New law aims to increase funding for demolition of blighted properties

By Mia Sims | Dec 16, 2016

HARRISBURG – A new law in Pennsylvania is intended to make demolishing blighted properties much easier than in the past.

HARRISBURG – A new law in Pennsylvania is intended to make demolishing blighted properties much easier than in the past.

Gov. Tom Wolf, on Nov. 4, signed Senate Bill 486, amending the Recorder of Deeds Fee Law. The new law authorizes each county to charge a fee, up to $15, for each deed and mortgage recorded in the county. The funds generated by this fee are reported to be used solely for the demolition of blighted properties within the county where the deed and mortgage are recorded.

Reed Smith attorneys Dusty Kirk and Brittney Wozniak recently wrote “blighted residential and commercial properties are a major impediment to rehabilitation and redevelopment efforts in cities and towns through Pennsylvania.”

Kirk added in an interview: "A lot of municipalities wanted to get (the properties) renovated and back on the tax roll, but some of the owners couldn’t be found or they had passed away; or there wasn’t a clear line of who would be responsible.”

Each community already has transfer tax fees and usually, throughout most of Pennsylvania, one percent goes to the school district and the city and one percent goes to the state. According to Kirk, in Philadelphia and Pittsburgh it’s four percent.

There are supporters and critics of the bill. Supporters argue that there’s a lack of funding to support the rehabilitation of the properties. Critics argue that instead of homeowners and buyers being individually responsible for paying the bill, the entire affected community should contribute.

"People are objecting to it because they’re saying if you sell your property, there’s already a transfer tax,” Kirk said. “Now there’s an additional $15 that’s going to go to this county. I think the law reads that it’s up to $15, so a county can say they’re going to pass $10 or $5, but I can’t imagine they won’t do the $15 fee.”

Kirk said initially, real estate groups were among those opposed to the new fee.

"I think initially that the real estate groups were opposed to it, but in Pennsylvania, transfer tax is split between the purchaser and the seller,” Kirk said. “So it’s like adding $7.50 to each side. In the end, I think they thought ‘this really isn’t worth our time fighting about.’”

The surplus of blighted properties weighs in on a number of factors, including people losing their jobs or otherwise not being able to afford the upkeep of their property.

"I think that if you think about a community that had a lot of people who were employed with the steel industry and then they lost their jobs, you’ll see that some of them were able to recover, while some were not,” Kirk said.

"Many were also older communities and some [of the owners] were elderly and on fixed incomes. So they don’t have the ability to put money into properties. Many might move to assisted living facilities and the house is just left there.”

In addition to Senate Bill 486, Wolf also signed House Bill 1437, which amended the Municipal Code and Ordinance Compliance Act, now giving property owners only one year after a purchase date to remedy code violations. Before the amendment, property owners had 18 months.

If property owners do not meet the requirements needed within the time period, it could result in the demolition of property that is in violation of the code at the purchaser’s expense.

No Pennsylvania county has yet imposed the recording fee authorized by Senate Bill 486.

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