In this matter, the Commonwealth Court was asked to decide whether a housing cooperative board can impose a limitation on the number of dwelling units individual members can own. The court determined that such a policy was not authorized because the cooperative’s bylaws did not contain any such limitation. Such a policy, the court concluded, could only be imposed as an amendment to the cooperative’s bylaws.
The plaintiffs owned and occupied two units in Penn Center House, Inc. (PCH) but desired to buy a third after the tenant of another unit passed away. They entered into an agreement of sale with the tenant’s estate in May 2013. The PCH bylaws neither restricted the number of units a member could own nor did they vest members with a right to own more than one unit. However, the bylaws did contemplate multiple-unit ownership as it pertains to member meetings and voting. Prior to the plaintiff’s agreement with the tenant’s estate, the PCH Board voted 4-2 to create a policy that: “any one member may not own more than two units.” The PCH Board rejected plaintiffs proposed agreement of sale based on this new policy.
Plaintiffs sued, seeking a declaratory judgment that the new policy was invalid, arguing that a limitation on the number of units any one member may own can only be imposed by amending the PCH bylaws. Amending the bylaws required a vote by PCH members, not just the PCH Board. The Philadelphia County Court of Common Pleas granted plaintiff’s declaratory judgment claim, and the PCH Board appealed.
The Commonwealth Court affirmed the declaratory judgment. PCH’s articles of incorporation provided that the qualifications, rights, and privileges of PCH members were to be set out in its bylaws. A restriction on ownership and the transferring of units, the court found, concerned the rights and privileges of PCH members. Moreover, while the PCH bylaws did not prohibit or expressly provide for multiple-unit ownership, they did contemplate multiple-unit ownership in addressing voting rules. Therefore, the court found the two-unit limit had to be enacted by amendment to the bylaws, rather than a unilateral decision by the PCH Board.
Click here to read: Robbins v. Penn Center House, Inc., No. 979 C.D. 2015 (Pa. Commw. Ct. May 23, 2016).
Bob Turchick, Law Clerk
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