It centers around the Pearson House on the 5100 block of Wayne Avenue.
A developer recently purchased the property and plans to turn it into apartments.
Neighbors wanted to see the house, which dates back to 1852, preserved.
On Tuesday their community group filed an appeal to stop the demolition.
"I woke up this morning and there were people taking down the chimney. There was no permit posted and L&I wasn't here until later," said neighbor Ann Peters.
According to the Philadelphia Department of Licenses, the property owner has a valid demolition permit, but the contractor failed to have a required onsite meeting with L&I inspectors before beginning the demolition, officials said.
The contractor also failed to obtain approval to close the street, which is required.
Because of this, L&I has issued a stop work order to halt the demolition until requirements have been met, officials told Action News.
It was not clear how long it would take for the owner to meet the requirements.
The city's Historical Commission previously said it couldn't intervene because the property owners started the demolition permitting process before the historic designation process began.
The home once belonged to famous painter Joseph T. Pearson Sr.