Mind Your Business – Tia’s Tips for Better Rental Management
By Tia Politi, ROA President, Rental Owner, Property Manager with Acorn Property Management
Law Changes 2016
Staying current with your rental business requires keeping abreast of law changes. Because the Oregon legislature now meets annually it means that every year you risk having outdated agreements with residents that don’t encompass the changing regulations, and that could limit your rights under the law. But your residents don’t need to sign new agreements every year. Except in the case of a fixed-term lease, changing the terms of your month-to-month rental agreements is as simple as sending a Notice of Change in Terms, or the new ORHA 2016 Addendum (form #60 now available at the ROA office). And when you do initiate a new residency, be sure you are using new applications, rental agreements and addendums that include the law updates.
Changes requiring notice to residents
Renter’s Insurance (Amendment to ORS 90.222) The statute that allows landlords to require Renter’s Insurance now clarifies that the landlord may also require the resident to name them as an Interested Party on the policy. It further authorizes the insurer to notify the landlord of cancellation or nonrenewal of the policy, reduction of policy coverage (the maximum $100,000 required liability coverage remains), or removal of the landlord as an Interested Party. Renter’s insurance cannot be required if the combined household income of the resident falls at or below 50% of the area median or if the dwelling unit has been subsidized with public funds. This exception does not apply to tenant rent subsidies such as Section 8; however, in most cases, their income will fall below the median. In order to require renter’s insurance, the requirement must be plainly stated in writing at the outset of the tenancy, and a “reasonable explanation” of the situations in which a landlord may not require it also stated plainly in writing. The renter’s insurance requirement, or the ability to be named as an Interested Party per the revised statute mandates delivery of a 30-day notice of change in terms for existing month-to-month residencies or upon renewal of lease with the required disclosures stated in the lease renewal documents.
Move-in or move-out fees assessed by homeowner’s association pass through (Amendment to ORS 90.302) This change allows landlords to pass through move-in or move-out fees charged to an owner by a homeowner’s or condominium association when a resident moves in or out. Landlords are required to have a provision for charging this fee in their written rental agreements, bill the tenant within 30 days of receiving the bill, provide a copy of the invoice from the association, and allow the resident up to 30 days from the date of billing to pay. This change in statute requires that an applicant be notified of this requirement in writing prior to a landlord accepting any money.
Municipal fees and Utilities Pass-Through (Amendment to ORS 90.315) The revision of this statute allows landlords to assess fees to residents if those fees are charged by a municipality and assessed to a landlord’s property for services and resources related to the dwelling unit including the following: street maintenance, transportation improvements, public transit, public safety, parks and open space, or a charge imposed on a landlord by a utility or service provider on behalf of a local government or directly by a local government, not including real property taxes, income taxes, business license fees or dwelling inspection fees. To pass these charges through to your resident, after serving the required 60-day change-in-terms notification, you must: bill your tenant in writing within 30 days of receipt of the provider’s bill, itemize the charges clearly, include a copy of the bill or make it available for the resident’s review (including by electronic means if allowed by rental agreement), and allow the tenant no less than 30 days to pay. You may not make a current resident responsible for a charge assessed to a previous resident.
It will be interesting to see what these pass-through charges may encompass and how it will play out in the courtroom for landlords and residents. It may require further clarification in future sessions.
Changes requiring no notice to residents
Ending times of notices (Amendment to ORS 90.160) This change clarifies that notices with end times of 11:59 p.m. are technically correct. There had been some confusion about this as the statutes stated end times of either 11:59 p.m. or midnight (end of day) in various places, prompting one particular judge in Medford to rule in favor of a defendant whose attorney claimed their client was deprived of one minute to cure their non-payment of rent notice, thereby making the notice defective.
Allocation of Tenant Payments (Amendment to ORS 90.220) This amended statute mandates the following application of tenant payments: 1) outstanding rent from prior months, 2) rent for the current rental period, 3) utility or service charges, 4) late rent fees, 5) other non-compliance fees or charges owed by the tenant under ORS 90.302, and 6) other fees or charges related to damage claims or other claims against the tenant. This provision requires no notification to residents in month-to-month or week-to-week tenancies, and takes effect January 1, 2016 regardless of the order of payments stated in the current rental agreement, but only be in effect for fixed-term lease tenancies entered into or renewed after January 1, 2016.
Landlords who knowingly rent unsafe/illegal dwelling units (Amendment to ORS 90.220) This amendment clarifies that it is unlawful to rent a unit that does not provide safe egress from sleeping areas in case of fire. Basement units are the most frequently noted to be deficient in this regard. “A landlord shall at all times during the tenancy maintain a secondary escape route through a window or emergency exit that conforms to applicable law for all designated bedrooms and sleeping places in the dwelling unit.” If a landlord violates this requirement, the tenancy may be terminated with 72 hours’ notice. The resident may also recover actual damages incurred as a result of the landlord’s noncompliance, based on twice the resident’s actual damages or twice the monthly rent, whichever is greater. If the landlord cures the violation within 72 hours, the tenancy does not terminate. Additionally, penalties do not apply if the noncompliance was caused by the tenant. For example, the tenant blockades the secondary escape route by installation of an air conditioner or other belongings, or they paint the window shut.
