HOMEBUYER BEWARE

These Philly homebuyers trusted that their houses were built to code. Now they say a flawed and overwhelmed city inspection system failed to catch life-threatening hazards.

Crumbling City is an Inquirer series about how Philadelphia’s surging housing redevelopment has led to construction safety issues in a city that has the nation’s most rowhouses and some of the oldest housing stock.

It was about the time that the large window on the front of her rowhouse crashed to the ground that Julia Blaukopf realized she had a serious problem.

She’d been a first-time homebuyer, and the $359,000 renovated rowhouse in Kensington had been way above her budget.

But the renderings were “magical,” she said, depicting a perfect live-work space for the self-employed designer. And the gut renovation seemed to be reassuringly hassle-free, with its one-year builder’s warranty.

By her January 2022 move-in, however, the hassles were adding up. Construction delays and mishaps had pushed back her closing and left a long punch list for the builder, Eddy Paiz, to complete. Then, she said, within months, the window blew in, the roof started leaking, and the heat stopped working. And, the smell of sewage in her basement was so strong that it gave her a headache.

“So many things were starting to creep up,” she said. “I started to feel like I don’t trust that my house is sound.”

Perhaps most alarming, as she began calling the city Department of Licenses & Inspections (L&I), it appeared that her house was haunted — by phantom city inspectors who logged inspections in the agency’s public database that Blaukopf said were never conducted.

As Blaukopf was learning, the only thing guaranteeing the safety of her home was a municipal construction-oversight system that relies in part on third-party inspectors, licensed by the city but hired by the contractors themselves, to monitor for critical safety concerns. Critics say that system is rife with conflicts of interest.

The rest falls to city inspectors who are responsible for an average of 964 permits each. L&I staff and construction professionals alike say that amounts to an impossible caseload, providing inadequate safeguards against shoddy construction.

A spokesperson for L&I Commissioner Ralph DiPietro declined an interview request, and declined to answer questions about Blaukopf’s house “due to current litigation.” In an email, the spokesperson said that L&I is able to monitor third-party inspectors effectively during routine inspections as well as a complaint-driven audit process.

In Blaukopf’s case, the third-party inspectors on the job included an electrical inspector whom the city accused 10 times of approving work that was not up to code, and an engineer who has been sued over five construction projects that allegedly damaged adjoining homes, two of which had to be demolished.

As for the L&I staff, it stamped approval on her house’s zoning permits that included incorrect, apparently copy-and-pasted information — including the wrong address, a photo of the wrong house, and an elevation diagram depicting an entirely different property, down the street.

Bennett Levin, a professional engineer who was L&I commissioner during the Ed Rendell administration, said the agency should either outsource more inspection functions or add significantly more staff. With L&I’s current resources, he said, the department is not fulfilling its public-safety mandate as outlined in the city charter. “Everything is on autopilot and nobody is focusing on the underlying rules that you’re supposed to play with, because they’ve gotten away with it for so long.”

Blaukopf learned that her neighbor, Farah Lopez, was experiencing similar problems.

Their homes bore striking similarities: Both were renovated by the same team — owner James Bill and contractor Paiz. And, like Blaukopf, Lopez said she was discovering potentially life-threatening problems in her home.

Lopez said she had to call Philadelphia Gas Works and, eventually, a plumber to address natural-gas leaks. “We were afraid we were going to blow ourselves up,” she said. Within months of the purchase, she said, she discovered cracks in her foundation and mold on her walls. Water flooded into her finished basement.

The two women said they have heard from other neighbors who bought homes from the same team and faced problems. One of them, who spoke on condition of anonymity, said the home had drainage problems that cost about $40,000 to repair.

Paiz declined to speak with a reporter.

Bill, who said he lost money on the projects and left the real estate business, said that not all of the women’s allegations were accurate. But, he said, he’s working hard to address any problems that have arisen.

“There have been suggestions relative to the contractor I worked with that corners were cut that just aren’t true,” he said. But “I do think I have problems with the contractor that I may have to pursue legally.”

A home inspector might have caught those problems, but neither Lopez nor Blaukopf hired one. Lopez, who had moved from New York, thought her real estate agent had obtained an inspection. Blaukopf said her agent did not advise her to get one because the house was as good as new.

