Municipal maintenance code legislation introduced

Here’s an update on an issue of great importance in our industry.

House Bill 1480 (R-Santora), which would amend Act 99 of 2000, was recently introduced as a result of discussions between the leadership of the Pennsylvania Association of Realtors® and the newly-formed Real Estate Caucus (consisting of six legislators who have a real estate or real estate-related background, prior to being elected to state office).

Act 99 of 2000 was originally designed to allow municipalities to inspect “for sale” homes for property maintenance violations, but also require that certificates of occupancy be issued unless the property is “unfit for habitation.” The intent was to allow private negotiations to take place, between sellers and buyers, regarding which party would pay for necessary code-related repairs.

What we’ve seen, however, is that some municipalities define “unfit for habitation” as any property maintenance violation, no matter how minor. For example, real estate transactions have been unable to close due to something as simple as the size of the house numbers on their mailboxes that need to be ordered due to an ordinance that requires them to be a nonstandard size. Many municipalities are withholding use and occupancy certificates, which are needed to allow settlement to move forward, until all code violations are corrected. Many times this means that the financial burden of all repairs is forced upon the seller prior to settlement. In the case of a foreclosure or short sale, this practice can also force a buyer into making repairs to a home he or she does not yet own.

Some municipalities, along with charging a fee and conducting their own code inspections, require expensive heater, chimney, plumbing and electrical certifications from outside contractors prior to issuing a certificate of use and occupancy. Other municipalities routinely require escrow deposits anywhere between $1,000 to $9,000 from sellers and buyers to guarantee completion of sidewalk repairs and other code-related work that is not being required of other homes.

Our association believes that withholding use and occupancy certificates, which are needed in some municipalities to allow settlement to move forward, stifles the negotiation process between buyers and sellers.

House Bill 1480 would amend Act 99 of 2000 by providing a clear definition of “unfit for habitation,” thus providing better guidance to local code enforcement officials.

The amendment would also require that use and occupancy certificates be issued, by municipalities who choose to conduct resale code inspections, regardless of the nature of the code violation(s) found. It would create a new category of “Temporary Use” certificate that would allow a sale to move forward, but require that substantial code violations be corrected prior to the new owner inhabiting the property. It would also require that all other code violations be corrected within a certain time frame, with financial and other penalties left in place for failure to comply.

The bill has not yet been posted but you can see the Co-Sponsorship Memoranda online.