Conservatorships in Pennsylvania
This page deals with Pennsylvania's Abandoned and Blighted Property Conservatorship Act. For other types of guardianships, see Guardianships in Pennsylvania.
Contents
Abandoned and Blighted Property Conservatorship Act, Act 135 of 2008,68 P.S. §§ 1101-1120
The Abandoned and Blighted Property Conservatorship Act (Act 135) is designed to allow court-appointed, third-party conservators to rehabilitate deteriorating residential, commercial, or industrial buildings before the buildings fall into such disrepair that demolition is required.[1] Act 135 is effective as of February 24, 2009.[2]
Underwriting
Sales
- Both the record owner and the appointed Conservator have ownership interests in the Property.[3] Therefore, both Conservator and Owner should consent to the transfer and sign any documents of sale.
- If the Property is transferred or foreclosed while subject to conservatorship, the Property remains subject to the conservatorship.[4] Therefore, Court approval should be obtained even if the Owner is consenting to the transfer.
- The Court may authorize a sale by the Conservator upon notice to all owners and lienholders if the Conservator has been in control of the building for more than 3 months and the conservatorship has not been terminated.[5]
- The Court may terminate the conservatorship upon request under certain conditions, including the Property has been sold by the Conservator and proceeds have been distributed[6]
Liens
- Appointment of a Conservator does NOT relieve the owner from liability for things such as payment of taxes, municipal liens and charges, mortgages, private liens, and other fees and charges, whether before or after conservatorship.[7]
- The Conservator may borrow money to cover the costs or fulfill their obligations under Act 135.[8]
- The Conservator may grant a PRIORITY LIEN for debt incurred for Act 135 purposes provided any existing senior lienholder declined to provide reasonable financing.[9] If the senior lienholder agrees to provide financing, the funds to cover the rehabilitation are added to the preexisting lien.[10]
- The Conservator may file a lien against the Property for the costs of rehabilitation, attorneys fees, and court costs, which may be adjusted from time to time.[11]
- Financing of the rehabilitation remains with the Property after the conservatorship ends, and may be assumed by the Owner (if they regain possession) or a Buyer.[12]
- The Court may authorize the Conservator to sell the building free and clear of all liens, claims and encumbrances provided the distribution follows the statutory priority.[13]
Therefore, all liens on the Property, including the costs of rehabilitation and the Conservator's lien, if any, should be paid or otherwise released, unless a free and clear sale has been authorized and the funds distributed according to statute.
Procedure
Exceptions
Act 135 does not apply to:
- Real property owned or held in trust for the Federal Government; or
- Property that the Owner has vacated in order to perform military service.[14]
Ownership and Sale of Property During Conservatorship
Termination of Conservatorship
The Court may terminate the conservatorship upon request of a party in interest[15] or the Conservator if 1) the conditions have been abated and all fees and expenses of the conservatorship have been paid, 2) the owner or lienholder has provided adequate assurances that the conditions will be promptly abated and all fees and expenses of the conservatorship will be paid, 3) the building has been sold by the Conservator and proceeds distributed according to statute, or 4) the Conservator is unable to present a plan that could be approved by statute or implement a previously approved plan.[16]
- ↑ See 68 P.S. § 1102 (Legislative findings and purpose).
- ↑ See 68 P.S. § 1120 (Effective date).
- ↑ 68 P.S. § 1107(a).
- ↑ 68 P.S. 1109(a).
- ↑ 68 P.S. § 1109(b).
- ↑ 68 P.S. § 1110 (Termination of conservatorship).
- ↑ 68 P.S. § 1107(b).
- ↑ 68 P.S. § 1108(a).
- ↑ 68 P.S. § 1108(b).
- ↑ 68 P.S. § 1108(c).
- ↑ 68 P.S. § 1105(g).
- ↑ 68 P.S. § 1108(d).
- ↑ 68 P.S. § 1109(c) & (d).
- ↑ 68 P.S. § 1111 (Applicability).
- ↑ 68 P.S. 1103 (a "party in interest" includes the owner, a lienholder, or other parties with an interest in the surrounding area).
- ↑ 68 P.S. 1110 (Termination of conservatorship).
