Yuriy 0:00

We're here to share insights and experiences, not legal or accounting advice. Be sure to talk to your attorney, accountant, or professional advisor before making any decisions. Everyone's situation is different. Get the help that is right for you. you have to have so many different licenses you have to have so many different tax account numbers with the city of Philadelphia

Rachel 0:22

philadelphia i was the only property manager working for this investor so i personally managed everything for all 200 units

Yuriy 0:29

usually people that you talk to they kind of like lower level employees and they may not understand themselves. So welcome to the very first episode of the Philly Landlord Guy. I am Yuri Skripnichenko, the guy with the long, crazy last name. Do not try to remember it. Just think of me as Philly Landlord Guy. I am licensed broker, real estate broker in the city of Philadelphia and certified property manager. We're not here to tell you about success stories. We're here to dive into real issues landlords face in the city of Philadelphia, to break down the rules and help you stay ahead of the changes in the local Philadelphia market. Today we're kicking off things with one of the most crucial topics for any Philly landlord, rental license compliance. Whether you're new to rental properties in Philly or seasoned investors, understanding the city requirements is crucial to avoid any fines or delays and legal headaches that you may have. I'm excited to have Rachel with us here today. Rachel is an expert in property management and license compliance. And she's going to walk us through everything landlords need to know from the basics of getting a rental license to the challenges that trip people up, let safety requirements, the legal and financial risks of non-compliance with rental license. Let's get started. Rachel, we're glad to have you here. Welcome to the show. And can you tell us a little bit about yourself? How did you get on property management and rental license compliance?

Rachel 2:14

Yeah. Thank you so much for having me on the show, Yuri. I'm excited to be here today. A little bit about my background. I went to Temple University here in Philly for my undergrad where I studied risk management insurance. And then after I finished college, I actually went and worked in that industry. I did not go into real estate yet. So everything shifted for me during the pandemic. I used to live in Manhattan and then everything changed. I actually ended up coming home back to Philly and I started working Thank you so much. office space, commercial, like industrial warehouses, and mostly residential rental units, single family, multifamily. And then within that, a mix of market rate rent and Philadelphia Section 8 housing as well. So I was the only property manager working for this investor. So I personally managed everything for all 200 units. I did the leasing, rent collection, repairs, real estate taxes, rental license compliance, which is where I am now, and really anything and everything in between. So through that, I just learned so much about what goes through the minds of real estate investors, how to manage real estate, and also just when you're the only person How to not be able to just shift it to someone else, how to actually have a problem come across your desk and then you need to figure it out. You know, sometimes that's dealing with the city of Philadelphia or whatever that might be. So it really taught me how to kind of just keep pushing through these more annoying things like compliance with the city of Philadelphia. So I eventually wanted to really get into my own business. I wanted something to do by myself and have my own business. So I actually ended up leaving property management and I started working doing rental license compliance. The way I got into that is I would just let other people in real estate know, hey, by the way, I'm a property manager. If you have any questions or need help, reach out to me. And I actually started having realtors come reach out to me that their clients bought investment properties and now they need rental licenses and they don't know how to do it. So I got into it just by people coming to me, asking me for this help. And then I realized like, well, maybe there's actually more of a business model there. So I decided to start my own company of really focusing on rental license compliance. And so now I'm an expediter with the City of Philadelphia Department of License Inspections and focusing on rental licenses and everything having to do around that.

Yuriy 4:56

Now, wow, that's a cool story. And I guess that's a good segue for the next question. Can you tell us what is a rental license and why is it required in the city of Philadelphia?

Rachel 5:07

Absolutely. So a rental license just verifies that you are registered with the city of Philadelphia to rent this real estate. It means that the city has verified the number of units that you're legally zoned for. They verify that at the time there's no outstanding violations on the property, that the landlord is registered with the Department of Revenue for the rent collected on the rental. And it's just another way for the city to kind of have management over what's going on. There are thousands of rental units in Philadelphia, and this is a way for them to just really try to tackle keeping things in compliance and making sure that landlords are following some sort of regimen. So a rental license is a certificate that is valid for one year. And every property owner who rents residential real estate in Philadelphia is required to have this and it expires annually. So every year it also has to be renewed and maintained.

