There are a bunch of new Philadelphia landlord-tenant laws on the books right now, and if you own rental properties in this city, you need to know them. I own a property management company here in Philadelphia, so I’m going to break these down one at a time — starting with the new security deposit rules.
The New Philadelphia Security Deposit Rule
Here’s the deal: if you own more than three units in Philadelphia and you want to charge a tenant more than one month’s security deposit, you now have to let that tenant pay the additional amount (anything beyond one month) in three or more installments.
So if you own three units or fewer, this rule doesn’t apply to you. But if you’re a bigger landlord or you’re running a portfolio, this is something you have to build into your move-in process.
Why Landlords Charge More Than One Month in the First Place
Most Philadelphia landlords charge first month’s rent plus one month’s security deposit. Standard stuff. But when you’ve got a higher-risk tenant — somebody whose credit isn’t great, or whose application has some red flags — charging a larger security deposit is one of the tools you use to protect yourself while still giving that tenant a shot at the unit.
It’s actually a win-win when it works. The tenant with less-than-desirable credit gets more options in the rental market. The landlord gets extra protection against damage or non-payment. That’s how it’s supposed to work, anyway.
Is This Law a Big Deal? Honestly, No.
I don’t think this one is unfair to landlords, and it’s not unfair to tenants either. It’s a reasonable middle ground. Most Philadelphia rental property owners and property management companies can navigate it without much trouble.
That said, here’s where I’d pump the brakes a little: think through the timing.
The Timing Problem
When a tenant moves in, you’re collecting first month’s rent and the first portion of the security deposit. The additional security deposit money — the part beyond one month — comes in over installments after they’ve already taken possession.
So if you end up with a bad tenant, you’ve got a problem. You’re not only not going to collect the rest of that security deposit, you also have a bad tenant living in your property. That’s why properly screening your tenants up front matters more than ever. The security deposit was always your backstop — now part of that backstop is coming in over time, so the screening has to do more of the work.
What Philadelphia Landlords Should Do Right Now
- Update your lease. If you own more than three units and you charge more than one month’s deposit, your lease needs to lay out the installment schedule clearly.
- Document the installments. Three or more installments — put the dates in writing and track the payments like you’d track rent.
- Tighten your screening. Since you may not have the full deposit in hand on day one, your front-end screening is doing more of the heavy lifting.
- Know the rest of the rules. This is just one of several new laws coming down. There are more, and I’ll be covering those in separate videos and articles so it doesn’t get overwhelming.
The Bottom Line
This new Philadelphia security deposit law isn’t going to break anybody’s business. It’s a manageable change. But it’s a reminder that the rules in this city keep moving, and if you’re a landlord here, you have to keep up — or hire somebody who does.
I’m just a humble Philadelphia property management company owner doing my best to answer your rental property investing questions. More on the rest of these new laws in upcoming videos. Happy rental property investing.
