CAPITOL BRIEFS - JULY 3, 2009
House Passes RELRA Amendments; Governor to Consider
On Tuesday, the state House of Representatives passed legislation to allow parties in a real estate transaction to reach an agreement in writing in advance as to how escrow money will be distributed in the event a dispute occurs.
Senate Bill 241 (Tomlinson, R-Bucks) passed the House and Senate by unanimous votes, and will be presented to Governor Rendell for his signature.
The legislation also provides that associate brokers and salespersons may set up entities such as S corporations or limited liability companies (LLCs) to conduct their real estate business and receive commissions. The legislation would require that only a licensee may own an entity that is paid a commission by the broker.
The provisions in the bill will become effective 60 days after being signed by the Governor. Nothing in this bill requires real estate licensees to make any changes in their day-to-day practice; PAR will provide additional information over the next few months.
Legislation Addresses PAR Concerns Regarding Blight
The Senate Urban Affairs and Housing Committee has approved legislation to provide for neighborhood blight reclamation and revitalization.
Prior to the introduction of legislation, PAR provided testimony on several areas of concern included in previous incarnations of the bill:
· The definition of “residential building” is overbroad and should be defined as “real property that consists of not less than one nor more than four residential dwelling units” to mirror the Residential Real Estate Transfers Law.
· Oppose allowing the state or a municipality to deny an applicant a permit, certification, license or approval for contemplated action if the applicant owns any property which is tax delinquent or in violation of codes.
· Opposing implementing a property maintenance code violations registry. A statewide central registry would be cost prohibitive, an administrative burden to municipalities for timely reporting, and may be a hindrance in the purchase of property.
We are pleased that
Senate Bill 900 (Argall, R-Schuylkill) addresses all of the above concerns. The definition of “residential building” now mirrors the Residential Real Estate Transfers Law; the definition of “license” pertains to anyone
except those licensed under the Bureau of Professional and Occupational Affairs; and the property maintenance code violations registry was completely removed from the legislation.
Mechanics’ Lien Exclusion Passes Senate
The state Senate has unanimously passed legislation to change the residential construction exclusion regarding waiver of liens.
Senate Bill 563 (Browne, R-Lehigh) amends the Mechanics’ Lien Law and repeals the current one million dollar maximum residential construction contract exclusion and replaces it with an exclusion of residences three stories in height, or less, not including basements.
The legislation does not alter the original concept of the exclusion to keep it limited to low-rise residential. Large multi-story apartments and condominiums are considered commercial construction and are not included in this exclusion.
The PA Builders Association supports this legislation because it has become a critical issue for new homebuyers whose home has been liened due to disputes between developers, builders, sub-contractors and suppliers.
House Committee Approves Assessment Moratorium Bill
The House Urban Affairs Committee has passed legislation to put a moratorium on court-ordered, countywide property reassessments while the General Assembly conducts a study of the state’s property tax reassessment system.
House Bill 1661 (Yudichak, D-Luzerne) is companion legislation to House Resolution 334 which calls on the Legislative Budget and Finance Committee to conduct a study of the Commonwealth’s system of property tax assessment and compare it to real property tax systems of other states.
The resolution also directs the LBFC to specifically analyze the real property tax reassessment systems of Maryland and California. The results of the study and its recommendations are to be filed with the Chief Clerk’s Office no later than June 30, 2010.
PAR supports the legislation based on the Policy Statement on Education and Economic Development Funding Options as adopted by the Board of Directors. The Policy discusses assessment practices and states that “In order to attain property assessments that are fair, realistic and equitable, PAR recommends the state legislature initiate a study of other states’ best practices and introduces legislation based on those findings.”