Yuriy 6:00

Okay. And what are the key requirements to apply for one?

Rachel 6:05

Yeah, absolutely. So in order to get a rental license, first, you have to have what's called the commercial activity license. This is sort of like an umbrella with the city of Philadelphia for all licenses. A commercial activity license is just registering your... either EIN and LLC or personal name and social with the city along with what's called the Philadelphia tax account number. So once you have a commercial activity license, you can then apply under that license for the rental license. And you have to have things such as lead-based paint testing if your property was built prior to 1978, zoning requirements if you are registering for a multifamily property, and then basic information, owner name, mailing address, information like that. And everything is applied for through the city of Philadelphia.

Yuriy 6:53

So this commercial activity license, is it something that you have to have to get your rental license or how does that work?

Rachel 7:01

That's a great question. And the answer to that is yes. You cannot move forward with a rental license application if you do not have the commercial activity license. There are some other types of commercial activity licenses. For example, a nonprofit commercial activity license or a two to four unit owner occupied commercial activity license, but you have to have one and you can only have one license registered per social or EIN number. So once you register for your commercial activity license, let's say I own a piece of real estate and I need to get my rental license. Once you register for the commercial activity license under your name and social, that does not expire. So even if you first got this in 1990, that's the same commercial activity license that you're supposed to keep using as you register for more and more other types of licenses under this umbrella of license.

Yuriy 7:55

So what happens if I have, let's say, two properties and I have one in my personal And the other one is an LLC name or some entity name. How would that work?

Rachel 8:07

That happens all the time. So that's really important to notate also what kind of LLC this is. When someone has a single member LLC, meaning that it's only owned... in your own personal name. You don't have any partners on it. In most cases, that LLC files its taxes through your personal tax return. The government sees that as one entity and you actually pass through the LLC and file the taxes personally. If you have a single member LLC, you actually still register under the commercial activity license tied to your personal name. And then from there, we have to add your LLC as what's called a disregarded entity through the Philadelphia Department of It's kind of how they tie it all together on the backend. So if you have multiple properties under your personal name, and let's say you also have multiple properties under an LLC that is owned only by yourself, then yes, it's all registered to long commercial activity license. Now, if you have a rental property in your personal name, and then let's say you have some rentals under a partnership in an LLC, you have a partner on it. Those do require separate commercial activity licenses. One would be tied to your name. and your social, and then one would be tied to your partnership and your EIN number. And then everything has to go separately under those licenses.

Yuriy 9:28

So if I have a single member LLC, it will go under my personal commercial activity license. Do I have to register that LLC with the city of Philadelphia as well, or I just go in and just start using my existing commercial activity license. How would that work?

Rachel 9:47

Yeah. So the way that actually gets tied together is through the revenue department. So what you would have to do is you would have to upload and submit to the city of Philadelphia, a copy of your EIN letter. Once that gets shared to the city and you're able to register it as a disregarded entity, they will know on the backend that it's linked to your personal name. So when you go and you apply for like a rental license or any other type of license, they will search on their end when they're reviewing it to see if this license, if this LLC has been tied to your personal name. They will know either way. For example, if you have a single member LLC and you register that single member LLC for its own commercial activity license using its EIN number, and then you try to go get a rental license, they will flag it because they do know if that is a partnership or not. So I've had it before where clients will try to register for a And when they try to apply for the rental license, the city flips it back to them saying that this is a single member LLC and that you have to apply under your personal commercial activity license.

Yuriy 10:55

So a lot of little nuances there.

Rachel 10:59

lot of nuances. It's very specific. And the city wants it a certain way, but they really don't tell you that. They kind of give you some very vague response, but they don't explain to you how to do it or what to do or many resources for it. So it's honestly So much of it's just the trial and error of all the times I've gone through the process, knowing when I get a certain type of license across my desk that someone needs help with. from the start, like how it's supposed to be getting done because the city wants it a certain way. It's kind of like taxes. Like the government knows how much you owe, but they don't tell you that. It's like the city knows what they want from you, but they don't tell you how to go about it. You have to give it to them how they want it.

