The opinion of the court was delivered by: President Judge Leadbetter
Argued: February 23, 2009
BEFORE: HONORABLE BONNIE BRIGANCE LEADBETTER, President Judge, HONORABLE DORIS A. SMITH-RIBNER, Judge, HONORABLE JIM FLAHERTY, Senior Judge.
John W. Cunius, Jr. appeals from the order of the Court of Common Pleas of Chester County, which denied his real estate tax assessment appeal and affirmed the assessment imposed by the local tax authority. The issue raised on appeal is whether the local tax authority may properly increase the total assessed value of an apartment building, owned by a father and son as tenants in common and then converted into a two-unit condominium, upon conveyance of the condominium units to the former co-tenants such that father and son each took individual ownership of one unit. On appeal, we affirm.
Prior to July 31, 2006, Cunius and his son, Edward, owned a 68-unit apartment building (the property) as tenants in common.*fn1 The apartment building is situated on a 2.1-acre parcel of land located in the Borough of West Chester, Chester County. At that time, the property was assessed at $1,535,730.00.*fn2 On July 31, the Cuniuses, as declarants, filed a declaration of condominium and submitted the property to condominium ownership. The property was divided into two condominium units; Unit 1 consisted of 44 apartments and 62% of the common area, and Unit 2 consisted of 24 apartments and 38% of the common area. On August 1, John and Edward conveyed Unit 1 to John and Unit 2 to Edward.*fn3
After the declaration of condominium was filed, the local assessment board assigned individual tax parcel numbers to each condominium unit and, following conveyance of the two units to John and Edward as individual owners, the board increased the assessment of Unit 1 from $1,535,730.00 to $1,856,490.00 and assessed Unit 2 at $1,012,610.00. The Cuniuses appealed their individual assessments and a combined hearing before the Chester County Board of Assessment Appeals followed.
According to Cunius, he presented evidence demonstrating that the property was not physically improved in any manner and that the declaration of condominium represented only a change in the form of ownership. The Board affirmed each assessment and separate appeals to common pleas followed. Apparently, common pleas was faced only with a question of law, to-wit, whether the increase in property assessment was permissible following conversion of the apartment property by the co-tenant owners, as declarants, to a 2-unit condominium, and the subsequent conveyance of a unit to each declarant. Neither John nor Edward presented any evidence regarding the fair market value of his unit or the property as a whole.
Noting that Section 3105 of the Uniform Condominium Act, 68 Pa. C.S. § 3105, requires that each condominium unit be separately taxed and assessed if "there is a unit owner other than a declarant" and, that, following conveyance, the ownership of the units changed from a co-tenancy, wherein each owner had an interest in the property as a whole, to individual ownership, which limited each owner's interest to his individual unit and a share of the common area, common pleas affirmed the assessments. In doing so, common pleas commented that no evidence was offered to establish that the amount of the assessment was improper.*fn4
The present appeal followed.
On appeal, Cunius does not challenge the propriety of issuing separate tax assessments for the condominium units.*fn5 He argues, however, that the increase in assessment was not permitted under the Uniform Condominium Act,*fn6 The General County Assessment Law*fn7 or the Second Class A and Third Class County Assessment Law (Assessment Law)*fn8 and, therefore, the increase constituted an illegal spot reassessment. We disagree.
The Uniform Condominium Act (Act or Condominium Act) regulates the creation and operation of condominiums. Pursuant to the Act, a "condominium" is defined as "[r]eal estate, portions of which are designated for separate ownership and the remainder of which is designated for common ownership solely by the owners of those portions." 68 Pa. C.S. § 3103.*fn9 A condominium is created by the execution of a declaration by all persons whose interests in the real estate will be transferred to unit owners. 68 Pa. C.S. § 3201.*fn10 The declaration is recorded in the same manner as a deed. Id. Because the creation of a condominium alone does not constitute a conveyance, simply recording the declaration establishing the condominium is not a taxable event and should not subject the declarants to state or local transfer taxes. Id. (Pennsylvania Comment -- 1978).
With respect to the critical statutory provisions governing the assessment of real estate in this case, we note that the reassessment of an individual property alone, known as "spot reassessment," is prohibited except in limited circumstances.*fn11 See Section 7.1 of the Assessment Law, added by the Act of July 19, 1991, P.L. 91, 72 P.S. § 5348.1 (providing that the board "shall not engage in the practice of spot reassessment"). As we noted in Sher v. Berks County Board of Assessment Appeals, 940 A.2d 629, 633 (Pa. Cmwlth. 2008), county assessors and assessment boards "cannot reassess less than an entire county except [for] correction of errors or as otherwise specifically provided by statute." (Emphasis deleted and quotation omitted). Here, under the Assessment Law, individual properties may be reassessed as follows:
The subordinate assessors may change the assessed valuation on real property when a parcel of land is divided and conveyed away in smaller parcels or when improvements are made to real property or existing improvements are removed from real property or are destroyed. The painting of a building or the normal regular repairs to a building aggregating [$2,500] or less in value annually shall not be deemed cause for a change in valuation.
Section 6.1 of the Assessment Law, added by the Act of July 19, 1991, as amended, 72 P.S. ...