Pocono Springs Civic Association Inc., v. MacKenzie
667 A.2d 233 (1995)
The MacKenzies bought a vacant
lot in the Pocono Springs subdivision. Twenty years went by and they never
built a house.
Eventually, they attempted
to sell the land, but there were soil problems and the sale fell apart.
Turns out there was no way
to build a sewer or septic tank on the land, so you could never build a
habitable house on land.
The MacKenzies got tired of
paying the homeowners' association fees on a piece of property that they
felt was worthless and had no use for. So they declared the land abandoned and stopped paying fees. Pocono Springs sued.
MacKenzie had not visited
the property for years and attempted to give the land to Pocono Springs,
but they refused to accept.
MacKenzie stopped paying
real-estate taxes on the land and the local tax board attempted to
auction the property off, but no one would buy it.
The Trial Court found for
Pocono Springs in summary judgment. The MacKenzies appealed.
The Trial Court ruled that abandonment was not a valid defense in this case.
The Appellate Court affirmed.
The Appellate Court found
that the MacKenzies remained the owner of the property in fee simple with perfect title.
Even the MacKenzies'
admitted that there was no way under Pennsylvania law to legally abandon a property owned in perfect title.
Fee simple means that you own the land completely, and
can transfer or sell it to anyone you like, or let your heirs inherit
it. There are no restrictions to your ownership.
In the olden days the King
used to give out land to people, but required that they take certain
actions to maintain ownership of it (like fight in the King's wars).
But land owned in fee simple
didn't have any requirements.
A perfect title is a title that is free of liens and legal
questions as to ownership of the property.
One reason the MacKensies were
not allowed to get out of their obligation because the State has a vested
interest in maintaining an owner for the property.
The State needs to collect
property taxes for civic means, and they need someone to blame if there
is a tort claim when someone hurts themselves on the property.
MacKenzie was probably going
about this the wrong way. Under Restatement of Property, there are ways to get a covenant
terminated if the obligations to pay fees for services becomes excessive
or unconscionable. MacKenzie should have argued to get the covenant terminated, not abandon the property.
Of course Restatement of
Property also says that you can't
use that excuse to get out of covenants involving common
interest communities (like this one).
Another thing that MacKenzie
could have done was to create a corporation, and then transfer the
property to the corporation. Since the corporation has no assets, and
debts of the corporation are not transferable to its shareholders (aka
MacKenzie), Pocono Springs would have no one they could recover from.
This is why you want to hire
a good lawyer. They think of things like this.