Yuriy 11:39

Yeah. Yeah. And from my experience, when I started doing that many years ago, even if you go to the city and you talk to them in person, usually people that you talk to, they kind of like lower level employees and they may not understand themselves. what is required or what kind of paperwork or paper trail they're looking for. And that can get even more confusing for the owners

Rachel 12:04

it definitely will because if you yourself are going through this process for the first time and then you go to the city directly to ask them about especially in person it will make you so many times just more confused like i'm at the point where when i go i know what we need done and a lot of my initial conversation with the employees at the in person is explaining to them like no like this is what i need This is how you do it. Here's the information you're going to need for it. And then what's amazing is they honestly, sometimes it feels like, you have to just come with every single thing in a row. If you don't have everything on point for them, you have to go away and you have to come back another time. So it's really nuanced.

Yuriy 12:45

Yeah, and it's a time sink for sure. So doing that all the time, what are the most common issues that landlords usually face or what kind of delays or why do they get delays?

Rachel 12:58

Yeah, I think something we touched on, one of the biggest ones are confusion between single member LLC and registering your personal name, the disregarded entity, that's a huge one that people get really tripped up on. They're like, it's been taking me six months to Why is my license still not registered? And then when I come in, I can really quickly identify the issue. So that's a big one. Another one that's really common is around zoning. So all the time, unfortunately, people buy properties that they do not realize they are not actually legally zoned for. They go and they see a beautiful duplex, triplex, quadplex. They buy it. Turns out that's single family. Whoever converted it never got the legal zoning to do it. And now they're here. They need to get their license. A lot of time it's because they have a tenant that they need to evict or something, and they end up in this hole issue that they actually didn't even realize they were buying. So zoning is a big one. Just from the start, I really try to stress to investors to know how to verify the property zoning before purchasing it. And then once the property is purchased, even if it is legally zoned, maybe the zoning was approved back in like 1950. And the city has specific ways that they want you to verify that zoning to them. So a lot of times it's just a matter of people who don't do this every day. not really knowing how to navigate it. So zoning is a big one. Disregarded entities is a big one. Lead testing, like I mentioned before, all properties, but prior to 1978 have to be tested for lead. City of Philadelphia is super old. So that's most properties unless it's new construction. So, you know, getting passing lead results can really slow people down. And also just understanding when you have different ownership structures, sometimes people can kind of get bogged down by partnerships in personal names, spouse ownerships, LLC ownership. So those are some things that can actually end up making the application process a little bit more difficult and it can end up slowing people down a bit.

Yuriy 15:03

So that's actually a question that I see pop up pretty often. When two spouses have an LLC, so let's say John and Jill, they bought a property together in an LLC, John and Jill LLC, do they file for a rental license as a disregard detention? entity or is it a partnership? How does that work with the city of Philadelphia?

Rachel 15:28

Yeah, in that case, it's considered a partnership. So when it's just two individuals that own an LLC together, everything has to run through the EIN number and the partnership. So that partnership needs its own commercial activity license, tax account number, and the rental license will get registered under the partnership. But if you have the two spouses owning the properties in their personal names, so I think you said like John and Jill, if John and Jill both own the property, just in personal names, what then needs to happen is one person almost has to kind of be like the primary on the tax account. And then the other spouse gets added to the tax account as a responsible party. And then that's a solution to making sure that both people's names can get added to the rental license. That's a really common one that comes up all the time.

Yuriy 16:15

Okay. And you mentioned something about zoning as well. So that is a common issue as well. And I've been talking about it for years. A lot of people or a lot of investors especially realtors they do not understand how it works and they they will say things that not true so is there any certain way how you can check on zoning of the property or is there an easy way how you can do it? As you mentioned, Citi wants you to give them specific proof of zoning instead of them telling you what a zone is like. They kind of want you to tell them.

