest." An interest in real or personal property created by contract or conveyance which secures payment or performance of an obligation. The term includes a mortgage, deed of trust, trust deed, security deed, contract for deed, land sales contract, lease intended as security, security agreement, assignment of lease or rents intended as security, pledge of an ownership interest in an association and any other consensual lien or title retention contract intended as security for an obligation. "Special declarant rights." Rights reserved for the benefit of a declarant to: (1) Complete improvements described in the public offering statement (section 4403(a)(2)). (2) Exercise any development right (section 4209). (3) Maintain sales offices, management offices, signs advertising the cooperative and models (section 4214). (4) Use easements through the common elements for the purpose of making improvements within the cooperative or within real estate which may be added to the cooperative (section 4215). (5) Make the cooperative part of a larger cooperative or group of cooperatives (section 4220). (6) Make the cooperative subject to a master association (section 4219). (7) Appoint or remove any officer of the association or any master association or any executive board member during any period of declarant control (section 4303(d)). "Time share." A right to occupy a unit or any of several units during five or more separated time periods over a period of at least five years, including renewal options, whether or not coupled with an estate or interest in a cooperative or a specified portion thereof. "Unit." A physical portion of the cooperative designated for separate occupancy under a proprietary lease. "Vote management system." A third-party vendor who operates a digital or subscription service that securely manages the conduct of elections and voting procedures. (May 4, 2018, P.L.96, No.17, eff. 60 days; Nov. 3, 2022, P.L.1750, No.115, eff. 180 days) 2022 Amendment. Act 115 added the defs. of "immediate family," "independent reviewer" and "vote management system." 2018 Amendment. Act 17 added the defs. of "alternative dispute resolution" and "proprietary lessee in good standing." Cross References. Section 4103 is referred to in sections 4102, 4205, 4304, 7302, 7402 of this title; section 8401 of Title 53 (Municipalities Generally).

68 Pa.C.S. § 4104 Variation by agreement.

Except as expressly provided in this subpart, provisions of this subpart may not be varied by agreement, and rights conferred by this subpart may not be waived. A declarant may not act under a power of attorney or use any other device to evade the limitations or prohibitions of this subpart or the declaration.

68 Pa.C.S. § 4105 Property classification of cooperative interests.

A cooperative interest shall be deemed to be a separate leasehold interest in real estate for all purposes except as is otherwise provided in section 4321(b) (relating to limited equity cooperatives). Cross References. Section 4105 is referred to in section 4321 of this title.

68 Pa.C.S. § 4106 Applicability of local ordinances, regulations and building codes.

A zoning, subdivision, building code or other real estate tax or use law, ordinance or regulation may not prohibit the cooperative form of ownership or impose any requirement upon a cooperative which it would not impose upon a physically identical development under a different form of ownership. Otherwise, no provision of this subpart invalidates or modifies any provision of any zoning, subdivision, building code or other real estate tax or use law, ordinance or regulation except as is otherwise provided in section 4321(f) (relating to limited equity cooperatives). Cross References. Section 4106 is referred to in sections 4102, 4321 of this title.

