Stop Work Order on Your Permit? Philadelphia’s New Tax Delinquency Hurdle for Developers and Property Owners

Starting in Spring 2026, a critical new compliance step will be added to Philadelphia’s permitting process: the Department of Licenses and Inspections (L&I) will begin withholding certain high-value permits if the property owner has unpaid real estate taxes, fees, or liens.

This change, enabled by Section 202.7 of the Philadelphia Administrative Code, fundamentally alters the due diligence required for real estate development and investment in the city. For developers, investors, and homeowners planning major projects, an overlooked tax bill can now lead directly to costly permit delays.

Key Permits Now Subject to the Tax Check

The enforcement of this rule is targeted, focusing on permits associated with significant development or change in use. The permits L&I will withhold if outstanding debts are found are:

Zoning Permits for Development: This includes new construction, additions, site adjustments, and lot adjustments.

Zoning Permits Granted by Variance or Special Exception: Any approval from the Zoning Board of Adjustment (ZBA) will now be subject to this tax clearance.

Building Permits for New Construction or Additions.

The implication is clear: if you are pursuing any project that involves new building, structural expansion, or a zoning change that requires an L&I permit, the property’s tax status becomes a mandatory prerequisite for issuance. The Philadelphia Administrative Code specifically requires the Department to withhold permits if the owner is delinquent on taxes, though it allows for exemptions related to maintenance. The Department’s intention is to apply this check against property taxes for new construction, additions, site, and zoning permits where the owner is delinquent.

For any party involved in a transaction or development project—including owners, developers, and contractors—the new rule dictates an immediate change in strategy:

1. Enhanced Pre-Acquisition Due Diligence

Before closing on a property intended for development, a full-scale review of all municipal debt must be prioritized. The new mandate makes checking the property’s status through the Philadelphia Tax Center Property Search a required part of due diligence before permit application.

2. Resolving Delinquency to Lift the Hold

The only way to resolve a permit hold related to tax delinquency is to resolve all outstanding debts with the Department of Revenue before a permit can be issued. Our firm can assist clients by:

Negotiating Payment Agreements: If the client cannot pay the full balance immediately, the Department of Revenue offers various payment plans for delinquent Real Estate Taxes, including those for non-owner-occupied properties. Successfully entering into an agreement to pay the delinquent tax should be a key path to permit clearance.

Verifying All Charges: The rule covers “real estate taxes, fees, or liens”. This broad language includes all City and School District of Philadelphia taxes, charges, fees, rents, or claims not paid when due.

3. Impact on Maintenance vs. New Construction

It is important to note the distinction L&I intends to make. The Administrative Code provision on issuance requirements allows for exemptions related to maintenance. This suggests that permits for “ordinary repairs” and general upkeep may not be subject to the same strict tax check, though the full details will be clarified in official policies. However, the rule’s primary intent is to apply the check against property taxes for new construction, additions, site, and zoning permits.

This new policy represents a concerted effort by the City to enforce collections by leveraging the high-stakes world of development permitting. By turning the permit process into a critical collections choke-point, Philadelphia is adding a significant, mandatory legal step for all major projects.

The new enforcement of Administrative Code Section 202.7 means that neglecting historical tax debt is now a direct threat to your project timeline and financing. If you are a developer, investor, or contractor facing delays due to an L&I tax hold, don’t wait for your project schedule to collapse.

Contact Console Matison LLP and attorney Joseph J. Console, at (267) 603-2493 or email Joe@ConsoleLegal.com to ensure your next Philadelphia development is legally secure from the ground up.