Unauthorized Pet Fees (Amendment to ORS 90.302) Noncompliance fees increased substantially for residents who keep on the premises an unauthorized pet capable of causing damage. The statute further clarifies that the unauthorized pet must be removed within 48 hours. As with any allowable noncompliance fee (except for late fees, NSF fees, late payment of utility fees, lease-break fees, and smoke or CO alarm tampering fees) the landlord must first issue a written warning, after which they are allowed to charge the fee for each violation for one year from the date of the written warning. Once the year expires, another written warning is required. For other noncompliance fees the allowable charge is capped at $50 for a second violation and $50 plus 5% of the rent amount for subsequent violations within that year.
With the pet violation fee, however, the maximum allowable fee is the $250 per violation. Despite service of a 10-day Pet Violation, a landlord may begin assessing fees 48 hours after the written warning if the pet is not removed within that time frame and assess repeated fees for every 48-hour period afterwards during which the pet remains on the property. Remember though, the fee is only able to be charged for unauthorized pets on the premises that are “capable of causing damage.” If your tenants got some goldfish or a hamster, you may not assess a fee, but instead issue a Notice of Termination with Cause. Also, how this fee would be assessed in relation to a resident who then claims disability status and asserts that the animal is serving a disability-related need, is something that will likely be addressed in the courtroom, so it’s also wise to remember that a resident may make a reasonable accommodation request at any time, including during the eviction process.
Failure to clean up waste of service or companion animal (Amendment to ORS 90.302) This change in statute clarifies a landlord’s ability to charge a noncompliance fee for a resident’s failure to clean up the waste not only of a pet, but also of a service or aid animal from any portion of the premises other than the dwelling unit.
Charging for damage related to Domestic Violence (Amendment to ORS 90.453) Victims of domestic violence may not be held responsible for damage caused by their perpetrators, as long as they provide the landlord with verification of the incident(s) of domestic violence by a qualified third party as specified by ORS 90.453(3). Residents are relieved of responsibility for damages by guests if the damage resulted from an incident of domestic violence, sexual assault, or stalking. This change does place an obligation on the part of the victim to provide the landlord a third-party verification that the damage was caused in the above manner. This verification can be in the form of an order of protection, or a written verification from a qualified third party. The form of the verification is found in ORS 90.453(3).
Charging for damage that results from acts of God (Amendment to ORS 90.453) Another minor clarification to ORS 90.453 is that a landlord may not charge a tenant for damage that results from acts of God. This is defined as events outside human control, such as sudden natural disasters for which no one can be held responsible.
Restitution end date (Amendment to ORS 105.159) This amendment clarifies the ending dates of Notices of Restitution following judicial granting of legal possession in an eviction action, and potentially allows residents more than the minimum of four days to vacate after the court issues a judgment for possession to the landlord. If the four-day restitution period expires on a weekend or holiday, the deadline for move out will be extended to the day preceding the next judicial day. That means that a judgment is granted on a Wednesday, Thursday or Friday, the restitution period remains four days; however, if a judgment is granted on a Monday or Tuesday, the resident will be granted through the following Sunday at 11:59 p.m. or through the end of the day prior to the next judicial day to vacate the premises. Really, it makes sense, because a rental owner can’t hire the Sheriff to execute on the restitution unless the Sheriff’s office is open.
Tenant’s failure to pay money when due, avoiding waiver (Amendment to ORS 90.412) To lawfully terminate a tenancy for cause for unpaid amounts owing for damage to the premises or any other structure on the property, utility charges, fees or deposits, a landlord must first issue a written warning notice. The notice must describe the basis of the claim and the amount of money owed, state that the resident is required to correct the violation by paying the money owed, and state that continued nonpayment of the money owed constitutes a violation may result in termination of the tenancy. Failure to notify the tenant prior to the acceptance of rent for three separate rental periods or more creates waiver of termination of tenancy based on this noncompliance; however, the money owed remains a charge on the resident’s account. For a resident’s failure to pay money owed to the landlord, the written warning notice remains effective for 12 months from the date of the resident’s failure to pay.
All of the above changes in law do NOT apply to residents with fixed-term leases unless all parties agree in writing to the alterations, or the lease expires and the rental owner provides required notification to the residents of the changes, or a new lease agreement is signed that incorporates the changes.
All relevant ORHA forms have been updated to reflect the above law changes, and are currently available at your local ROA office.
This column offers general suggestions only and is no substitute for professional legal assistance. Please consult an attorney for advice related to your specific situation.