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:
1. Do not ignore legal notices.
A Notice of Violation starts a legal process. By failing to take action, you can waive your rights and accelerate the coming legal problems and financial penalties. Even if you cannot resolve all the violations immediately, acting promptly can help prevent more severe problems in the future.
2. Exercise the right to appeal.
In the City of Philadelphia, property owners can appeal an unfair or inaccurate violation to the Board of Licenses and Inspections. An appeal can resolve a violation or delay further enforcement.
3. Take steps to correct the violation as soon as possible.
The longer a property owner delays, the greater the risk of losing control over the situation. For example, if a violation is imposed for elevator safety issues, it may take a long time to correct the issues. Meanwhile, legal problems and fines may mount while waiting for engineers, contractors and municipal inspectors to complete their responsibilities.
4. Settle a code enforcement case after the violations are brought into compliance.
Even if you have accrued a hefty fine due to a code enforcement case, it may be possible to settle the case after the violations are corrected. However, a municipality will not resolve a dispute if the owner has not taken the necessary steps to correct the problems.
As a real estate attorney, I help real estate investors resolve code enforcement lawsuits. If you know someone sued by their municipality, please forward our contact information:
Phone: (484) 690-4613
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