Rachel 16:50

It's really funny you say that because I say that to my clients all the time. They get so confused. Why do I have to show them what they approve my property for? I'm like, I know. I get it. This is how it works. We have to give them the zoning documents that they approve. We have to present it to them as a They don't already have it on file. I think the reality is the city is just so big and the history is so vast that they're not going to go searching for your property records. You have to bring it to them. So honestly, one of the best ways to search is through Atlas. Atlas is a city of Philadelphia website where you can plug in your address and it will bring up the archives on the history of the property and just a lot more information about the zoning. Unfortunately, there isn't really one place best way to just plug in your address and get like an automatic response of how many units you're zoned for. A lot of the time, even if you do search your address, the general zoning of the neighborhood will come up or what your lot was approved for. So a lot of times someone's zoning actually still listed as residential single family zoning. But back in the 80s, they got a variance that gave them the permission to have the zoning be multifamily or mixed use. So the best thing to do is on Atlas, we can find the zoning archives. And even if something is from 20, 30 plus years ago, there are certain documents that we just have to have signed today that verify that to your knowledge, the property has never changed use since then. So there are ways that we can give the city the zoning history and they will accept it. Now, if it's something that's newer construction, they will need a certificate of occupancy. So that's a strong requirement. And I really urge you as an investor, if you are purchasing what's a newer multifamily or really any multifamily, I would urge you to ask for a copy of the certificate of occupancy. That's the CO. That's what the city is going to ask for to verify zoning for pretty much anything that has been approved after the year 2000. So it's very, very beneficial to get that in your hands before you purchase the property because there is a whole process to go down to actually get a copy of the CO if it was issued before your ownership. And it's just really worthwhile to try to put that on your realtor's plate and have your realtor try to get that for you while you still have one working for you. So the CO is always really important as well. Now, also, if a owner was maintaining the rental license before you bought the property, if there was an active rental license on file with the city within the last three years, that's enough to verify the zoning. So that's another really important key is to look at when the last active rental Because a lot of the time, if you're buying property from an owner that took good care of the property and maintain a rental license, you can usually just piggyback off of their last approval to get those zoning pushed through. But honestly, like the city is the city. If you bought a property that didn't have the zoning approval and you want to try to get it now, there's no guarantee. You know, sometimes it's just a matter of trying to hiring a zoning attorney and going through the entire process to get that variance issued. issued for the first time, but the city will not give you the license if they feel that the property has not been approved for it.

Yuriy 20:16

Before we continue, I want to take a quick moment to thank our sponsor, TrustArt Realty. If you're a landlord in Philadelphia, you know that managing rentals can be complex. That's why TrustArt Realty is offering all of our listeners a free rental analysis or management advice session. Whether you need to help understand your rental market or optimizing your rental strategy, they we've got you covered. To claim your free rental analysis or scheduled consultation, just send an email to trustartrealty at phililandlord.com or click the link in the show notes to fill out a quick form. Yeah, and there is something very important that you mentioned is that the rental license that you're getting from the seller or whatever records that you have, it has to be within three last year because what the city of Philadelphia does is that if the property doesn't have that rental license and it used to be a multifamily property but in three years they can just reduce it to single family that's what's in our city's regulations and laws and regulations i guess and i've seen that multiple times when you see the property it was built as a duplex or triplex or whatever it can be it has three separate units it may have three separate entrances everything is separate however the rental license wasn't renewed for the last 15 years or Or the owners, maybe they were owner occupying the property. They had family living in other units and now they're selling it. And when your buyer goes to get a rental license, they cannot. Because now on paper for the city, that property is a single family. So yeah, it's very important to verify when you purchase a property that it's actually a multifamily. So you can avoid all of this time consuming and costly procedures going through zoning board and going through zoning attorneys. All of that. So we already named so many different things that you need to have to get your rental license. And I think that's not even all of it. I know that there is such a thing that is called business income and receipt tax. So can you tell us a little bit more about that? And why do we need that? Or do we need that?

Rachel 22:28

Yeah, definitely. The tax account for business income and receipts is required. So just like any business, this is a rental income. Rental properties in the eyes of the city of Philadelphia are businesses. It earns income and therefore, like any government, they want to charge a tax on it. So you have to register through the Department of Revenue for the Philadelphia business income and receipts tax. However, what a lot of people find comfort in knowing is that if the earned revenue for that tax year is whatever tax year it was, let's say 2024, because that's the one that people need to start filing for. If the income earned for that tax year was below $100,000, you're actually exempt from owing a business income and receipts tax. You still have to file it. That's what people forget. get or they don't realize. You file what's called a no tax liability form. You can file that online through the tax portal. So if your revenue earned, the gross revenue is below $100,000, you are exempt. You still have to file it. You have to let the city know, hey, I'm declaring I made less than $100,000 on my business in Philadelphia. And then that keeps your account in compliance with the city.

