Chapter 3. Require Buyers to Bring Properties Up to Code Within a Specific Time Frame After Sale and Disqualify Tax-Sale Bidders Who Have Tax Delinquencies or Code Violations

By requiring that properties be brought up to code within a specific time frame after sale and by disqualifying tax-sale bidders who have tax delinquencies or code violations, municipalities can break the cycle of blight

Presale Inspections: Requiring sellers to pay for inspections before transferring properties to new owners and to notify owners of deficiencies or to bring properties up to code

Under presale-inspection laws, all properties for sale must be inspected by their municipality for code violations before transfer to a new owner. Violations revealed in the inspection report must be either corrected by the seller before sale or revealed to a prospective buyer, who—for the sale to go through—must agree to correct them within a set amount of time after the property transfer.

What does it do?

To ensure compliance with local codes, any owner who offers a property for sale must have the property inspected. Sellers are responsible for paying an inspection fee when they request the inspection. Once the inspection is completed, the public officer prepares a presale-inspection report outlining all code violations. If the officer finds no violations, the municipality issues a certificate of compliance, which is valid for one year from the date of the inspection. If code violations are found, the seller may fix the violations or give the buyer a copy of the report, listing all violations. To complete the sale, the buyer must commit to abating the violations within a specified period of time from the purchase date.

Another significant feature is a requirement that the seller notify the municipality of the buyer’s name and address within three days of the transfer. That requirement helps end the practice by some absentee owners of falsely listing the property address as their address. Presale inspections also allow for the verification of a property’s allowable use before sale and its compliance with zoning ordinances.

How do we pay for it?

Inspections are financed by the seller, who must pay a fee for the inspection. The fee should be no more than necessary to support the presale-inspection program.

What types of property are covered?

All types of property for sale or transfer to a new owner may be covered.

What challenges will it solve?

Mandatory presale inspections represent a proactive, preventive approach to stabilize and repair older buildings. They are particularly important when a property is repeatedly transferred to absentee owners, who are difficult to hold to local code standards. The presale-inspection requirement applies not only to buyers and sellers in Pennsylvania but also to those out of state and gives municipalities the opportunity to hold the appropriate parties responsible for meeting property improvement and maintenance needs. A reactive approach to enforcing city codes—by pursuing negligent property owners after they cause problems, rather than preventing problems in the first place—is costly and inefficient. In addition, presale inspections help protect potential purchasers by ensuring that they are aware of the existence and the nature of code violations before entering into an agreement of sale.

Where does it apply?

Any municipality may impose a presale-inspection requirement.

How does it work? What is needed to use this law effectively?

The municipality adopts an ordinance that requires presale inspections. Sellers pay a fee, and municipal officials conduct inspections before a sale. A presale report is issued, and either the seller corrects the violations before settlement or the buyer corrects the violations within a certain number of days after settlement. The law should allow for a hearing so that owners may appeal a finding of code violations. The municipality should ensure that it has sufficient housing inspectors, whether on staff or available under contract, to operate the program.

Presale-inspection laws have been upheld by the courts. In Mann v. Calumet City, Nos. 09-1681 and 09-2481, 2009 WL 4546352 (7th Circuit, December 7, 2009), the United States Court of Appeals for the Seventh Circuit reviewed a point-of-sale ordinance prohibiting the sale of houses until they were inspected to determine whether they complied with city building codes. Prospective sellers claimed that the ordinance prevented or delayed them from selling their homes. The court rejected the owners’ challenges to the ordinance, saying that preventing a transfer of property until a certificate of compliance was issued does not violate owners’ rights and that a hearing process allowing owners to challenge correction requirements provides adequate safeguards.

What policies and practices will increase our chances of successfully using this tool?

In Allentown, the implementation of the ordinance began in February 2008. Before beginning implementation, the city completed a mass mailing to real estate brokers and lenders. The mailing had information about the program’s purpose and intent and the responsibilities set forth in the ordinance. To ensure the notification of all sellers and buyers subject to the ordinance, the city has been monitoring deed transfers (particularly sale-by-owner transactions) as well property conveyances to successful bidders at sheriff’s sales.(19) After inspection, Allentown has certified some homeowner properties and rental properties as unfit for human habitation.

What legal documents will we need?

  • Ordinance requiring presale inspections
  • Buyer notification inspection report form or presale-inspection report form
  • Certificate that certifies the property for transfer without code violations
  • Where violations do exist, a form in which buyers can acknowledge the violations and state their commitment to fixing the violations within the required timeframe

Who is using the tool now?