68 Pa.C.S. § 4107 Eminent domain.

(a) General rule.--If a unit is acquired by eminent domain or if part of a unit is acquired by eminent domain leaving the proprietary lessee with a remnant which may not practically or lawfully be used for any purpose permitted by the declaration, the award must include compensation to the proprietary lessee for the value of his cooperative interest. Upon acquisition of all of a unit by eminent domain, unless the decree otherwise provides, that cooperative interest's allocated interests are automatically reallocated to the remaining cooperative interests in proportion to the respective allocated interests of those cooperative interests before the taking, and the association shall promptly prepare, execute and record an amendment to the declaration reflecting the reallocations. Any remnant of a unit remaining after part of a unit is taken under this subsection is thereafter a common element. (b) Acquisition of part of a unit.--Except as provided in subsection (a), if part of a unit is acquired by eminent domain, the award must compensate the proprietary lessee for the reduction in value of his cooperative interest. Upon acquisition, unless the decree otherwise provides: (1) That cooperative interest's allocated interests are reduced in proportion to the reduction in the size of the unit or on any other basis specified in the declaration. (2) The portion of the allocated interests divested from the cooperative interest of which the partially acquired unit is a part are automatically reallocated to that cooperative interest and the remaining units in proportion to the respective allocated interests of those cooperative interests before the taking, with the cooperative interest of which the partially acquired unit is a part participating in the reallocation on the basis of its reduced allocated interests. (c) Acquisition of part of common elements.--If part of the common elements is acquired by eminent domain, the portion of the award attributable to the common elements taken must be paid to the association. Unless the declaration provides otherwise, any portion of the award attributable to the acquisition of a limited common element must be equally divided among the proprietary lessees of the units to which that limited common element was allocated at the time of acquisition. (d) Recording court decree.--The court decree shall be recorded in every county in which any portion of the cooperative is located. Cross References. Section 4107 is referred to in sections 4102, 4206, 4209, 4216, 4217, 4313 of this title.

68 Pa.C.S. § 4108 Supplemental general principles of law applicable.

The principles of law and equity, including the law of corporations and nonprofit corporations and unincorporated associations, the law of real property and the law relative to the capacity to contract, principal and agent, eminent domain, estoppel, fraud, misrepresentation, duress, coercion, mistake, receivership, substantial performance or other validating or invalidating cause supplement the provisions of this subpart, except to the extent inconsistent with this subpart. Cross References. Section 4108 is referred to in section 4102 of this title.

68 Pa.C.S. § 4109 Construction against implicit repeal.

This subpart being a general statute intended as a unified coverage of its subject matter, no part of it shall be construed to be repealed by subsequent legislation if that construction can reasonably be avoided.

68 Pa.C.S. § 4110 Uniformity of application and construction.

This subpart shall be applied and construed so as to effectuate its general purpose to make uniform the law with respect to the subject of this subpart among states enacting it.

68 Pa.C.S. § 4111 Unconscionable agreement or term of contract.

(a) Powers of court.--The court, upon finding as a matter of law that a contract or contract clause was unconscionable at the time the contract was made, may: (1) refuse to enforce the contract; (2) enforce the remainder of the contract without the unconscionable clause; or (3) limit the application of any unconscionable clause in order to avoid an unconscionable result. (b) Parties may present evidence.--Whenever it is claimed or appears to the court that a contract or any contract clause is or may be unconscionable, the parties, in order to aid the court in making the determination, shall be afforded a reasonable opportunity to present evidence as to: (1) The commercial setting of the negotiations. (2) Whether a party has knowingly taken advantage of the inability of the other party reasonably to protect his interests by reason of physical or mental infirmity, illiteracy or inability to understand the language of the agreement or similar factors. (3) The effect and purpose of the contract or clause. (4) If a sale, any gross disparity at the time of contracting between the amount charged for the cooperative interest and the value of the cooperative interest measured by the price at which similar cooperative interests were readily obtainable in similar transactions, but a disparity between the contract price and the value of the cooperative interest measured by the price at which similar cooperative interests were readily obtainable in similar transactions does not, of itself, render the contract unconscionable.

68 Pa.C.S. § 4112 Obligation of good faith.

Every contract or duty governed by this subpart imposes an obligation of good faith in its performance or enforcement. Cross References. Section 4112 is referred to in section 4102 of this title.

68 Pa.C.S. § 4113 Remedies to be liberally administered.

(a) General rule.--The remedies provided by this subpart shall be liberally administered to the end that the aggrieved party is put in as good a position as if the other party had fully performed. However, consequential, special or punitive damages may not be awarded except as specifically provided in this subpart or by other rule of law. (b) Judicial enforcement of rights and obligations.--Any right or obligation declared by this subpart is enforceable by judicial proceeding.

Source: Open US Law by Vaquill AI (CC BY 4.0)URL: https://www.palegis.us/statutes/consolidated/view-statute?txtType=HTM&ttl=68Fetched: 10/16/2026