Real estate developers who acquire deteriorated properties in Philadelphia are at risk of code enforcement lawsuits. Developers perform the important work of transforming underperforming buildings into productive assets. These properties are often over a hundred years old making it difficult to comply with city code requirements.
I have represented investors who were hit with enforcement actions despite significant efforts to correct violations. In my experience, violation of city codes is not usually wilful. Non-compliance is often due to cash flow, logistical problems, or the practicality of correcting a defect.
In the City of Philadelphia, the municipal code imposes a penalty of $300 per violation for every 30-day period from the date of the violation order to the date of correction. Each violation is a separate offense with a separate fine that accrues until the property owner resolves the violations.
Penalties can be assessed for many types of violations. Some violations are a simple matter of failing to obtain a particular license. But in the case of a property with severe structural problems, a court could order the property demolished with the cost of the demolition imposed against the owner.
Here are four tips to avoid the risks of municipal enforcement actions to your investment property:
