A Federal judge’s ruling regarding Philadelphia Gas Works’ (PGW) method of collecting delinquent accounts on rental properties is a resounding “win” for landlords, especially owners of commercial properties. And you can be sure that your experienced, in-the- know Philadelphia, Pennsylvania Title Insurance Company such as World Wide Land Transfer is ready to tackle the resulting changes.
A bit of backstory: Most people think of utility companies as being privately-owned. PECO (Philadelphia Electric Company) is one example. Use their electricity then pay their bill. Regardless of whether you’re a property owner, landlord or tenant, you are the only party responsible for paying that bill. If you don’t pay, then PECO can file a claim against you in the Courts and have a monetary judgment entered in their favor. This judgment award follows you regardless of where you live and will stay against you, personally, until paid. Opposite privately-owned utilities such as PECO are those that are government-owned, e.g. Philadelphia Gas Works (PGW). Unpaid bills also lead to a monetary award in favor of the utility; however, government-owned entities are awarded a municipal lien against the property as opposed to a judgment against the person. Municipal liens stick to the property regardless of who actually used the gas service and must be paid in full to be removed from the court records.
In 2005 The Responsible Utility Consumer Protection Act clarified the right of PGW to file liens against landlord properties due to unpaid TENANT accounts. In an attempt to be fair to the landlords PGW implemented the Landlord Cooperation Program (‘LCP’) which in its simplest terms stated that landlord (residential) properties could not be liened due to delinquent tenant accounts as long as the landlord cooperated with PGW by providing access to tenant meters and any other information PGW deemed necessary. This left landlord owners of commercial properties as well as those determined to be ‘uncooperative’ holding the bag for any and all delinquent tenant accounts, even if the tenant was long gone.
In 2014 a number of landlords sued arguing that PGW’s method of notifying landlords of delinquent tenant accounts did not provide adequate and timely notice to the landlords. By the time the landlords knew of the delinquency and municipal liens, it was too late to go after the tenant for payment as the tenant was rarely still around. This forced commercial or uncooperative landlords to pay sometimes hefty municipal liens when they went to sell or refinance their properties.
U.S. District Judge J. Curtis Joyner agreed, ruling in favor of the landlords and issuing a permanent injunction against the City and PGW barring them from filing liens against landlord properties for unpaid tenant accounts. In addition the City was ordered to vacate (remove from record; i.e. ‘wipe out’) any liens filed against registered rental properties filed since 2009. The ruling didn’t necessarily dispute the City’s and PGW’s legal right to file a municipal lien, it instead attacked its methodology. The door was left open for the City and PGW to institute a new system of collection whereby the landlords are given fair, proper and timely notice of delinquent tenant accounts prior to any municipal liens being filed against the property.
Rest assured. Here at World Wide Land Transfer we are well-versed in municipal lien law and highly- experienced with Pennsylvania and Philadelphia title issues. If our search discloses any PGW liens, we will dig deeper to determine the validity of the lien and help take any necessary steps to have it paid or removed from the records. At the same time we’ll keep a close watch out for any new procedures implemented by the City and PGW that may affect our clients’ rental properties or purchases. You can LEAN on us.