Yuriy 23:42

And it's for everyone across the board. It doesn't matter if you're just a person, single member LLC or partner.

Rachel 23:48

Exactly. It doesn't matter what your ownership structure is. It doesn't matter if you are personally located outside of Philadelphia. This is for any person, LLC entity located anywhere in the world. That has business within the city of Philadelphia. They are responsible for being registered for this tax type. And then they are responsible for filing it every year, which is very simple to do. But it's just the matter of knowing you have to do it, knowing how to do it and remembering to do it every year. That's important. And a lot of accountants don't know the intricacies of the city of Philadelphia tax department. So it happens all the time. I have a client in Florida or just even in the suburbs outside of Philadelphia and their accountants not familiar with the tax rules in Philadelphia. So, you know, sometimes it's a little bit of collaboration between a client and their accountant to figure out what the city needs done. But as long as you kind of get the hang of it, it's pretty straightforward. As someone who's I say that as someone who's done it a lot. So when it's your first time, it might not feel straightforward, but it's not as daunting as it seems. And just staying on top of it every year is really important.

Yuriy 24:57

So let's say if I buy a property, existing property that already has a rental license, can I just keep using that rental license? Or what would the process be to transferring, I guess, that rental license or getting a new one?

Rachel 25:11

Yeah, that's such a great point. No, the short answer is no. Every rental license is registered to that owner. So once someone sells the property, their license does not transfer. So every person or LLC entity, whatever the owner structure is, Once you own that property, you have to file for the license. Now, if you're going to a settlement and you know you're going to be buying the property, you can't purchase it until you can show proof of ownership. So if you know that you're settling on something in 30 days and maybe you want to get your license ready, you can prep your application, but we can't actually submit it until you can show the city that you own the property. Unlike the rental license though, lead... does transfer. So the city of Philadelphia requires that all properties built prior to 1978 are tested for lead-based paint. Those results are valid for four years. And the nice thing is that those do transfer between owners. So it's another good thing to kind of put on your realtor's checklist before settlement to get any copies of lead results as well, because those are beneficial for you and it'll save you some money.

Yuriy 26:17

Okay. And what are those lead tests? Can you talk a little bit more about that and how does that connect with the rental license?

Rachel 26:24

Yeah. So the lead requirement is something that the city rolled out about four years ago now that all residential rental properties built prior to 1978 have to be tested for lead-based paint. This is just something to keep up with the health and the safety of properties, making sure that they're safe for families to live in. And the way it works is that a certified lead tester will come to the property and they take just a swab of the floor and a windowsill in your common area. And then in every bedroom from there, they send it to a lab and the lab will determine the amount of lead that was in the sample. And then they will issue the results. And then the city has parameters on how much lead is acceptable to be present in a property. So long story short, you will get either a failed result or you'll pass, you'll get a certificate and lead results, and then that gets provided to the city of Philadelphia. And then, like I mentioned, those results are good for four years. So it's a nice thing to either provide to the buyer if you're selling a property or if you're buying a property to be asking for. And yeah, that's just another thing that the city requires to get a rental license. If your results are not on file with the city, they will flag your application and they will not even let you submit it unless these results are on file. The city's rental license application system knows if you have results on file or not. So it won't even let you submit the the application unless the city has the lead results on file. Now, if your property was built after 1978, then it's exempt. You still have to file it with the city. You have to let them know that this property is newer construction. So either way, you have to file it with the Department of Lead. health and safety before you can submit your application.

Yuriy 28:06

It's kind of funny what you're saying that the city will know if you don't have this or you don't have that. They will flag your application, but for whichever reason, they do not know if you need to have a rental license for a single member LLC or whatever LLC, and they can explain you that. And you have to have so many different licenses. You have to have so many different tax account numbers with the city of Philadelphia just to get your rental license. I don't know why wouldn't they just combine it all into one thing, and then you just have your rent license. And based on that, you can pay your taxes. Based on that, you can do whatever you need to do with city of Philadelphia. But no, it's not that easy. Not too much logic in our city, I guess.