The City of Easton requires sellers to advise buyers of the legal use and condition of properties and to obtain a buyer notification inspection report and certificate before making an agreement of sale. A seller must schedule an inspection with the bureau of codes and inspections. Fess for inspection and certificate of occupancy must be paid to the code office before the inspection date. The seller of a single-family home must pay a $150 inspection fee and a $75 certificate-of occupancy fee. The seller then receives a report of the inspection and an application for a certificate of use and occupancy. The buyer notification inspection report must be forwarded to the buyer. If there are no violations, a certificate of occupancy is issued. Where there are violations, a certificate of occupancy inspection must be scheduled once the violations are abated.

How can we combine this with other strategies?

Presale inspections are an opportunity to document the violations on a property and obtain a commitment from the buyer, seller, or both to resolve them. It is an important opportunity that should be used with the other code enforcement tools documented in this manual.

Municipal Code and Ordinance Compliance Act: Requiring purchasers of properties that have known code violations to resolve the violations within 18 months

The Municipal Code and Compliance Act(20) requires purchasers of properties that have known code violations to resolve the violations within 18 months (structures) or 12 months (lots) of purchase. To assess code violations, the municipality inspects a property any time before purchase and performs a follow-up inspection 12 or 18 months later. An owner is personally liable for any violations and faces fines ranging from $1,000 to $10,000.

What does it do?

The goal is to ensure that a property does not continue to violate codes once it is transferred to a new owner, whether as part of a private sale or a tax sale. The act provides that within 18 months of the date of purchase(21), any purchaser of any building or structure known to have one or more substantial violations of a building, housing, property maintenance, or fire code must bring the building into compliance with the code or demolish the building in accordance with the law. Failure to do so will result in the purchaser’s being personally liable for the costs of repairs or demolition and a fine of not less than $1,000 and not more than $10,000. In addition, any purchaser of any lot or parcel of land known to have one or more substantial violations of a municipal ordinance relating to maintenance, health, or safety must make a reasonable attempt to abate the violation(s) within one year of the purchase date. Failure to do so will subject the purchaser to personal liability for the cost of maintenance and the fines noted above. That said, a municipality may not refuse to issue a use-and-occupancy certificate on the basis of a substantial violation and may not require the correction of a substantial violation as a condition to issuing a permit unless the substantial violation renders the property unfit for human habitation.(22)

How do we pay for it?

Fines ranging from $1,000 to $10,000 can be used to administer the law. In a municipality that has low-income housing, however, not less than one-third of the fine imposed must be used by the municipality for low-income housing in a manner determined by the municipality.

What types of property are covered?

Properties covered are those that have code violations at the time of purchase or transfer.

What challenges will it solve?

The law’s goal is to improve the housing and building stock and prevent worn-down, unsafe properties from changing hands without a plan for making repairs and bringing them up to code. Purchasers of buildings or structures that have known code violations are under a legal obligation to fix up the properties and care for them within 18 months. The law requires a potential purchaser of an “as is” property, when making the decision to buy, to assess both the purchase price and the cost to rehabilitate the property in the next 18 months. The goal for any transfer of a property in substantial disrepair is to ensure that a responsible new owner will take care of the property and bring it back into productive use. This tool attempts to do just that.

Where does it apply?

Everywhere in Pennsylvania.

How does it work? What is needed to use this law effectively?

To use the law, a municipality must cite properties for substantial code violations and make the citations available to the public so that it is clear that buyers have at least “constructive knowledge” of the substantial violations at the time of sale.(23) Buyers have only the responsibility to remedy substantial violations that pose a threat to health and safety that they know about. The tool differs from a presale-inspection ordinance, which requires sellers to arrange for an inspection of the property before being able to complete a sale. This law places the responsibility for providing an inspection on the municipality.

What policies and practices will increase our chances of successfully using the tool?

Clear and timely inspections and making sure that code violations are carefully recorded.

What legal documents will we need?

The municipality must retain clear records noting all code violations and must share those records with a buyer at sale.

Who is using the tool now?

No examples known at this time.

How can we combine this with other strategies?

Progressive code enforcement and clear reporting are crucial for the enforcement of this tool.

Disqualification of Tax Sale Bidders: Restricting bidders who have tax delinquencies or code violations

Philadelphia and counties that have tax claim bureaus under the Real Estate Tax Sale Law (RETSL)(24) have some power to restrict buyers of properties at tax sale to ensure that buyers will maintain the properties after purchase. Under RETSL, a tax claim bureau may disqualify a delinquent property owner as a bidder at tax sale if the buyer is delinquent in paying a local tax for the taxing district in which the property is located, or if the buyer carries a municipality-owned utility charge that is more than one year delinquent.(25) A tax claim bureau also can refuse to sell further tax sale properties to an owner who has outstanding code violations(26) or a landlord whose rental license was revoked by a municipality in the same county.(27) Philadelphia may disqualify bidders who are tax delinquent.(28)

What does it do?

