Ensuring Regulatory Compliance in Philadelphia Asset Management: A Must-Read Guide

May 23, 2024 TCSMgmt

Ensuring Regulatory Compliance in Philadelphia Asset Management: A Must-Read Guide

Ensuring Regulatory Compliance in Philadelphia Asset Management: A Must-Read Guide - Article Banner

In Philadelphia, you need a rental license in order to lawfully rent out a home. This is only the first part of following all the legal and regulatory requirements that come with rental property ownership. If you’re not sure about what you need to be doing, we strongly recommend you talk to a property manager who can ensure you’re on the right side of the law. 

Here’s a quick guide to the most important regulatory compliance issues you need to be aware of before you move a tenant into your property and start collecting rent.

Start by Obtaining the Appropriate Rental License

As we mentioned, a rental license is required if you’re going to be a landlord in Philadelphia. According to the Philadelphia Code, all rental properties must have a rental license, and it is the responsibility of the property owner or landlord to apply for this license. This isn’t a one-time licensure, either. You have to renew the license annually as long as you continue renting out a property.

There are a few steps you’ll need to navigate as you apply for the license. 

First, if you live outside of Philadelphia but you’re renting out a property in the city, you’ll need a managing agent with a local address on your application. 

Next, you’ll have to include a lead safety certification and evidence of your compliance with the tax code. 

Finally, you’ll have to pay a licensing fee, which at the end of 2023, is $63 per unit. The fee for renewing your license is the same.

Failure to obtain or renew a rental license might lead to heavy fines and legal action. It is, therefore, necessary to obtain or renew the rental license on time to avoid facing such penalties.

Ensure Compliance with Rental Property Standards and Guidelines

In Philadelphia, the landlord is responsible for ensuring that the rental property meets the set standards and guidelines when it comes to maintenance and repairs. The property has to be habitable, and those habitability standards are established by the Philadelphia Department of Licenses and Inspections. Such guidelines include: 

  • Proper ventilation
  • Heating
  • Ensuring proper plumbing
  • Making sure that windows and doors function correctly.

Respond to repair requests from your tenants right away. The longer you wait, the more damage you do to your own asset and the higher your risk for a habitability issue being brought against you by your frustrated tenant. 

Obtain a Certificate of Rental Suitability

Philadelphia landlords are also required to obtain a Certificate of Rental Suitability within 30 days after a new tenant moves in. This certificate is an assurance that the rental property is compliant with the city’s legality standards. The failure of the landlord to obtain this certificate results in important legal ramifications.

If you’re not sure how to obtain your certificate, or you’re running into trouble getting one, talk to a Philadelphia property manager.

Follow all Fair Housing Laws

Asset management includes protecting yourself against fair housing claims and disputes. If you’re found to violate a fair housing law, your first offense could cost you around $16,000. 

Philadelphia landlords must abide by the Fair Housing Act, which ensures that tenants are not discriminated against based on their sex, race, color, religion, national origin, familial status, and disability. This law is fundamental in protecting the tenants’ rights, and you can violate in ways that you might not expect. For example, if you use the wrong language during your marketing phase or if you screen one tenant differently than another tenant, you could be violating fair housing laws.

You Want to Have a Lease Agreement in Place 

A lease or a rental agreement is a contract which legally binds both a landlord and a tenant to certain rights and obligations. This can be a big part of protecting yourself legally, so make sure you have a strong lease in place. 

When a rental agreement or lease is merely discussed and never put to paper, the parties can later have a difficult time agreeing on specific terms (such as the amount of rent or what utilities are included) or general items (expectations for cleanliness, etc.). If an agreement is made in writing there is more clarity, which is good for both sides.

To remain compliant with laws in Pennsylvania and Philadelphia, there are specific disclosures you need to include in your lease agreement. For example, the Lead Disclosure Rule is a federal law that applies to all rental properties built before 1978. The law is to ensure that the risks of lead-based paint exposure are mitigated in rental properties. Landlords are responsible for ensuring that their rental properties are free of lead hazards. Additionally, landlords must provide tenants with a copy of the EPA-approved lead-based paint pamphlet.

Security Deposit Regulations in Philadelphia

Security DepositThere are regulations that need to be followed around what you collect in a security deposit and how you return it. 

First, the limits. The maximum that you can require for a security deposit is two months’ rent. For any subsequent years of renting, you cannot require more than one month’s rent.

You’re required to return your tenant’s security deposit within 30 days of them moving out. If you aren’t returning the full amount, you’ll need to provide an itemized list detailing what was withheld and why.

Investing in real estate in Philadelphia is an excellent way to diversify one’s portfolio, but you have to protect your assets by understanding the law and the regulations that exist on a federal, state, and local level. 

Get to know the legal and regulatory requirements. By educating yourself, you will have a smoother and more fulfilling experience as a Philadelphia real estate investor. Compliance with the laws ensures that your investment is safe, and it protects the rights of your tenants. Therefore, complying with the laws is crucial as it avoids costly penalties in the short term and preserves your reputation in the long run.

Contact us at TCS Management if you need help.

TCS Management is a full service property management company headquartered in Philadelphia, Pennsylvania, also serving Cherry Hill, NJ, Wilmington, Delaware, Nashville, Tennessee and the surrounding areas. We focus on single-family and multifamily residential property management of homes, condos, townhomes, and apartment buildings.

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