Rachel 28:47

And something that we actually haven't even spoken about yet is like, Why should someone care? Because like you're saying, you're like, they make it so hard and annoying and difficult. If you're a landlord in Philadelphia, why bother? Well, there's a lot of really important reasons why it's worth your time and effort. The biggest reasons are that without a rental license, you are not legally allowed to collect rent payments. You're not legally allowed to enter into lease agreements. And what's happening is a lot of tenants in Philadelphia are learning about these requirements. And once a tenant catches wind that you don't have a rental license, a lot of tenants are starting to refuse to make rent payments and they're starting to withhold rent. And then in addition to that, If you do not have an active rental license, you cannot file for back payment of rent due in the court system. So you also can't start an eviction process without an active rental license. So at the end of the day, everyone's getting into real estate to make money. It's a business. And if you don't have the rental license, it can come around and bite you really hard because it can either withhold you from collecting rent or it can withhold you from being able to file that eviction in the court and get that long eviction process started to try to get nonpaying tenants out of the apartment. as well. So maintaining an active license from start to finish is just always in your best interest because you just never know when that tenant is going to flip on you. No one leases an apartment to someone thinking they're going to default on their rent or thinking they're going to become difficult, right? You always go into a new lease agreement because you feel like you vetted them. You feel like they're going to be the best fit for the apartment. And you just never know when people can just, even their situation changes, maybe they lose their job or maybe something happens where they just can't make the rent anymore. And sometimes there's tenants that are really willing to work with you and communicate. And then other times there's tenants that they just shut down and you have to turn to the courts. So you never know when it can happen. You will never know when a tenant could start refusing to pay rent and having your ducks in order from the start is the best thing that you can do to protect yourself because Philadelphia is a tenant favorable city. And more often than not, the courts will side with the tenant. So as a landlord, you really have to be prepared and you need to have everything that the city wants you to have otherwise they will not roll in your favor which i'm sure is something that like you're you've seen happen over and over again

Yuriy 31:06

yeah yeah unfortunately i have and this is one of the topics of our future conversations when we'll have our eviction attorney on the show we will discuss all of that in details i know all of this information i've been doing it for a long time but still listening to this you telling me all of these requirements that you need to have to get a rental license it My head just explodes. It's so many things. And do you need to have all of this every single time when you, let's say, like, I just bought a property, right? I went, I got my commercial activity license. I opened city account, tax account to pay my business income receipt taxes. I did my LED certification for the property. I applied for rental license. I got my rental license. So good for a year. next year i have to do all of that all over again or how does it work

Rachel 32:01

Yes and no. So once you have your commercial activity license registered for that set, that's not going to expire. That doesn't change. That one's fine. The rental license will expire. And when you go to renew it, the city is going to verify, are there violations against the property? Are your tax accounts in compliance with the city? So they're going to check your Philadelphia tax account. And if you have missing filings or payments owed to the city, they're going to flag you for that. And then if your lead results have expired or they're not on file, they're going to flag you for that as well. So once you're in the groove of it and you're doing it every year, you know, it really comes down to making sure that your results are still active. They're good for four years, making sure that you are filing your necessary business taxes every year. And then, yeah, making sure that every year you renewing your rental license. That's something I do for my clients as well. I track all the rental license renewals for them and I reach out 30 days in advance to get the ball rolling. That way, if there are issues that come up, we give ourselves time to sort through whatever could be stopping it from getting renewed, but yeah. Every year, these things have to be getting done. And then in addition to that, we didn't even talk about the certificate of rental suitability. That's another thing that's required in addition to this. So once your rental license is issued, you can then apply for what's called a certificate of rental suitability. It really goes hand in hand with the rental license. They're like brother and sister. Once you have the rental license, you need to get the certificate. And that also needs to be given to the tenant along with a copy of the rental license. This very Yeah, absolutely. But that's why property management companies like TrustArt Reality are so important, especially in a city like Philadelphia, where you really need boots on the ground to understand what the city wants. Because if you follow the rules, it can be a great city to invest in. But if you don't, it can become like the headache that you never wish you signed up for. Yeah,