A 1998 amendment to RETSL prohibits tax claim bureaus from selling properties at tax sale to bidders who are delinquent on their current real estate taxes within the taxing district, are more than one year delinquent with a municipality-owned utility bill, have outstanding code violations, or have a revoked rental license in the same county. Although bidders can be asked to complete affidavits asserting their eligibility, it is the responsibility of the county to verify that bidders qualify. Philadelphia has separate provisions that disqualify bidders who have code violations from purchasing properties at tax sale.

How do we pay for it?

The only cost is a basic search of each bidder’s history of tax payments, outstanding code violations, and revoked rental licenses. Code enforcement agencies have 20 days after tax sale to complete the searches before a deed is issued to the winning bidder.

What types of property are covered?

Properties sold at tax sale by tax claim bureaus under the Real Estate Tax Sale Law (RETSL) and in Philadelphia.

What challenges will it solve?

The state has several tax foreclosure laws that share the goal of revenue generation for taxing authorities. Such laws have allowed the highest bidder to obtain a property at tax sale without any check on whether the bidder will be a responsible owner. By limiting eligible bidders at tax sale in RETSL jurisdictions and in Philadelphia, the municipality can limit potential new owners to those likely to care for their properties.

Where does it apply?

Jurisdictions that fall under the Real Estate Tax Sales Law (RETSL) and Philadelphia.

How does it work? What is needed to use this law effectively?

In RETSL jurisdictions, the county tax claim bureau must qualify bidders at tax sale. The tax claim bureau can establish a mandatory preregistration process for buyers of tax sale properties. The process allows relevant agencies to screen registered bidders before sale. Under RETSL, municipalities may challenge a successful bidder within 20 days of sale.(29) Code officials must coordinate with the tax claim bureau and the sheriff to identify bidders who have tax delinquencies, code violations, or revoked rental licenses to disqualify them from buying properties.

Courts have held that purchasers delinquent in their real estate taxes are permitted by law to bid at a tax sale as long as the new owner of a property cures a delinquency within 20 days of the tax sale.(29)The fact that a bidder does not provide certification of payment of real estate taxes under Section 619.1 does not affect the validity of the sale. Instead, it is up to government to prove the tax delinquency.(30) If a bidder is found to be ineligible to make a purchase, the tax claim bureau will not issue a deed to the disqualified bidder.

In Philadelphia, the process is different. Within 30 days of a tax sale, the city may petition the court to prohibit the transfer of property to a purchaser who has housing code violations on other properties owned within Philadelphia.(31)

What policies and practices will increase our chances of successfully using this tool?

The county tax claim bureau should establish a written process that requires mandatory preregistration for potential buyers at tax sale. The tax claim bureau should widely publicize the new procedure and its policy of refusing to sell further tax sale properties to purchasers who have delinquent taxes or municipal utility charges, outstanding code violations, or revoked rental licenses.(32)

Better sharing of information between tax claim bureaus and municipalities can improve the effectiveness of this tool. Tax claim bureaus can better screen eligible buyers if they receive annual or semiannual information from municipalities listing owners who have tax delinquencies, code violations, or revoked landlord licenses. Similarly, if tax claim bureaus can share information about properties to be offered at sale with municipalities (and land banks, where they exist), municipalities can work with tax claim bureaus to warn potential private buyers of the level of investment needed to bring the most deteriorated properties into compliance and to dissuade bidders who do not have the ability to improve derelict properties. A liaison designated to work with tax claim bureau staff, code enforcement staff, redevelopment authorities, and land banks where they exist can better ensure that properties auctioned at tax sale are purchased by responsible buyers.(33)

What legal documents will we need?

  • Affidavit in which bidders certify that they are eligible to bid under the county’s rules

Schuylkill County asks each bidder to sign the affidavid in the presence of a notary public. There is no penalty under law for failing to sign the affidavit and make the certification, but the county may refuse to accept a registration if the form is not completed accurately.

Who is using the tool now?

