Blighted residential and commercial properties are a major impediment to rehabilitation and redevelopment efforts in cities and towns throughout Pennsylvania. However, late in the 2016 legislative term, the Pennsylvania House and Senate enacted new laws that will change the rehabilitation and redevelopment landscape.
On November 4th, 2016 Governor Tom Wolf signed into law Senate Bill 486, amending the Recorder of Deeds Fee Law. The bill, introduced by Senator David Argall (R, West Chester), is a response to the difficulty many Pennsylvania counties face in dealing with blighted properties. These troubled buildings often affect the value of surrounding properties and, in some instances, are health and safety hazards.
The new law authorizes each county to charge a fee, up to fifteen dollars ($15), for each deed and mortgage recorded. The funds generated by this fee will be used solely for the demolition of blighted properties within the county where the deed and mortgage was recorded.
Many properties are beyond repair, requiring total removal of the building before the property can be repurposed. Advocates of this legislation believe that lack of funding is the central obstacle to rehabilitating blighted properties and neighborhoods. This law will substantially increase the funding available for demolition. The PA Department of Revenue estimates that the fees would have generated $14 million in 2013 and almost $12 million last year.1
Critics of the bill believe that homeowners and homebuyers should not be the primary source of funds for demolishing these blighted properties, but rather the entire affected community should contribute to blight remediation.2 Some counties impose an even greater burden on homeowners and buyers. For example, the city of Reading, in Berks County, applies a four percent (4%) local realty transfer tax, in addition to the one percent (1%) state realty transfer tax.
Senate Bill 486 was the second of two bills signed into law by the Governor on consecutive days that address the problem of blighted properties. On November 3rd, Governor Wolf also signed House Bill 1437, which amended the act of December 20, 2000 (P.L.724, No.99), known as the Municipal Code and Ordinance Compliance Act, giving property owners only one year after the purchase date to remedy code violations. The prior law gave property owners eighteen (18) months. Failure to make the necessary changes could result in the demolition of the property that is in violation of the code at the purchaser's expense.
Of course, these changes are not a complete cure to the difficulties surrounding the rehabilitation of blighted properties. Ownership determination, liens and overall community redevelopment planning still present significant challenges in the rehabilitation and redevelopment arena. Still, both bills are positive steps in efforts to correct years of delays in the process of redeveloping blighted homes and neighborhoods.
No Pennsylvania county has yet to impose the recording fee authorized by Senate Bill 486. Look for a follow-up blog as counties begin to adopt this fee.
Footnotes
[1] Emily Previti, Pa. Counties on Track to get Millions for Blight Demolition, Keystone Crossroads (Nov. 1, 2016), http://crossroads.newsworks.org/index.php/local/keystone-crossroads/98412-pa-counties-on-track-to-get-100m-for-blight-demolition.
[2] Kim Shindle, PAR Urges Legislators to Stop Adding Fees to Real Estate Transaction, JustListed PA Association of Realtors (Aug. 5, 2016), https://www.parjustlisted.com/par-urges-legislators-stop-adding-fees-real-estate-transaction/.
This article is presented for informational purposes only and is not intended to constitute legal advice.