City oversight was also scarce. Months after moving in, Lopez learned that the permits on the house were still open, meaning that inspections were not complete. There was no certificate of occupancy, which would show that a building was safe to be occupied, a fact that wasn’t flagged by her lender, title company, or agent.

Lopez said she was unprepared for the free-for-all of Philadelphia real estate transactions.

“[In New York], you had to have a lawyer to close a deal. Here, it’s like you’re on your own. Here, it’s like, ‘Good luck! I know it’s brand new, but it might just fall on top of you!’ That’s new. I’ve never had to do such due diligence.”

A developer with a vision

It’s easy to see why the stylish renderings from Evolve Build attracted the two prospective homebuyers. Both Blaukopf, 40, and Lopez, 41, work as designers — Blaukopf creating photographic installations, and Lopez in user experience (UX) design for Vanguard.

The concept was an update to the classic, efficient Philadelphia rowhouse, bringing in exposed brick, a dramatic open-riser staircase mounted on a central I-beam, and expanded living space thanks to a rear addition and a deepened, finished basement.

But, because the plans called for excavation underneath century-old rowhouses, they were also somewhat complex from an engineering perspective — requiring underpinning to support the existing foundation. That involves digging out one small section at a time beneath the old foundation and pouring new concrete supports.

Lopez and Blaukopf contacted a lawyer, Pam Loughman, who brought in inspectors and contractors to examine the structures. They made a series of alarming discoveries.

An engineer who examined part of both Lopez's and Blaukopf's foundations told the homeowners that, although the underpinning had been done, it appeared that the worker had left a gap between the old foundation and new underpinning — meaning that the foundations were not supported.

Both a home inspector and an electrician concluded that many of the circuits in Blaukopf’s new home lacked arc-fault protection, which they said violated the electrical code and was a fire hazard.

At Lopez’s house, “the architectural plan bears little relation to the house itself,” Loughman said. The plans were the mirror image of what was submitted for zoning — showing Lopez’s front door and staircase on the wrong side. An L&I spokesperson said the approved plans were accurate.

L&I records show an inspector noted that work at Blaukopf’s home also departed from the approved plans — mentioning workers digging a new foundation footer without authorization. But L&I issued no violations.

And, though the electrical permits were obtained by a licensed electrician, Abraham Buyag, Lopez received a warranty from a different contractor, Genesis Electric, which is not licensed to do electrical work in Philadelphia.

Buyag, who said he had at one time worked with Genesis, said he didn’t recall the project. “Probably it was one of the projects that I subbed out. You pretty much have to ask Genesis.”

Genesis owner Domingo Aguirre said he works for Buyag. “That’s my partner. He’s licensed,” he said. He said the work was done correctly. If arc-fault breakers were missing, he said, it was because Blaukopf had removed them — perhaps because they had been tripped by her hair dryer.

In the past, L&I has revoked or suspended contractors’ licenses for working with unlicensed subcontractors or for selling permits to unlicensed workers.

But L&I staffers said it’s an “open secret” that the practice continues.

Ads on Craigslist brazenly offer to obtain permits for electrical, plumbing, HVAC and construction work in Philadelphia and surrounding counties, for the price of $1,500 to $2,000.

Reached by phone — at the same number he uses on his city permit applications — a licensed contractor named Robert Harris acknowledged he was behind one such ad.

He said he used to do work himself. But he’s 62 now, with a bad shoulder, bad knees, and a bad back. So he “qualifies” others, obtaining permits, checking the work, and meeting L&I inspectors. He said the service benefits both do-it-yourselfers and skilled workers unable to navigate the bureaucracy to obtain licenses. ”I’m trying to help people,” he said, “to make it fair for all the workers.”

L&I did not respond to questions about whether it investigates such permit sellers. One staffer said there simply are not resources to investigate.

The general contractor for the two homes in Kensington, Eddy Paiz, was licensed.

But, in Philadelphia, a contractor’s license only indicates the company is insured, and that the contractor has taken a 30-hour safety training course. Some critics say more rigorous qualifications are needed. One, Jonathan Perry of Duckrabbit Design-Build, noted that the Pennsylvania Home Improvement Contractor license requires even fewer credentials. He argued the state should look to Oregon, where any contractor’s full history of complaints, discipline and fines can be easily searched online, and to Massachusetts, where a construction supervisor must submit proof of work experience and pass an exam showing knowledge of building code and construction practices.

