Philadelphia Landlords: Prepare for the New Security Deposit Installment Law
A significant change is coming to how landlords in Philadelphia manage security deposits. City Council has passed Bill No. 250044-A , which amends Chapter 9-800 of The Philadelphia Code ("Landlord and Tenant") to establish new requirements related to security deposit collection for residential rentals.
This new ordinance was signed into law on September 3, 2025 It will be effective 90 days after this date, meaning landlords must comply for any residential lease executed or renewed on or after December 2, 2025.
The Key Change: Security Deposit Installment Payments
The core of this new law involves offering tenants a flexible payment option when the security deposit exceeds one month's rent.
Landlords must ensure the security deposit never exceeds the maximum amount permitted under state law, specifically 68 P.S. § 250.511a.
1. Deposits Up to One Month’s Rent
If the security deposit charged is up to one month's rent, the full amount may still be collected as a lump sum.
2. Deposits Exceeding One Month’s Rent
If the security deposit for the first year of tenancy shall exceed one month's rent, the landlord must offer the tenant the choice between two payment methods:
- Option A: Payment as a lump sum.
- Option B (Installments): Payment in three equal monthly payments, with one month's rent paid as a lump sum upfront, and the remainder paid in the three equal monthly payments, starting the month after the initiation of the tenancy.
The total amount charged for a security deposit shall be the same regardless of the payment method chosen.
Who Must Comply with the Installment Rule?
The installment provision has a crucial exemption for smaller landlords.
- The provision shall not apply to an owner, landlord, agent, or other person operating or managing 2 or fewer rental units.
- It's vital to note that ownership interests shall be aggregated across all legal entities to determine this threshold. Properties are considered collectively if they are owned, operated, or managed substantially by the same individuals or entities.
If you operate 3 or more rental units in Philadelphia, you must update your processes.
Penalties and Legal Consequences
Violations of this ordinance, specifically Subsection (4) regarding Security Deposits, are classified as an Unfair Rental Practice Landlords who unlawfully retain any security deposit or fail to comply with the collection requirements face significant legal risk:
- The aggrieved person is entitled to actual damages.
- Alternatively, the tenant may elect statutory damages equivalent to the value of one month of rent.
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The court may also award the tenant reasonable attorney's fees and costs.
📌 Note: Philadelphia Security Deposit Law Builds on Pennsylvania State Law
Philadelphia's security deposit rules are in addition to Pennsylvania statewide requirements.
If you are not familiar with the PA baseline rules, read our full guide first:
Pennsylvania Security Deposit Law — Complete Landlord Guide →
⚠️ 2026 Update: The Safe Healthy Home Act Adds New Security Deposit Rules
Since this page was published, Philadelphia passed the Safe Healthy Home Act, signed by
Mayor Cheryl Parker on May 7, 2026, effective November 1, 2026. The Act introduces
additional security deposit-related requirements for Philadelphia landlords:
- You can no longer file for eviction without attaching a Certificate of Rental
Suitability issued within 30 days of filing. An expired or missing certificate will result
in a rejected eviction filing even if the tenant owes rent. - Tenants can request a Certificate of Rental Suitability once every 90 days. If you
fail to provide it within 10 days, you are legally barred from collecting rent until you do. - Willful violations can trigger triple damages plus attorney's fees — the same penalty
structure that applies to security deposit violations. - The statute of limitations for tenant claims is now four years. Something that happened
in 2022 can still be actionable today. Your record keeping must reflect this.
These changes mean your compliance obligations in Philadelphia now go beyond deposit
collection and return timelines. If you want to make sure your operations are fully compliant
before November 1, 2026, contact TrustArt Realty for a free consultation.
📖 Read our full Safe Healthy Home Act breakdown →
Your Next Steps with TrustArt Realty
The New Philadelphia Security Deposit Installment Law requires immediate action for most portfolio owners. To ensure your lease agreements and collection policies are compliant before the effective date December 2, 2025, professional guidance is essential.
TrustArt Realty is here to help you and specializes in helping Philadelphia landlords navigate complex legislation, protect against claims for statutory damages, and remain compliant with the FHA. Contact us today to update your leases and guarantee a stress-free investment.