Yuriy 34:10

yeah. And that little piece of rental suitability certificate, which is just a paper that you get with one click online. It's super easy to get. And we get it all the time when we sign new leases because we have to provide it to tenants. But if you miss that one little step as a landlord in the city of Philadelphia, it doesn't matter if you live in Philly or not. If you have a property in Philadelphia, you have to provide that. And when you go or if you go, which is when you go to eviction court, you cannot file for eviction without that little piece of paper. And as Rachel mentioned before, that you legally are not allowed to collect rent without rental license. But even if you have rental license, but you did not provides a certificate of rental suitability to your tenant, you're still legally not able to collect rent. And what the court can actually tell you, the judge can tell you that you have to return all the money that the tenants paid you over the time until you provided them with certificate of rental suitability. So imagine that you go to eviction court because tenant didn't pay you for two months. Now, by the time you're in court, it's probably already five months behind and the tenant was on the property for a year. So the judge tells you before you can do anything, you have to pay back the rent for 12 months that tenants were paying to you before. It's a huge amount of money for anyone to just put out as all of us know that we're not this rich corporation sitting here and putting all the cash in the pockets. We pay our taxes. We pay our real estate taxes. We pay our mortgages. And at the end, it's not that much money that is left in your pocket. So just be very careful and make sure that you understand every single little piece of information that you have to provide the tenants with in the city of Philadelphia to be a legal level word.

Rachel 36:03

On that note, too, something that's important to know is that we cannot backdate a rental license or certificate of rental suitability. So if your tenant has been living there and they haven't paid rent in six months, but you didn't have this in place, once you finally do get your rental license and certificate of rental suitability, it is only good for that day forward. So you can only sue in the court for the back rent owed from that date forward. You cannot go backwards and now try to collect on that back rent owed six months ago, which is why it's just so important from day one, you have to have these in your pocket because you just don't know when things are going to flip and you don't know how long. Sometimes some landlords, it just takes them longer than others to get their licenses in place. So it's just important to have it correct from the start.

Yuriy 36:46

Yeah. Yeah. It's mind boggling how many things that we need to know to be able to do business in the city of Philadelphia. But again, that's why people like Rachel exist. That's why people like us exist. So we can help landlords to navigate all of those complications of the city of Philadelphia and make things right to make sure that we can actually collect the rent, that we can actually go to eviction when we need to go to eviction and the tenants cannot just tell us that we're not going to pay you rent because you cannot collect rent, which is happening a lot in city of Philadelphia. So Rachel, do you know if there are any upcoming changes in city regulations or anything that landlords should be aware of that's coming our way?

Rachel 37:30

So there's nothing that the city has announced that I'm aware of about changes coming, but what What I can say is that they're only getting better at being able to connect the dots between different elements that they want to see. So they're getting better at knowing if you filed your taxes, if you've completed the lead testing, you know, the city is only getting better at being able to flag your applications and say, well, no, you didn't do this or you didn't do that or your zoning isn't right or your proof of ownership isn't right. So all I can say is that like when you're going through like a city government website, they're not like revolutionary. It's a nonprofit organization. So they're not investing tons of money to make better systems, but they are getting smarter about knowing when you're in compliance versus when you're not. Something that the city is starting to do is if you have, I believe, business income and receipts taxes that haven't been filed, they are going to start coming after people stronger for that. So if you have a commercial activity license, then that means that you have the business income and receipts tax. So if you haven't been filing that, the city is actually going to start coming after people very strongly with fines and penalties owed for that as well. So that's an important thing is if you've been neglecting your revenue accounts to make sure that you get that worked out this tax year, just so that it's not going to come back for you.