Philadelphia’s L&I’s contractor lookup indicates Paiz’s record is free of any violations.

But in lawsuits, other homeowners have alleged defective work. In 2021, a couple sued Bill and Paiz, alleging that their new $425,000 Port Richmond rowhouse required $35,000 in repairs. And, a South Philly homeowner sued a different developer — who added Paiz as a defendant — alleging that water infiltration due to construction flaws in her seven-year-old house would cost $240,000 to fix. Both cases remain pending.

Blaukopf’s and Lopez’s homes also had plans provided by a licensed architect, Kenneth Stevenson of Evolve Build.

Evolve Build’s founder Michael Sebright said that was the extent of his firm’s involvement in the projects, so he could not say whether or why work had deviated from the plans.

But he pointed to L&I, not Paiz, as the likely cause of any incomplete permits.

“Eddy told me he called for inspections four times and it was canceled four times,” Sebright said. “They don’t have enough inspectors. I’ve seen that be the problem many times.”

Failing safeguards

Several layers of safeguards should have ensured the quality of the work at both Lopez’s and Blaukopf’s homes.

First, L&I should have inspected the homes to close out the permits and issue a certificate of occupancy.

That never happened at Lopez’s house, where records still list unresolved deficiencies regarding structural elements such as joists. L&I declined to answer questions regarding the property.

Records for Blaukopf’s house also showed no indication that a final inspection had been completed — until she and Loughman called L&I. Then, a city inspector who stopped by in December 2022 marked her home as having passed final inspection, even though they said the visit was brief and no inspection occurred.

“L&I is supposed to be the safety check,” Loughman said. “It is supposed to ensure the public’s welfare, and in this case it seems that L&I is completely falling down on the job.”

In addition, because the building permits called for excavation with underpinning, a special inspector hired by the contractor was supposed to be on site to monitor that work.

The inspector listed for both Lopez’s and Blaukopf’s house was Georges Ballouz of Alfa Engineering. On paperwork for both homes, Ballouz said he would continuously monitor the underpinning work, as required by law.

This special inspector system was established almost a decade ago as Philadelphia sought to dramatically reshape its construction oversight practices in response to a horrific tragedy: A four-story wall collapsed during demolition in 2013, killing seven people inside a Salvation Army thrift store next door.

So far, the requirement for inspectors does not appear to have stemmed incidents of construction damage to adjoining properties. In the last three years, more than 50 homes have been deemed unsafe or imminently dangerous amid construction on an adjoining property overseen by a licensed special inspector, an Inquirer analysis of city records revealed.

Some engineers questioned whether the qualification process is sufficiently rigorous. For underpinning, the special inspector must be a licensed engineer with at least one year of relevant experience.

“A lot of people doing special inspections really shouldn’t be,” said John Peirce, vice president at Peirce Engineering, a Phoenixville-based firm that specializes in complex underpinning work. “I’ve seen many projects where the special inspector really did not understand what was being done from either a structural or a safety standpoint, despite being prequalified by the city.”

In other cases, he said, the special inspector is not even on site. “The city is stretched thin. So to get caught without having an inspector, that’s a long shot.”

The final reports for Blaukopf’s and Lopez’s homes — each stamped with Ballouz’s seal but also with his first and last name typed in with misspellings — do not show whether continuous monitoring of underpinning occurred.

Ballouz did not respond to emails and phone calls.

The firm he operates, Alfa Engineering, has been sued five times over projects that allegedly damaged neighboring buildings — displacing a business and the residents of a three-unit apartment building, according to the lawsuits, all of which also named other contractors as defendants. One house remains unsafe, according to L&I. Another, according to court filings, required $519,000 worth of work to stabilize it. And two of the buildings had to be demolished.

Three of those cases were settled out of court, while two are pending.

After the Salvation Army collapse, a task force convened to review oversight practices raised concerns about the third-party inspections.

“This is neither improper nor illegal, but has considerable potential for blatant conflicts of interest,” the mayor’s special advisory commission wrote in its 2014 report, discussing the city’s outsourcing of all electrical inspections to private agencies. They warned that the arrangement was particularly susceptible to corruption because “an electrical contractor can handpick the [inspection] agency.”