Schuylkill County requires all bidders to register and to sign an affidavit that they are not delinquent in paying real estate taxes, have no municipal utility bills that are more than one year outstanding, and do not bid for or act as the agent for any landlord who has had his or her license revoked. Unfortunately, the requirement lacks teeth, says Deb Dasch of the Schuylkill County Tax Claim Bureau, because the bureau doesn’t have the resources to determine whether filers of affidavits are lying, and because bidders who have substantial resources can bid under a different corporate name. At judicial sale, however, the bidder must have the approval of the municipality in which the property is located. Before repository or private sales, the bureau sends the municipality a letter noting the buyer, and the municipality has 45 days to approve or deny sale to the high bidder at a public meeting for reasons that are not “frivolous.” Where the municipality rejects the high bidder, the property is either added to the next judicial sale or is placed in the repository.(35)

When the Lackawanna County Tax Claim Bureau finds that delinquent taxes are due from a purchaser, no deed is issued until all taxes are paid in full. The bureau also reserves the right to disqualify any upset-sale bidder because of unpaid taxes.

How can we combine this with other strategies?

Restricting eligible buyers at tax sale can work jointly with progressive code enforcement discipline and denials of permits by providing increased incentives for owners to bring their properties up to code.


19. Allentown Progress Report, Fels Institute of Government (April 2009). https://www.fels.upenn.edu/sites/www.fels.upenn.edu/files/Allentown_Progress_Report_0.pdf.

20. 68 P.S. §1081 et seq.; Act 99 of 2000.

21. The 18-month period begins at closing for private sales and on the first day after the owner redemption period if acquired at tax sale under the Municipal Claim and Tax Lien Law.

22. A “substantial violation” is a violation of a building, housing, property maintenance, or fire code, which violation poses a threat to health, safety, or property.

23. If by applying reasonable care or diligence, a person should have known a fact, he or she is deemed to have constructive knowledge of that fact.

24. 72 P.S. § 5860.619; Act 5 of 1998.

25. 72 P.S. § 5860.619a, Act 133 of 1998; In Re: Upset Tax Sale of September 11, 2009, Country Acres v. Wayne County Tax Claim Bureau, Commonwealth Court of Pennsylvania (opinion not reported), January 5, 2012. http://statecasefiles.justia.com/documents/pennsylvania/commonwealth-court/5-c-d-2011.pdf?ts=1325859268

26. 72 P.S. § 5860.619, Act 5 of 1998.

27. 72 P.S. § 5860.601, Act 5 of 1998.

28. Everything You Need to Know About Sheriff’s Sales, Philadelphia Sheriff’s Office Website downloaded April 12, 2014. http://www.officeofphiladelphiasheriff.com/en/real-estate/how-sheriff-sales-work

29. Section 619(a) restricts a tax claim bureau from issuing a deed before 20 days after the judicial sale, and 619(b) gives the municipality 15 days from the date of sale to petition the court to prohibit the transfer to a person who has unabated code violations after being convicted of such violations and the property poses a threat to health and safety. Upset sales have a 30-day period after confirmation when objections can be filed. Objections to private sales can be filed within 45 days of the second advertisement but objections must be based upon the sale. Repository sales give the municipality the option of withholding consent to a sale.

30. RETSL Section 619.1 provides: (a) “Within 20 days of any sale under this [law], a successful bidder shall be required to provide certification to the bureau that the person is not delinquent in paying real estate taxes to any of the taxing districts where the property is located and that the person has no municipal utility bills that are more than one year outstanding.

(b) As used in this section, the following terms shall have the following meanings:

‘Certification,’ shall mean proof via receipts of paid real estate taxes and municipal utility bills within the jurisdiction or a notarized affidavit by the bidder evidencing payment of such real estate taxes and municipal utility bills.”;  In Re: Upset Tax Sale of September 11, 2009, Country Acres v. Wayne County Tax Claim Bureau, Commonwealth Court of Pennsylvania (opinion not reported), January 5, 2012. http://statecasefiles.justia.com/documents/pennsylvania/commonwealth-court/5-c-d-2011.pdf?ts=1325859268.

31. In Re: Upset Tax Sale of September 11, 2009, Country Acres v. Wayne County Tax Claim Bureau, Commonwealth Court of Pennsylvania (opinion not reported), January 5, 2012. http://statecasefiles.justia.com/documents/pennsylvania/commonwealth-court/5-c-d-2011.pdf?ts=1325859268.

32. 53 P.S. § 7283(b); Act 6 of 1998.

33. Northumberland County Comprehensive Blight Prevention/Remediation Program (July 2012).

34. Interview with Deb Dasch, Schuylkill County Tax Claim Bureau, August 14, 2013.

35. Interview with Deb Dasch, Schuylkill County Tax Claim Bureau, August 14, 2013.