Yuriy 38:51

Yeah. And to back up that, actually, I myself had an issue. I've been doing that for many, many years, doing all the rental licenses for properties that I own. And this year, when I went to renew a license for one of the properties, I couldn't renew it or whatever reasons they flagged my application. And one of the ways how you can figure out what's happening is to email them at revenue.fila.gov, which I did. And I get a response that they basically do not know what it is, but I need to go to my taxpayer center and pull my compliance on the website. And that compliance will show me what the problem is. And I never logged into that tax service center before. because I have my accountant doing all the job for me, all the work of tax filings for me. So I had to create that account. I had to receive a code from the city of Philadelphia that they do not, they say that they will mail you the code to access your account, but they actually do not. You need to email them back after you create the account so they can give you the code so you can log into your account. So it was a whole long process. I finally figured all of that out. I logged into my tax portal. I pulled the up that certification. And the problem was that I I haven't paid my refuse collection fee, which is basically trash fees. So whenever you have a multifamily property in the city of Philadelphia, by multifamily, I mean two units and up, you have to pay $500 a year for refuse collection fee, which I guess I just missed paying or it just slipped my mind. I didn't pay that. And they flagged my renewal application for that little fee. So I had to pay that first. And then I was able to go back and renew my application, which I had the period of time, about a month when I just ran without rental license being active.

Speaker 00 40:45

Yeah. And what the city is doing now too, I believe, and this is a great question, actually, you should bring up with your eviction attorney. If you have a lapse in rental license coverage, I believe that the city is now saying that if there was any lapse, you cannot back sue for rent from the time that you did have the active license. Once that lap starts, I do believe that from that date forward, you're reset on when you can sue for background owed. So that would actually be a really great thing to ask the eviction attorney about because I'm pretty sure that now any lapses void out any past coverage that you had it for. And the city will now start making you go from that date that your license became active again on.

Yuriy 41:24

Yeah, yeah. They don't make it easy for us. That's a lot of information. And to wrap it up, Rachel, what if you could give one key piece of advice to Philadelphia landlords? What would that be?

Rachel 41:38

One key piece of advice about rental licenses. I know, like I think at this point, I feel like such a broken record because so much of like what I really push in on, I've talked about. So I'm trying to think of something that like I haven't brought up yet, trying to think of something creative. So a piece of advice that I always give to all of my clients is that once the license is issued and once you get your certificate of rental suitability, present them both to your tenants and have them sign it so that you have proof that they've been provided with these documents so that God forbid, if you ever have to go to court or if there's ever a reason that you need to show the city, like hold up, they have the license, they've been provided the license. You should always make sure that your tenants are signing it and you should retain a copy for yourself so that you can show the courts that they did receive it regardless of maybe what your tenant might say otherwise. Because people nowadays, the leasing packets are so massive in Philadelphia that a tenant won't even remember if they signed it or not. So you have to remember for your records that the tenant signed it.

Yuriy 42:39

Yeah, great advice. You definitely have to provide it to the tenant and have a signature from them that you provided. Or if tenants, for whatever reason, refusing signing it, just send it by certified mail or send it by email. So in case if you have to go to court, you have that proof that, hey, this was the date and time when I actually sent it out. That's very important and great advice. So Rachel, if any of our watchers or listeners have any questions about it. What is the best way for them to get in touch with you? How they can find you?

Rachel 43:12

Yeah, absolutely. So my website is phillyrentallicense.com. My email is rachel at phillyrentallicense.com. That's R-A-C-H-E-L. And I'll give out my number too. If you want to call me, it's 215-740-6038. And from what you've probably already heard is that I specialize in landlord compliance with the Getting a rental license is in order, annual renewals, just making sure that all of the things we talked about today are not your problem to deal with, but something that I can help you navigate and just not have to worry about. That's my bread and butter. And that's what I enjoy doing and helping landlords in Philly know the laws and know what they need to do to be able to earn their money because that's what it's all about.

Yuriy 44:00

That's awesome. Yeah, and we will put that in the show notes as well. So if anybody is interested in talking in more in-depth with rachel feel free to grab that and reach out and we will end at this oh wow that was a lot of information about rental license in philadelphia more than i need but also i i have to know all of that and you have to know all of that as well as philadelphia land words so again we will put all rachel's information in the show notes feel free to reach out rachel is a great resource i've been working with rachel for some time now she's been helping a lot of our clients as well. And if you have any issues with your rental license, she's a good resource to go to. On this note, until next time, when we'll hopefully will provide you with more great information for City of Philadelphia landlords.