Indeed, one L&I staffer told The Inquirer he visited a Center City job site about five or six years ago and discovered a sticker “approving” rough electrical work that had not even been installed yet. By the circuit box, the staffer found an envelope with the private inspector’s name on it. Inside was the final inspection sticker. (“I know he took the cash out and put the sticker in,” said the staffer, who declined to be identified because he was not authorized to speak. “But can I prove it? No.”)

“It’s the Wild West,” the staffer said. “A lot of bad electrical work is being done in the city and there are no consequences.”

Two L&I employees said the department, which used to audit one in 10 electrical permits, has ceased routine audits — and now has only one electrical specialist to monitor 11 third-party inspection agencies employing 46 inspectors. A department spokesperson said that there are “several” electrical specialists and that the current audit goal is 12 audits per inspection agency per year, or 10% of permits they’re assigned — whichever is less.

One electrical inspection agency is still licensed in the city today even though it approved the wiring in a house that caught fire in 2014, killing a woman. The electrician and the agency settled a lawsuit for $2.77 million, court records show.

Another inspector continues to approve jobs after being cited by L&I for a dozen violations, including giving final approval to a job where work — including the kitchen installation — had not yet been completed, court records show.

As for Blaukopf’s home, where the electrician her lawyer brought in found several fire hazards, L&I records indicate it was inspected by Howard Pinto, of Middle Atlantic Inspections. (Pinto’s final inspection form is dated Jan. 20, 2021, even though a city inspector who visited the next day reported that some lighting fixtures and outlet covers had not been installed.)

Pinto said he did not recall the project.

According to city records, L&I inspectors cited Pinto for approving electrical work that was not up to code on 10 jobs since 2016. They issued extra fines for work on apartment buildings in West Philadelphia and Fishtown where he approved work the city said was hazardous. Pinto said he could not discuss those allegations without approval from his agency.

Peter Vaira, a lawyer who led the special advisory commission, said the city should institute a system in which inspectors are assigned to jobs, rather than chosen by the contractor.

He said former Mayor Michael Nutter, then his successor, Jim Kenney, had greeted the recommendations with enthusiasm — then inaction. “I briefed this present mayor on our report and he said, ‘You’re right. We gotta get rid of this [system].’ He never did.”

Hidden defects

For Lopez and Blaukopf, the next step according to their sales contract will be mediation. If that fails, they may go the route a growing number of homebuyers have taken: civil litigation.

But homeowners can face major challenges in taking on developers — especially small developers already fighting other court cases. Jennifer Horn, a lawyer specializing in construction cases, said that a key question in deciding to sue is whether any award would actually be collectible.

Her firm, Horn Williamson, saw its caseload swell as construction boomed in recent years in the city, the suburbs and the post-Hurricane Sandy Jersey Shore — bringing with it an epidemic of luxury homes rotting due to water infiltration.

But even as homebuyers win big verdicts — such as a recent $3.2 million judgment against the developer Streamline over four allegedly defective homes in Fishtown — some developers say they may not have funds to pay. “I don’t know what they think they’re getting from me,” Streamline’s chief executive, Michael Stillwell, told The Inquirer at the time, adding that Streamline was winding down operations.

The pace of such filings is only accelerating — reflecting a problem that is particularly dire in the mid-Atlantic.

“With the extreme weather we’ve been having lately, with heavy rainfall,” Horn said, “it really exacerbates, illuminates and reveals these problems.”

Horn said it often takes years for defects that cause water damage to become apparent.

“We believe that builders should be warning families and homeowners about known construction defects in their homes — and that’s especially true where the defects are hidden,” Horn said. “What we’re talking about here are many defects that are hidden in the walls.”

Lawmakers have proposed measures to aid homeowners — state Rep. Joe Hohenstein (D., Philadelphia) drafted a “lemon law” for shoddy construction, while Bucks County state Rep. Tom Galloway (D., Bucks) proposed a consumer protection fund, mandatory disclosures of defects, and transparency around arbitration clauses in sales contracts. To date, those proposals have never received a hearing.

For Lopez and Blaukopf, who bought their homes less than two years ago, their biggest fear is what other problems might emerge in years to come.

“I cried many times,” Lopez said. “I’m stuck with a money pit. I’ve only been here a year and I’m terrified of what’s going to happen two, three, four years from now.”