Property Condition Codes (1)
As Philadelphians wait for the City of Philadelphia Office of Property Assessment (“OPA”) to finalize its citywide reassessment and certify the new Tax Year 2025 assessed values for all 580,000 parcels across Philadelphia, one thing to consider is whether the OPA has correctly classified the condition of your property. While that may seem intuitive, there are ambiguities in the guidelines for each classification that a property owner, or commercial tenant, may want to raise in any real estate tax assessment appeal. Over the next few months, I will be exploring the official guidelines for each condition code, beginning with Rehab (Code No. 2) and Above Average (Code No. 3).
The guidelines for Condition Code No. 2, Rehabbed Condition, are as follows:
The improvements feature no deferred maintenance, little or no physical depreciation, and require no repairs. Virtually all building components are new or have been recently repaired, refinished, or rehabilitated. All outdated components and finishes have been updated and/or replaced with components that meet current standards. Dwellings in this category either are almost new or have been recently renovated and are similar in condition to new construction.
The improvements represent a property that is well-maintained with no deferred maintenance and little or no physical depreciation, such as [] an older property that has been recently completely renovated.
The foregoing language seems fairly straightforward, no? But consider the following hypothetical: you are a property owner that has bought a traditional home in Germantown, which you consider a “fixer-upper,” even though when you bought it a few years ago, the former owners had pulled permits to put in a new kitchen and some new windows. However, your two bathrooms are outdated, with toilets that wobble, cracked tiles, and a window that is permanently fogged up because one of the window sashes has popped out, causing deterioration of the seal between panes resulting in calcium deposits. The carpeting in your guestrooms and hallway is not only atrocious but also bubbling, and you have knob-and-tube wiring in one area that was a pain when you had to shop around for insurance. Moreover, your water heater is at the end of its useful life, and you have fairly old window units for air conditioning. Though, beyond the kitchen repair, you have a new water heater, a new washer and dryer, freshly refinished (and gorgeous) original wood floors in your bedroom and living room, as well as a fresh paint job throughout.
You love your fixer-upper, but you see it as just that—still a fixer-upper. You certainly don’t see it as featuring “no deferred maintenance” and requiring “no repairs.” The property truly has not been “completely renovated.”
Of course, the photographs on MLS and Zillow reflect the property in its best light. The OPA evaluator assigned to your property, in reviewing real estate listings (yes, that does happen), finds your property’s listing. Given the photographs and permits reflecting the kitchen renovation and new windows, the evaluator identifies your property as a “Rehab,” and values it accordingly.
Notably, the foregoing “Rehab” condition guidelines provide only vague guidance for what to do if the property has been subject to only a partial renovation. How much renovation must be done to properly classify it as a “Rehab”?
Looking to the next condition code, “Above Average,” is somewhat helpful:
The improvements are well-maintained and feature limited physical depreciation due to normal wear and tear. Some components, but not every major building component, may be updated or recently rehabilitated. The structure has been well-maintained.
The improvement is in its first-cycle (sic) of replacing short-lived building components (appliances, floor coverings, HVAC, etc.) and is being well-maintained. Its estimated effective age is less than its actual age. It also may reflect a property in which the majority of short-lived building components have been replaced but not to the level of a complete renovation.
Could this better fit your fixer-upper property? Well, it’s true that “[s]ome components” have been “updated or recently renovated,” and you might think the structure has been well-maintained for what it is, but it’s certainly not in its first cycle of replacing building components. Plus, it was originally built in the 1910s, and with the lack of central air, carpet bubbling, and knob-and-tube wiring, so can you really say that it is a true “Above Average” either? At the very least, using the specific language in the guidelines, it would appear that, using the above-quoted language taken from the guidelines themselves, you have some good points as to why it shouldn’t be classified as “Rehab” condition. But could your fixer-upper be better classed as in-between “Above Average” and “Average” condition?
Check out my next Property Condition Codes post to explore the guidelines for an “Average” condition property. And, as always, feel free to contact me with any questions, or to request legal representation in a real estate tax assessment appeal.