No Right to Withhold Assessment Payments

Aug 25, 2017
No Right to Withhold Assessment Payments
Stefan Richter, Esq. CCAL & Josephine Lee, Esq.
Clemons Richter & Reiss, P.C. 
Unit owners occasionally threaten to “escrow” assessments, and wrongfully assume that if they are not satisfied with the board’s maintenance, repair, replacement, governance, management, or operation of the association, they are entitled to simply withhold assessment payments, similar to what may be permissible pursuant to landlord-tenant law.  

However, neither the Pennsylvania Uniform Planned Community Act (68 Pa.C.S. Section 5101 et seq.) nor the Pennsylvania Uniform Condominium Act (68 Pa.C.S. Section 3101 et seq.) support or authorize such “self-help” on the part of a unit owner. No such remedy is thus created by statute or intended by the legislature.  Stated otherwise, unless specifically provided in a deed or the governing documents, the obligation to pay assessments is not dependent upon the provision of services by the association.  See Rivers Edge Condominium Association v. Rere, Inc., 390 Pa. Super. 196, 199-200; 568 A.2d 261, 263 (Pa. Super. 1990); Fawn Ridge Estates Homowners Association v. Carlson, 2011 WL 10845830, *2-*3, n.8 (Pa. Cmlwth. 2011) (Memorandum Opinion); Society Hill Towers Owners Association v. Matthew, 32 Pa.D&C 3d 244, 247-48 (Phila. 1982).  This issue has been addressed by the Superior Court of Pennsylvania, which held that:

   We find it significant that nothing in Pennsylvania's Uniform Condominium Act supports the type of self-help action undertaken by the appellant... Had the Legislature intended to allow owners of condominium units to withhold    assessments where owners believe that their condominium association is not performing its obligations properly, we believe the Legislature would have explicitly so provided…. As it stands, unit owners must make their objections or    complaints known to their condominium association. Further, our Uniform Condominium Act provides that where that unit owner believes that an association has been negligent or has breached a contractual obligation, the unit    owner may institute a legal action against the association.  See 68 Pa.C.S.A. § 3311. In the present case, if the appellant is unsatisfied or believes that he has been damaged by the conduct of the… Condominium Association, these are the    remedies available to him.

Rivers Edge Condominium Association, 568 A.2d at 263.  Accord Logans’ Reserve Homeowners’ Association v. McCabe, 152 A.3d 1094, 1101-02 (Pa. Cmwlth. 2017) (unreported) (holding that Unit Owners in a planned community were required to pay association assessments regardless of any alleged inadequacies in the association’s performance and any alleged breach of said performance would not relieve the owners of their obligation to pay); Society Hill Tower Owners’ Association v. Matthew, 32 Pa.D&C3d 244 (C.C.P. Phila. 1982) (upholding a confession of judgment entered against Unit Owners and denying the petition to open judgment on the grounds that the association failed to provide maintenance of their unit because “…unit owners are required to pay all assessments and have no right to withhold payment for alleged non-provision of services”).  

It is thus well settled that unit owners are NOT entitled to withhold the payment of assessments.  Indeed, most modern documents specifically provide that the obligation to pay assessments is absolute, and that unit owners cannot exempt themselves from the payment of assessments by setoff, counterclaim, or otherwise.    Unit owners cannot, therefore, withhold assessments, or defend a collection action filed against them through a counterclaim for alleged breaches or failures by the association.   If indeed they believe to be entitled to damages, they must file an independent claim or action.

 ABOUT THE AUTHORS

Stefan Richter is a 1990 graduate of Temple University with a Bachelor of Arts in Philosophy, and a 1993 graduate of Temple University School of Law.

The focus of his practice has been on civil litigation; including association, bankruptcy, construction, corporate, and insurance law. Stefan concentrates in all aspects of community association law, including assessment collections, document interpretation and amendments, covenants enforcement, transition issues and associated litigation. Admitted to practice before State and Federal Courts in Pennsylvania and New Jersey, Stefan is also a trained mediator.

Josephine A. Lee is an associate of Clemons Richter & Reiss, P.C. Josephine is a summa cum laude graduate of West Chester University, where she received a Bachelor’s of Science Degree in Criminal Justice in 2010. Thereafter, she attended Widener University School of Law, graduating magna cum laude in 2013. She was admitted to the Bar of the Commonwealth of Pennsylvania and State of New Jersey in 2013.

 


Please visit our Diamond Sponsors: