• Wednesday, March 18, 2020 1:33 PM | Oregon Rental Housing Association (Administrator)

    The crisis set in motion by the spread of the Covid-19 virus is causing ripple effects throughout our communities. In many cases, we will all experience a significant reduction in income due to cancelled events, closed schools and facilities as we attempt to thwart the spread.

    While the government is taking various forms of action to reduce the impact on citizens and the economy in general, such as waiving the waiting week for employees to file for unemployment, tenant advocates are pleading for understanding from landlords during this uncertain time.

    If you are a landlord and have renters whose livelihoods are significantly impacted, and you are financially able to defer rent and waive late fees for a period of time, we are offering a Landlord and Tenant Deferment Agreement free on the Oregon Rental Housing Association website:  https://oregonrentalhousing.com/.

    Using this method, you won’t be creating waiver regarding the Application of Tenant Payments – ORS 90.220 that requires landlords to apply any money received from the tenant to past month’s rent owing, then current month’s rent owing, etc. Many thanks to Eugene attorney Brian Cox for his generosity in creating this form for our use.

    The crisis has already set in motion delays on eviction proceedings for at least a few weeks. Depending on how long this crisis goes on, the government may take further action. If we as a group can show that we’re being proactive and doing our best to help during this challenging time, the sense of urgency may wane, especially if the extreme measures being taken have the desired impact of slowing or stopping the spread of the virus so our lives can get back to our new normal.

    It is our sincere hope that legislators understand that while some landlords have reserves, and can muddle through without rent from their tenants for a time, many private landlords are in the same boat as their tenants – working full time paycheck-to-paycheck, and out of work because of the virus.

    Mass evictions help no one, and other ideas are being floated throughout the state and our nation to find solutions for this very temporary problem. Please do what you can, and we’ll do our best to keep you updated as the situation develops.


    Sage Coleman, ORHA President

    Jim Straub, ORHA Legislative Director

    ORHA Board of Directors

    To download this Memo or the Form, Click the links below:

    Memo - A Call to Oregon Landlords

  • Wednesday, February 19, 2020 7:41 PM | Maria Menguita (Administrator)

    By Tia Politi, Oregon Rental Housing Association Secretary
    February 19, 2020

    Landlord-Tenant law governs a lot between the relationship between rental owners and their customers, but how many know that there are state and federal laws that pose legal requirements on their conduct with tenants? In a nutshell, here’s the dos and don’ts:

    Landlords shall:

    1. Act reasonably
    2. Act in good faith
    3. Mitigate damages

    Landlords shall not:

    1. Discriminate
    2. Retaliate
    3. Evict without Due Process (Constructive Eviction)
    4. Contract with Unconscionability

    Let’s look at each of these concepts and how they impact housing providers.

    To act reasonably within the landlord/tenant relationship is often referred to as the reasonable person standard.

    Wikipedia defines this as, “…the omission to do something which a reasonable person, guided upon those considerations which ordinarily regulate the conduct of human affairs, would do, or doing something which a prudent and reasonable person would not do…A reasonable person does not insist on always holding to the letter of the law, nor are they unduly strict, stern, or harsh. Rather, they strive to be gentle in their dealings with others, taking into consideration their circumstances. They are willing to listen to others and, when appropriate, to yield to their wishes and adjust their requirements…The care taken by a prudent person has always been the rule laid down.”

    That’s a great definition. What would an uninvolved reasonably intelligent third party think of your words or actions? Do your words and actions fit the definition, or not? Sometimes people can get so entrenched in whatever their position is on a particular subject that they lose the ability to see the full picture and their behavior contributes to an escalation of a problem. I used to tell my children, it doesn’t matter what anyone else does, you are still required to behave properly and mind your manners.

    There is no excuse in the adult world (or in a court of law) that will excuse your improper words or actions even if someone else’s behavior is abusive or out of control. You can’t get out of a speeding ticket by telling the officer that you were just keeping up with the speeder ahead of you, and the same is true for how landlords deal with residents. Objectivity can be a challenge for all of us and that’s probably why many faiths emphasize trying to see things from the other person’s point of view. Landlords who struggle with anger or extreme emotions in their daily lives should hire a property manager.

    Good Faith
    Good faith is the concept of honesty, truthfulness and trustworthiness, and is defined in ORS 90.100 (20) as, “…honesty in fact in the conduct of the transaction concerned.” Furthermore, ORS 90.130 imposes the obligation of good faith by landlords, “Every duty under this chapter and every act which must be performed as a condition precedent to the exercise of a right or remedy under this chapter imposes an obligation of good faith in its performance or enforcement.”

    What does good faith look like? It looks like telling the truth, and not lying by omission in regards to something that can impact a resident. It creates a presumption that landlords will deal with tenants honestly and fairly, so as not to impact their rights to receive the benefits of a contract. It imposes the obligation to be fair, open and honest – regardless of the outcome. Anything a landlord does that could be considered misleading, dishonest or that takes advantage of a tenant’s lack of knowledge of their rights could be construed as acting in bad faith. Does that mean landlords have to educate tenants on their rights? No, but… taking advantage of, or benefitting from another’s ignorance isn’t really acting in good faith is it?

    Discrimination means treating people who belong to a protected class differently than people who do not. Protected classes are:

    • Federal – Race, Color, National Origin, Religion, Sex, Familial Status (families with children), and Disability;
    • State of Oregon – Marital Status, Source of Income (including housing subsidies), Sexual Orientation, and Gender Identity.
    • Some cities in Oregon have additional protected classes. Eugene, for example, has added protections for Type of Occupation, Ethnicity and Domestic Partnership.
    • Active duty military and victims of domestic violence have protections under the law that can impact a landlord’s ability to refuse to rent a property, terminate a tenancy, or charge lease-break fees to a protected resident.

    What actions by a landlord constitute discrimination? Denying an application, applying stricter screening criteria, misrepresenting available units, or requiring higher deposits based on a person’s membership in a protected class is discriminatory behavior. So is failing to take action against a resident in a multifamily complex who is targeting or persecuting another based on their membership in a protected class. It’s also against the law to terminate the tenancy of a victim of domestic violence, sexual assault or stalking, refuse to allow assistance animals for disabled residents, or refuse to rent to a single parent, among other examples.

    Most landlords are pretty savvy about avoiding these kinds of actions, but many seemingly innocent decisions can be considered discriminatory when they result in creating disparate impacts on protected classes of residents. For private landlords that most often happens in the areas of advertising, screening and the use of house rules. Take care to scrupulously follow Fair Housing law in your rental business.

    When advertising, avoid trouble by describing the property, not the kind of people you think should live there. When showing, it’s best practice to provide an application to anyone who indicates an interest in renting the property. And while you can certainly refuse to accept an incomplete application or set of applications, best not to refuse to accept a completed application to avoid any appearance of discrimination, regardless of whether or not you think the person will qualify. Everything you need to know about the applicant will be discovered during the screening process.

    In the use of house rules, discrimination occurs when it has a disparate impact on residents in protected classes. This is the creation of artificial, arbitrary and unnecessary policies that erect barriers or have a discriminatory impact on members of protected classes, regardless of how they are applied. A well-meaning landlords’ policies may be “facially neutral,” in that they are applied equally to all, but it’s the disparity in outcomes and their impact on a specific protected class that creates the problem. HUD language prohibits policies that, “…predictably creates, increases, reinforces, or perpetuates segregated housing patterns of race, color, religion, sex, handicap, familial status, or national origin.” That doesn’t mean landlords can’t make rules, only that those rules must serve a substantial, legitimate, nondiscriminatory interest and that there is no other practice that would have a less discriminatory impact.

    The concept of discrimination also applies to how a landlord imposes rules or occupancy limits. ORS 90.262 requires that when implementing rules on a tenancy, that the rules be fair, reasonable and non-discriminatory, and not be implemented so as to evade a landlord’s obligations. For occupancy standards, this statute provides that occupancy shall not be more restrictive than two per bedroom without good reason.

    Retaliation is defined by landlord-tenant law as increasing rent, decreasing services, serving a notice of termination, or bringing or threatening to bring an action for possession after the tenant has done one or more of the following:

    • Complained to, or expressed to the landlord in writing the intent to complain to a governmental agency charged with oversight for building, health or safety codes; mail delivery laws and regulations; or discrimination in rental housing.
    • The tenant has made a complaint to the landlord that is related to the tenancy;
    • Formed or joined a tenants' union;
    • Testified against the landlord in any judicial, administrative or legislative proceeding;
    • Successfully defended an FED (eviction) action brought by the landlord when the notice served by the landlord was defective or imperfect, or the timing of the notice was miscalculated; or
    • Indicative of their intent to assert or invoke the protection of any right secured to tenants under any federal, state or local law.

    There are exceptions to the use of the retaliation defense by a tenant in a courtroom:

    • The complaints by the tenant were unreasonable in their timing or manner;
    • The violation of housing codes were caused by the tenant;
    • The tenant has defaulted on rent (unless they deposit full rent into court); or,
    • Compliance with building codes requires the tenant to vacate.

    ORS 90.125 specifies that either party to the rental transaction may recover monetary damages against the other as a remedy for action or inaction that results in a legitimate loss, but that the aggrieved party has the duty to mitigate those damages. Mitigation in law is the principle that a party who has suffered loss has to take reasonable action to minimize the amount of the loss suffered.

    If a tenant signs a fixed-term lease for one year, but moves out and stops paying rent after a few months, the landlord may be able to sue for breach of contract, but the landlord must mitigate the tenant’s damages by making a reasonable attempt to find a replacement tenant.

    If a water pipe breaks in the unit, the tenant has the duty to do their best to prevent damage by whatever action necessary, such as turning off the water either in the unit or at the street, notifying the landlord or agency immediately, and mopping up the water to the best of their ability to prevent further damage.

    Each party owes mitigation duties to the other.

    Constructive Eviction
    Constructive eviction is defined by landlord/tenant law as unlawful ouster or exclusion, or willful diminution of services.

    1. Unlawful ouster means that landlords may not just lock tenants out when they don't pay rent or violate one or more terms of their rental agreement, but must proceed within the guidelines of the law. Landlords are prohibited from even attempting or threatening to unlawfully remove a tenant from the premises.
    2. Willful diminution of services means willfully interrupting heat, running water, hot water, electric or other essential service, and allows punitive damages for attempting or threatening to interrupt essential services. If a tenant moves in without transferring utilities to their name the landlord must serve legal notice to the tenant to transfer and pay or move out, not just stop the services.

    Let that sink in. Yes, even attempting or threatening to violate a tenant’s rights as listed above can result in punitive damages, even if you never actually do it.

    Unconscionability is a doctrine in law that describes terms that are so extremely unjust, or overwhelmingly one-sided in favor of the party who has the superior bargaining power, that they are contrary to good conscience. According to ORS 90.140, “If the court finds that a rental agreement or any provision thereof was unconscionable when made, the court may refuse to enforce the agreement, enforce the remainder of the agreement without the unconscionable provision, or limit the application of any unconscionable provision to avoid an unconscionable result.”

    Unconscionability is determined by a number of factors, including power imbalance, age, mental capacity, or intoxication that make a contract unenforceable because no reasonable person would otherwise agree. As a defense, the contract has to have been unconscionable at the time it was made, and is determined only by a judge.

    The takeaway Minding your business means minding your manners when dealing within the parameters of Landlord-Tenant law. There is never anything to be gained by escalating bad situations with a tenant, but a whole lot to lose. So, deal fairly, document scrupulously, and keep your emotions under control!

    This column offers general suggestions only and is no substitute for professional legal counsel. Please consult an attorney for advice related to your specific situation.

    About the Author: Tia Politi is a licensed property manager, rental owner, and president of the Rental Owners Association of Lane County. She serves as the secretary for the Oregon Rental Housing Association (ORHA) and ORHA Education, Inc., heads up the ORHA Forms Committee, serves as a volunteer instructor for St. Vincent de Paul’s Second Chance Renter’s Rehab Program, and teaches classes in rental management throughout the state, including a class teaching high school seniors the basics of renting a home. Tia owns and operates Rental Housing Support Services, LLC, providing consultation, landlord-tenant training, mediation, notice prep and service, eviction support, and telephone helpline services.

  • Tuesday, February 04, 2020 3:08 PM | Maria Menguita (Administrator)

    By Tia Politi, Oregon Rental Housing Association Secretary
    February 4, 2020

    The passage of Senate Bill 608 has thrown many long-time landlords into a bit of a tizzy. Many are thinking of getting out of the business entirely, but others are considering hiring a professional property manager because the rules have just gotten so complicated. I believe with the help of ROA and our sister organizations, you can continue to self-manage, but if you’re just done, let’s go over some criteria for evaluating management services and selecting a property manager.

    Property Management Licensing & Training
    The first thing to know is that (almost) everyone in Oregon who manages property for compensation must be licensed. There are a few exceptions outlined in ORS 696.020 that you can read about, but they are very limited. Property management licensing in Oregon is regulated by the Oregon Real Estate Agency (OREA). Their rules dictate the ethics, responsibilities and requirements of taking on the fiduciary duties of managing rental properties.

    To obtain a license, an individual must complete 60 hours of classroom education with a certified instructor, obtain instructor approval to take the state licensing exam, pass the exam with a minimum score, be fingerprinted and pass a background check, and pay the required fees. Upon renewal of a property management license every two years, licensees must prove that they have completed a minimum of 30 hours of Continuing Education provided by certified instructors in topics related to the field, as well as a required OREA Rule and Law Course. A property manager operating under a license granted by the OREA must prominently display their license in their place of business.

    I still hold a management license, but it’s inactive. What surprised me about the education I received and the exam that I passed was that it didn’t teach me anything about boots-on-the-ground property management. That takes more education, mentoring and experience. Property managers have a lot to keep track of and in order to be successful they need to cultivate a broad base of specialized knowledge, including management processes and procedures, maintenance for the types of properties they manage, trust accounting, Fair Housing, landlord-tenant law, and even contract law. They must also abide by OREA regulations, which specify the affirmative duties a property manager owes to their clients:

    Duties of real estate property managers - ORS 696.890

    (4) A real estate property manager owes the property owner the following affirmative duties:

    (a) To deal honestly and in good faith;

    (b) To disclose material facts known by the property manager and not apparent or readily ascertainable to the owner;

    (c) To exercise reasonable care and diligence;

    (d) To account in a timely manner for all funds received from or on behalf of the owner;

    (e) To act in a fiduciary manner in all matters relating to trust funds;

    (f) To be loyal to the owner by not taking action that is adverse or detrimental to the owner’s interest;

    (g) To disclose in a timely manner to the owner any existing or contemplated conflict of interest;

    (h) To advise the owner to seek expert advice on matters that are beyond the property manager’s expertise; and

    (i) To maintain as confidential all information from or about the owner, except under subpoena or court order, even after the agency relationship ends.

    (5) The affirmative duties listed in subsection (4) of this section may not be waived.

    (6) Nothing in this section implies a duty beyond or in addition to those activities that are reasonably within the scope of the management of rental real estate. [2011 c.158 §1; 2013 c.145 §2]

    Evaluating management companies 
    So how do you evaluate a property management company? What kinds of questions should you be asking? What should you consider?

    ✓ Step one is to look up the business on the OREA website. You’ll want to check and see if any complaints have been filed against them. That can be a bad sign or could just indicate a one-time problem that has been resolved through education and better practices.

    ✓ How long have they been in business? If only a short time, that company poses a higher risk than a longtime management company with a proven record of success.

    ✓ You should be concerned about the reputation of the company and its principal broker, including the broker's track record, base of knowledge and industry involvement. Reputable managers generally seek to better their industry through membership in local, regional, state and national groups that promote excellence in their respective fields. What is your prospective manager doing to better their own industry?

    ✓ How big is the company? A smaller company may operate with only one or two people, and may offer you a more customized experience, but is that sufficient to ensure timely advertising, showing, screening, placement, management of existing tenancies, and maintenance? In a larger company, you and your property can get lost in the competing needs of thousands of owner-clients, communication can be more challenging, and they may have their way of doing things and require that you fit in their box, so to speak.

    ✓ What is the company structure? Who is in charge and what is the delegated authority to those under them? Who in the company is licensed and has direct oversight of management duties? Who will be your point of contact and that of your tenants? What are the qualifications of the staff in regards to their duties?

    ✓ What is their financial oversight process? Money issues are the source of most complaints to the OREA about licensed managers. Companies with strict financial controls are less likely to have funds go missing, so you should ask about how funds of tenants and clients are handled. What are their procedures for reducing the risk of misappropriation of client funds? The OREA requires that management companies perform a triple-check reconciliation of company funds once per month, noting any irregularities. Is your prospective manager meeting regulation?

    ✓ What does the company do to safeguard your personal information, and who has access? Clients and residents provide very sensitive information to their managers and the information can be an ID thief’s dream hit. So, how will your information be protected? Do they have a security system to guard against break-ins? Do they limit access to employees on a need-to-know basis? If so, how do they do that?

    ✓ Are they willing to provide references from other clients? While you will be referred to happy clients, you can always dig deeper with them and ask about specific things you have concerns about like frequency of inspections, how they have dealt with tenants who are violating the rules, how maintenance is handled, etc.

    ✓ What management software does the company use? Renters’ demographics indicate that the two largest groups of renters are Boomers and Millennials. Each group wants to be served differently. Boomers tend to be more comfortable with pen and paper, but Millennials demand a tech-friendly experience with the ability to apply, request maintenance and pay online or with their phones. Is your company prepared to meet that demand? Do you want your prospective manager to use high tech software that can accommodate Millennials, while also providing a more traditional experience to older residents? I would. Cloud-based software can also relieve concerns about real-life tragedies that can strike at any time like the management office burning down. With cloud-based systems, the information remains intact and the company can still operate from a computer anywhere. Antiquated paper-only systems can result in a total loss of information. Technology and cloud-based software can make a big difference for an owner’s experience too. The ability to log in to an owner portal where you can make contributions, view statements and invoices and retrieve tax documents at your convenience is fantastic.

    ✓ What is the office climate like when you visit? Property management is a customer-oriented business and tenants are your customers. You should be concerned about the experience your tenants will have with the company you hire. Will they be greeted with a smile and offers to assist, or ignored and treated like an annoyance?

    ✓ Does your company know how to effectively deal with tenant non-compliance? And, will they? It takes time to address issues with residents, and many companies turn a blind eye because it requires time and effort, or because they really don’t know how to do it correctly and follow through to eviction when needed.

    ✓ Does the company solely manage real estate, or are they also realtors? This isn’t necessarily a bad thing, but you want to make sure that just because their real estate license allows them to perform property management in addition to property sales, that they are proficient in both areas, and have staff dedicated to the management side of the business.

    What should you expect to pay for management services?
    Most management companies charge a percentage of monthly rents, varying from 4-10%, and some charge a flat monthly fee. Some will collect fees only when the property is rented, others will collect whether the property is rented or not. Some companies charge set-up fees and unit turn fees, and most charge some sort of early termination fee should you not keep your property with them for a minimum length of time, but some don’t. Usually, you will get some sort of break on the per-unit cost if you bring multiple properties to the company. It’s important to keep in mind that management fees are tax deductible as allowed by law.

    With property maintenance, some companies charge a flat fee for each maintenance call, others mark-up repair bills by a percentage, and still others consider it part of the base management fee. Most companies retain late fees, noncompliance fees and NSF fees collected from the tenants, but what about lease-break fees? It seems reasonable to expect that you should receive at least part of that for the lost rent. Clarify these things before you sign, and know what you’re agreeing to.

    The property management contract
    There are standard parts of a property management contract – the term, the fees, the reporting dates, authority for costs, insurance requirements, owner reserve requirements, etc. Ask to see the contract in advance and review it carefully, and have your attorney review it as well. Perhaps the most impactful part of the contract is termination. It should specify when and how the contract may be terminated, the termination fee, if any, when services are no longer wanted or needed, and ideally should provide a speedy escape for either party in the event that either one undertakes an action that puts the other at risk. Property managers and their clients can pose liability to each other. Bringing reputations into disrepute, imposing liability for improper acts or behavior, even illegal actions can occur and put the other party in jeopardy of government fines or legal action.

    I’ve seen it happen both ways. Property managers or their employees who without their client’s knowledge rented substandard or unsafe dwelling units, failed to install the required smoke and CO alarms, failed to provide lead based paint warning information and get a signed agreement, failed to require the tenant to transfer utilities out of the owner’s name and then failed to take corrective action, sexually harassed tenants, or stole their personal property, including once, an expensive purebred puppy. And owners who entered unlawfully, performed substandard repairs, used their right of entry to harass or threaten the tenants, made agreements with tenants and didn’t consult with or even inform their manager. Because of that experience, whichever side of the relationship I was on, I would want an escape clause in the event the other party does something that puts me at risk of damage to my reputation, a lawsuit, or an enforcement action by governmental authorities.

    Risks of hiring a property manager
    Many readers may recall the devastating impact of what I call the “Shockley Debacle.” Several years ago, Eugene property manager, Terry Shockley, owned a company called Property Management Concepts (PMC), which many believed was a highly reputable, successful company. When the company was audited by the OREA, it was discovered that he had misappropriated owner and tenant funds for his own benefit. We’ll probably never know why, but not only did he destroy his career and end up in prison, the theft had devastating impacts on many owners’ finances. He was estimated to have stolen in excess of three million dollars.

    How did this happen? Clients were lured by low percentages - they were penny-wise and pound-foolish; based their selection of a manager on charisma instead of research; trusted too easily, sometimes because they went to the same church; didn’t ask tough questions; failed to verifying things like tax payments, maintenance and contracts; completely abdicated the responsibilities of rental ownership; and lacked understanding of the services they were entitled to receive.

    The company I worked for at the time took over several properties from panicked owners when PMC was placed into receivership by the state, and I was shocked that these owners hadn’t confirmed that maintenance work had actually been completed or that their property taxes had actually been paid. If they had, their losses would have been far less. And, there were numerous red flags such as calls and emails not returned – ever; late payments; late or nonexistent reports; ridiculously simple reports – just numbers on a page; no copies of paid invoices with reports; monies paid in but not accounted for or paid to the contractor; and vacant properties not advertised – no ads, no yard signs, extended vacancies with no explanation or communication.

    Once the truth came out, some owners were hit twice. I performed eviction services for one victim and not only did he lose three months’ rent and have to replenish the tenants’ security deposit (yes, owners remain liable for tenant deposits even if the management company collected and held them), he had to double-pay his property taxes. Turns out that although Shockley claimed he had been paying the taxes, and had charged him for it, he hadn’t and the owner ended up liable to Lane County for three years’ worth of taxes at a cost of more than $100,000, plus penalties. Another owner paid twice for a very expensive roof.

    So, don’t abdicate responsibility for your property. For the victims of Terry Shockley, their only recourse was to sue him civilly and try to attach his assets. I’m not sure how successful they were. Shockley only ended up in jail because he committed wire fraud during the OREA investigation by sending falsified financial records through an out-of-state internet server. That was a criminal act, but stealing everyone’s money was not – it’s considered a civil matter under the law. Your manager is your business associate, not your friend. Don’t hesitate to ask the tough questions and hold them accountable.

    Red flags
    Humans (fallible all) are managing your property. Be assured at some point a mistake will be made. The most important thing to see when a mistake is made is the manager’s response. They should promptly admit their mistake, apologize and make it right, but there are predictable signs that your management company may be in trouble.

    ✓ Repeated lack of timely reporting.

    ✓ Failure to provide copies of paid invoices with monthly statements.

    ✓ Repeated failure to distribute funds on time. When I worked in private management, our company was transitioning to a new system for owner draws and the first month, some owner distributions did not get made when we promised. We immediately reached out to those owners to let them know about the problem and got the distributions done the next day. That’s what a reputable manager does. They don’t try to hide their mistakes, but inform their clients right away when something goes awry, letting them know that a problem happened and how it will be resolved.

    ✓ Failure to respond to inquiries within a reasonable time.

    ✓ Failure to respond to maintenance requests by tenants.

    ✓ Failure to perform inspections.

    ✓ Failure to promptly advertise vacancies.

    If your manager is exhibiting one or more of these behaviors you should…

    ✓ Put your concerns in writing with specific expectations for improvement

    ✓ Transfer your properties elsewhere for management

    ✓ File a formal complaint with the Oregon Real Estate Agency – 530 Center St. NE, Suite 100, Salem, OR 97301 – 503-378-4170.

    ✓ All of the above, in sequence

    With all the risks, why should you consider professional management?
    Good property managers ease the stress in their clients’ lives by taking direct responsibility for the day-to-day management of their investment real estate. Acting as a fiduciary, your management company is charged with maximizing revenue and minimizing risks and expenses. This means charging market rate rents, screening prospective tenants regarding credit & criminal history, prior rental history, and ability to pay, responding in a timely fashion to maintenance requests, and finding the least expensive solutions to problems within their area of expertise. It also means reducing risks and liabilities associated with the ownership of rental property by reporting any habitability or safety issues with the property, and recommending remediation of any problems. They advertise and show the property, screen applications and fill vacancies. They collect rents, hold and distribute security deposits, pay bills on the owner’s behalf, account for and distribute owner funds, send annual tax statements and monthly financial statements, and they do it all properly, legally and on schedule.

    Professional managers enforce the terms of the rental agreement by serving notice upon the tenant immediately upon breach of contract. They inspect your property on at least an annual basis or on bad reports from neighbors or drive by inspections. They may also handle eviction and small claims cases and usually know a good attorney if you need one. When it works, it’s a great, mutually beneficial relationship.

    Ways to protect yourself

    ✓ When you and your property are set up with the company, you need to make sure that certain things are clear and in writing, and disclose certain things to your manager. Things like: Is your property located in the 100-year floodplain? Are there any services that the tenant will be obligated to pay for that benefits the landlord or other tenants? Do you have preferred vendors? Do you want the manager to require renter’s insurance? (The correct answer is, yes.) How will yard care be handled (be VERY specific)? Make sure everyone is clear on who’s taking care of things like underground sprinklers and backflow testing, fire alarm/extinguisher testing, roof/gutter cleaning. Will you allow tenants to smoke outside only or nowhere on the property? Will you allow pets, and if so, under what restrictions? There’s a lot more, just remember that good, clear documentation helps prevent problems and can ensure that you get off to a good start.

    ✓ Trust but verify - Don’t abdicate ultimate responsibility for your own asset. Confirm that bills have been paid, get copies of all signed tenant docs (but don’t expect copies of applications, credit reporting companies require that those not leave the manager’s office for obvious reasons), pay your own mortgage, taxes and insurance so you know it’s done. If you have no other choice, verify that the payments have been made each month.

    ✓ Review your monthly reports. There were a few times when I caught a company error and informed the client about what had happened and what we were doing to correct the error. It always surprised me when the client hadn’t even noticed; obviously, they were not looking over their reports.

    ✓ Inspect your properties yourself once a year. It shows you care and are paying attention. You’ll build relationships with your representatives and get better service overall.

    ✓ Document contacts and conversations with your manager just as you would with your tenants.

    Behaviors that drive property managers crazy and will eventually get you fired

    ✓ Clients who act like they’re the only customer by taking too much staff time. Property management is a high-speed, high-stress endeavor with a lot of balls in the air at any given time. If you make a pest of yourself, you can expect to be shown the door.

    ✓ Clients who make out-of-line demands such as monthly inspections. Not only is this an unreasonable request time-wise, but also very likely a violation of landlord-tenant law.

    ✓ Clients who won’t pay for needed repairs or argue about every bill. If you want maintenance done your way, then take charge of handling it. Also understand that professional managers can’t hire your cheap unlicensed handyman for $20 an hour. They are required to hire licensed contractors or use in-house employees and that costs more like $35-$65 an hour for general repairs and much more for electricians and plumbers.

    ✓ Clients who violate landlord-tenant law by peeking in windows or undertaking other illegal actions. I once had an owner who lived in one side of a duplex and had us manage the other side. She took care of yard maintenance, so didn’t have to give notice to go into the yard, but on the day the tenants were expected to be out, pressed her nose up against the kitchen window “Just to see if they were out.” They weren’t and they were more than a little angry to find their landlady-neighbor looking in the window. They didn’t insist on assessing the penalty of one months’ periodic rent, but could have. She was immediately released from her contract.

    ✓ Clients who go around the manager and make side agreements with the tenant. I once had an owner, who unbeknownst to me told his tenant that he could install a gate and grow medical marijuana at the property. We were supremely unhappy to discover the risk he had created not only for himself, but for us as well.

    ✓ Clients who refuse to do reasonable things that can help rent the property or keep tenants happy. One of my former clients had a unit where the interior paint was a mess. It hadn’t been painted for many years, and was covered with primed, but not painted patches, and he refused to paint the interior. In his exact words, “It’s good enough, it’s just a rental.” Actually, this will be someone’s home. I would not want to manage for a client with that attitude.

    ✓ Clients who believe their way is the only way. Often, owners who have self-managed for a long time make the worst clients because they think their way is the only way or the best way to do something. So, if you want a good relationship with your manager understand that they have their own experience and way of doing things. At the end of the day does it matter how we arrive at the destination as long as we get there in a cost-effective, efficient way?

    ✓ Clients who expect extra services for free. Many property owners seemed to feel that whatever they asked for, was included in the contract price. While it may seem that some months the manager is getting their percentage for very little effort, even the standard work like collecting rents, taking maintenance requests, hiring vendors, paying invoices, reconciling trust accounts, and delivering payments and reports is a lot of work. They’re also providing emergency maintenance services, collecting and confirming vendor information, managing an office and staff, and providing tax statements. Pile on your request for them to arrange for and oversee your unit remodel for nothing, or handle your insurance claim for restoration after your spectacular roof failure, and you’re out of line. That costs extra, usually a surcharge of around 10% of the total costs for labor and materials to oversee the restoration.

    ✓ Clients who say they can’t afford an essential repair. If you can’t afford to be a landlord then you should sell your asset. Owners need to be in a position to fork over possibly thousands of dollars to replace a drain mainline when it fails, replace a worn-out heat pump or furnace, or replace the roof. Just like in your personal finances, you need an emergency fund. (Read “Minding Your Business, means Minding Your Budget” on the ROA website for more details on planning for maintenance over time. You will also find depreciation schedules that can help you plan for replacement costs down the line.)

    ✓ Clients who want more than the two bids provided. If you are not satisfied with the bids your manager has provided, then you can do your own research and see if you can find acceptable service for less. I did once have an owner with a broken specialty stove who found the replacement part for his stove in an obscure corner of the internet that saved him a considerable amount over the costs of parts our appliance repair company was going to charge. Managers just don’t have time to do that, and it can be unreasonable to expect it.

    ✓ Clients who want sole approval rights over tenant placement. Your manager has a very fine line to walk in regards to Fair Housing and equitable treatment of all applicants and may not be able to deny someone you would rather not rent to for whatever reason. If you want control, then manage your own property. Or, screen and place tenants yourself and then hand it over to the manager (if they’re willing to allow it).

    ✓ Clients who expect that there will never be problems with tenants that their manager has placed in the unit. Screening is a risk assessment, but it’s not perfect at separating out successful tenancies from unsuccessful tenancies. Just like when owners screen, sometimes things blow up in our faces. I once had a lady apply for a unit who seemed perfect. She presented well, had great rental history, no criminal history, decent credit and enough income to qualify. A few months after she rented the unit, she displayed very disturbing behavior to the other residents. Turns out she had an alcohol problem and mental health issues, but when she had applied and leased up, she had been in treatment and off the booze. After she moved in, she stopped her meds and started drinking again. There’s just no way to predict things like that or prevent all problems. People are by nature unpredictable beings. Once they’ve been placed in the unit, they may start gambling, doing drugs, or get divorced and have the “War of the Roses” inside your unit. That same thing could have happened to you if you had screened and placed the tenants.

    ✓ Clients who display angry, abusive or inappropriate behavior to residents or staff - self-explanatory.

    ✓ Clients who insist that a bad tenant be retained. For whatever reason, some owners are so reluctant to ever have a vacancy they want their manager to continue to work with uncompliant, unreasonable, or unstable tenants. It’s the manager’s job to manage and that includes terminating tenancy for cause. They have an obligation to you, but also to the neighbors and the community.

    ✓ Clients who think their manager should know everything about the condition of the unit at all times. One of my management colleagues had a client who was very angry after a leak was discovered that had created a lake under her house. I’m sorry, managers are not professional home inspectors. They’re not going to crawl under your house, or on the roof and they’re not qualified to assess the quality of the fixtures, systems or foundation of your home. That requires a professional home inspector, which they can probably arrange for if you ask and pay for it. Otherwise, they will report and respond to visible issues discovered upon inspection or reported by tenants or vendors.

    Choose in haste, repent in leisure
    Choosing a property manager requires careful consideration. Don’t wait until you’re up against the wall and make a decision in haste, because it could be a decision you will regret. If you have multiple properties, you might consider splitting them up and trying out two or three different managers for a year then transfer them all to the one you like best. Not everyone has the same style, so all other things being equal, some people’s personalities or management styles are best served by one manager over another.

    The takeaway
    Choose wisely, be professional, document well, be accountable, hold your manager accountable, read reports, and follow up and you’re likely to have a great experience with professional property management services. You might even wonder why you waited so long.

    This column offers general suggestions only and is no substitute for professional legal counsel. Please consult an attorney for advice related to your specific situation.

    About the Author: Tia Politi is a licensed property manager, rental owner, and president of the Rental Owners Association of Lane County. She serves as the secretary for the Oregon Rental Housing Association (ORHA) and ORHA Education, Inc., heads up the ORHA Forms Committee, serves as a volunteer instructor for St. Vincent de Paul’s Second Chance Renter’s Rehab Program, and teaches classes in rental management throughout the state, including a class teaching high school seniors the basics of renting a home. Tia owns and operates Rental Housing Support Services, LLC, providing consultation, landlord-tenant training, mediation, notice prep and service, eviction support, and telephone helpline services.

  • Wednesday, December 18, 2019 5:00 PM | Maria Menguita (Administrator)

    By Jim Straub, Oregon Rental Housing Association Legislative Director
    December 18, 2019

    SB 608 was the result of those negotiations between myself and Speaker Kotek.  It was passed by the 2019 legislature and went into effect February 28, 2019. Not all tenant advocates like it.  They think the rent raise limitation is too high.  However, landlords know this is not rent control, and the high rent raise limitation is aimed at rent gouging (mainly going on in Portland).  Smart landlords know they’ll have plenty of room to raise their rents every year to take care of things like maintenance, taxes and protecting their investment.

    Landlords don’t like SB 608.  They know it’s a bill designed to solve problems they didn’t cause.  It places limitations on their small businesses.  As a landlord, I don’t particularly like this bill, and I don’t know any landlord who would.  However, landlords also know this was a reasonable compromise bill that took the needs of both sides into account.  And all our efforts to reach that compromise made this bill into a much better bill that it otherwise would have been.

    And what happens next?  Hopefully, no changes anytime soon.  This law needs time to be put into practice and see if it bears fruit.  There will be pressure by tenant advocates to lower the rent raise cap, but smart legislators know we don’t want to discourage new development.  The last thing Oregon needs is small landlords fleeing the real estate market, leaving big corporations as the last landlords standing in the marketplace.

    The worst thing we could do would be to tweak this law before we give enough time for data to come in about how it’s working, or not working.  In fact, at a recent landlord-tenant roundtable discussion I participated in, Professor for Land-Use Planning (Portland State University) Marisa A. Zapata (who is a strong tenant advocate) said, “Some (tenant) advocates say the rent raise limit is too high, but I think we need a wait-and-see approach.  We’re not yet sure what the bill will do and how things will play out.”  Advocates on both sides recommend this cautious approach, which will give this bill a fair opportunity to work as intended. 

    So the truth is, do I wish SB 608 had never become law?  You bet.  With a supermajority in the legislature, Speaker Kotek could have passed nearly any housing bill she wanted.  The bill we got was a compromise with landlords, but it doesn’t benefit us much.  Of course, this bill turned out so much better than it might have been without landlord input, but Speaker Kotek’s cure may be worse the ailment.  Time will tell, stay tuned.

    About the Author: Jim Straub is a third-generation landlord and real estate investor in Oregon with more than 29 years personal experience investing in, building and managing residential real estate. He is also owner of Acorn Property Management, LLC, with offices in Portland and Springfield. Since 2010, Jim has represented the Oregon Rental Housing Association as their Legislative Director. ORHA consists of 14 chapters across the state with more than 5,500 members. Jim brings a wealth of practical experience with a moderate voice to facilitate innovative ideas for modern/today’s housing dilemmas/solutions.

  • Tuesday, December 03, 2019 1:34 PM | Oregon Rental Housing Association (Administrator)

    U.S. Department of Housing and Urban Development (HUD) Secretary Ben Carson is seeking action against online companies that profit from selling sham assistance animal documentation at the expense of rental housing providers and renters who have legitimate needs. These companies’ documents are intended to justify reasonable accommodation requests for assistance animals (service animals and emotional support animals (ESAs)) in housing but are often used to skirt pet restrictions under false pretenses.

    In a letter sent to Chairman of the U.S. Federal Trade Commission Joseph J. Simons and Director of the Bureau of Consumer Protection Andrew Smith, Secretary Carson expresses several concerns in line with those of the apartment industry and asks the FTC to investigate some websites selling assistance animal verification documents. As HUD General Counsel Paul Compton states, “These websites are using questionable business practices that exploit consumers, prejudice the legal rights of individuals with disabilities, dupe landlords, and generally interfere with good faith efforts to comply with the requirements of the Fair Housing Act.”

    Click for More

  • Tuesday, December 03, 2019 12:45 PM | Maria Menguita (Administrator)

    By Sage Coleman, Oregon Rental Housing Association President
    December 3, 2019

    To our Valued Members around the state of Oregon, I am excited to be your new ORHA President, and want to get you up to speed on our direction as we head into 2020. Legislatively, we had a major change this year (Senate Bill 608) that was a hard pill to swallow, but with ORHA Legislative Director Jim Straub, and ORHA Lobbyist Shawn Miller, leveraging a reputation of good will and reasonableness in negotiation, our influence resulted in a more balanced outcome than we thought was possible. While many landlords around the state felt we should have dug in our heels, the political reality was that any effort like we expended to defeat HB 2004 in 2017, was doomed to failure given the legislative makeup and so time was better spent building a collaborative work environment. ORHA was the only entity that Speaker of the House Tina Kotek was willing to work with to craft the bill, speaking highly of our reputation in Salem. It was YOUR INVOLVEMENT to defeat HB 2004 which helped earn our seat at the SB 608 planning table. Please read Jim’s article, “SB 608 - What the Heck Happened?: The Inside Story” to get the inside scoop on how the negotiations played out.

    We published our new ORHA 2019 Forms Manual with new and updated forms to great acclaim, and the ORHA 2020 Law Book is in process. Forms Committee Chair, Tia Politi, is accepting suggestions for the next round of new forms and updates to current forms to compile ahead of the 2021 revision. Please email your suggestions to the ORHA office: office@oregonrentalhousing.com.

    The Forms Store/Technology Committee, headed by Cloud Miller, has made incredible progress on updating and modernizing the ORHA Forms Store. The updating and quality control testing consumed hundreds of hours of time, but the results are truly spectacular. That effort did not come without some major bumps in the road and we appreciated your patience when our store was down a couple of times. Fortunately, the interruptions in service were short because of the tireless efforts of Cloud and Brad Clemens at Sunriver Computer Services, and our site is now better than ever and ready to help landlords across the state operate a successful business. Currently, they have added new categories of forms to make your search for the correct form easier, and are working to create packages of forms, making the move-in process easier. Forms store quality-control testing continues with vetting across mobile and stationary platforms to ensure that we reach all of our customers and their favorite technology – stay tuned for more. Check it out now!!! https://store.oregonrentalhousing.com/

    The ORHA Board, led by Dennis Chappa of Lane County, recently completed a SWOT (Strengths-Weaknesses-Opportunities-Threats) analysis to help guide our long-range planning and I am excited about implementing this tool to help direct the future of ORHA. I am honored to serve with such a dedicated board and I look forward to robust collaboration with our dedicated State Board members and the talented associations around the state in achieving our next level of success.

    Keep your eyes peeled for a call to support legislative efforts with your dollar-for-dollar tax credit to ORH KEY PAC. If you are looking for tax deductions as 2019 comes to an end this group may be a good choice. https://oregonrentalhousingpac.org/donate

    Thank you for the opportunity to be of service,
    Sage Coleman
    President, Oregon Rental Housing Association
    Broker, Pacific Properties

    Oregon Rental Housing Association (ORHA) is a volunteer, nonprofit association consisting of 15 local groups throughout the state, comprising of more than 5,000 individual members. We provide landlord/tenant education and legal forms, lobby for fair and equitable laws and regulations, and support ethical property management practices throughout the rental housing industry.

  • Thursday, November 21, 2019 9:31 PM | Maria Menguita (Administrator)

    By Jim Straub, Oregon Rental Housing Association Legislative Director
    November 21, 2019

    The 2019 Oregon State Legislative Session was a historic, landmark session which passed Senate Bill (SB) 608, a first in the nation state-wide rent stabilization bill. SB 608 was a negotiated bill, and neither landlord nor tenant advocates got all they wanted. What we did get, though, is a bill everyone might be able to live with. But in order for you/landlords to recognize this, you need to know some of the back story. Will the bill do everything the legislature hopes it will, including solve the housing crisis? It remains to be seen.

    SB 608 is complicated and lengthy. In fact, many landlord-tenant attorneys are still working out all the details and implications. In fact, you’ve probably seen a lot of coverage on this bill by now. But so that we’re all on the same page, let’s review the major points of the bill.

    #1 : SB 608 limits rent increases. 
    This bill limits the amount rental property owners in Oregon may raise rents to a base amount of 7% plus the amount of the western region’s consumer price index (CPI). In 2018, the CPI was 3.3%. Thus, if this bill had been in effect in 2018, the amount rents could be raised would have been limited to 10.3% (7% base + 3.3% CPI).

    Although SB 608 does limit rent increases, the amount of the increase limited in the bill was a strategic negotiation. Tenant advocates originally proposed a limit of 2-3%. While that amount may have seemed fair to them in terms of owner profit, we know that there is more to consider when raising rents than simply a profit motive. Another consideration when determining the fair amount of a rent raise is the cost rental owners must plan for deferred maintenance over time. Rental property owners must factor in such things as repairs to heating systems, sewers and roof maintenance. So, while 10.3% might seem to be a larger annual rent increase than most rental property owners in Oregon might implement, a savvy rental property owner will increase the rent enough each year to allow for deferred maintenance and other items to be factored in.

    Rental property owners whose buildings received their certificate of occupancy less than 15 years ago will be exempt from rent increase limitations. This exception was negotiated by rental property owner advocates so that new construction was not discouraged by the bill. This means that for these newer buildings, rental property owners will be permitted to raise rents without limits, as much as the market will bear.

    #2:  SB 608 limits notices to vacate.

    Under SB 608, no-cause notices to vacate are limited to the first year of occupancy. After the first year, only with-cause notices are permitted, which the tenant may cure. Of course, an eviction (FED) may be filed if the tenant doesn’t comply with the with-cause notice, and if they do comply but commit the same offense within six months, then a ten-day repeat violation notice may be served.

    Fixed-term leases automatically become month-to-month rental agreement at lease termination, unless the landlord has written the lease to expire before one year is up. So, if your tenant pays their rent and follows the rules, they get to stay, subject to a few exceptions.

    With 90 days notice and the payment of a one month relocation fee to the tenants (payable at the time notice is given and only applicable if the owner has 4 or more rental units in Oregon), landlords may ask their tenants to leave under these four conditions:

    • The rental unit is to be renovated or remodeled to the extent that it will not be habitable during the work;
    • The unit is to be completely demolished, or converted to a non-residential use;
    • A landlord or an immediate family member is going to move in; or
    • The landlord has accepted an offer to purchase the dwelling unit from a person who intends in good faith to occupy the dwelling unit as the person’s primary residence.

    But fear not. SB 608 doesn’t prevent you from getting rid of a bad tenant. If they’re not paying their rent or playing by the rules, serve them with-cause notices. If they don’t comply, evict them as before. And there’s one more opportunity to get rid of bad tenants. SB 608 contains a “three strikes you’re out” rule. If over the course of one year, a landlord has served three written warnings (of any kind, it doesn’t have to be for the same offense), a landlord doesn’t have to renew at the end of the lease and there is no obligation to pay a one month relocation fee.

    So, while at first glance it may seem that SB 608 ties landlords’ hands, we believe this is an eminently workable compromise bill.

    So, what led to SB 608 and did landlords get much say in the bill?

    A lot has changed since the first Oregon landlord-tenant bill in 1973. Oregon landlords have been immersed in the development of new landlord-tenant law in Oregon since the Landlord-Tenant Coalition began meeting during legislative sessions since the mid-1980’s. At the Coalition, landlord and tenant advocates met and negotiated compromise bills, ones that were easy for legislators to pass because they knew such bills were supported by both sides. I’ve been meeting with the Coalition on behalf of landlords for ten years now.

    Things changed over the past few years as the sense of a developing housing crisis in our state gave landlord-tenant law a new sense of urgency. About that time, a large landlord group in Portland joined the Coalition (which is open to any landlord or tenant advocate group). In light of the sense of a housing crisis, the tenant advocates came to the Coalition asking the group to deal with the arising problems in the housing industry. The large Portland group simply refused to go there, identify the advocates’ requests as “industry killers”. By putting their head in the sand, the Coalition died.

    This set the stage for 2017 legislative session, and Oregon Speaker of the House Tina Kotek’s House Bill (HB 2004). This bill included many tenant protections, and you may remember it well – the Oregon Rental Housing Association and other landlord advocates worked tirelessly to defeat it. But we couldn’t rest on our laurels, as there was more to come.

    In November 2018, Oregon Democrats were voted into a supermajority in the legislature, and Tina Kotek remained as Speaker of the House. Defeating a new bill with extensive tenant protections would not be as simple as in 2017. To be frank, Speaker Kotek now had the political muscle to force most any bill thru the legislature. Fortunately for Oregon landlords, Speaker Kotek had a lot on her agenda for the 2019 session. Cap and Trade (climate change), funding of public schools and housing, zoning changes to incentivize housing development, Medicaid stabilization - some really big and time consuming bills to get through. Why is this good for landlords? The tenant groups in her home city of Portland were demanding she try again for another HB 2004. But, the speaker also knew that the majority of her time later in the session would be consumed with her other target items. She didn’t want to get bogged down in another fight over landlord/tenant issues.

    Just days after winning the supermajority, Speaker Kotek called me. She said that she was going to introduce and pass a tenant protection bill, but that she had also heard the testimony of the landlords the previous year and she wanted to work with just one landlord advocate who she felt could help develop a compromise bill that both sides could live with, and she felt that landlord advocate was me. Speaker Kotek said, “Jim, let’s find a way to work together.” And over the next several months, that’s just what we did.

    Within a week after winning the supermajority, Speaker Kotek drove down from Portland, and met with me at my office in Springfield for numerous hours of brainstorming. When she sat down, and went over what she wanted in a bill…frankly I was aghast. It would have been an industry killer. Ideas like rent increases limited to 2%, elimination of all no-cause notices regardless of circumstances, something called vacancy control which means that you could never raise the rent on the property more than the 2%, even if the tenant moved out. You would be forced to offer it to the new tenant at the same price as the old, regardless as to how long the previous tenant had lived there or what increases there were on property taxes or local bond measures. I remember thinking for the first time in my life, that it might be a good time to sell my rentals.

    Once I regained my composure, I gave Speaker Kotek real word examples of the need for no-cause notices to ask tenants to leave. There are so many examples of why asking a tenant to leave might be necessary, even if a landlord doesn’t have the legal, provable point to evict them in a court of law. I reminded the Speaker that there are good reasons for landlords to raise rents and that a bill that permits no rent raises will hurt small business owners and, ultimately, hurt tenants. I explained that I had tenants living in properties that I knew where paying hundreds of dollars less in rent each month than what the market would bear, and that lots of landlords did this because good tenants that take good care of the property and pay their rent on time are worth keeping and I reward them by not raising the rent to the maximum each year. I helped the Speaker understand that no matter how fair our application process, sometimes landlords end up with bad tenants. That it’s scary for landlords to hand over what is often their single largest investment, something worth $200K or $300K, to someone they barely know and just hope and pray that it’s still worth that when they get it back. That, to landlords, renting to tenants can feel like hiring someone without an interview and you can’t fire them if it doesn’t work out. Speaker Kotek listened carefully and thankfully, I was able to get her to negotiate. We had many more conversations, each time playing out the cause and effect of any change.

    About the Author: Jim Straub is the Legislative Director for the Oregon Rental Housing Association, a state-wide trade organization representing more than 5,500 landlords in Oregon. He was President of the Rental Owners Association of Lane County from 2007 to 2015, a local trade organization representing over 1,200 landlords in Lane County. He spent more than a decade as their helpline provider. He is also a past member of the Oregon Youth Conservation Corps where he served as an Advisory Board member for 2 terms. He sits on the Oregon Housing Choice Advisory Committee.
  • Friday, July 26, 2019 12:27 PM | Oregon Rental Housing Association (Administrator)

    By Tia Politi, ROA President

    SB 608 and Property Sales

    With the passage of SB 608, buyers, sellers and realtors are finding that the law’s mandates are dramatically changing the world of property sales when there are tenancies of more than one year in place. The new law restricts a landlord’s ability to terminate a tenancy of more than one year to a for-cause termination, or for one of four Qualifying Landlord Reasons: 1) the property is being demolished or converted to a different use within a reasonable time; 2) the landlord intends to undertake repairs or renovations to the property within a reasonable time and the property will be unsafe or unfit for occupancy during repairs or renovations; 3) the landlord intends for the landlord or a member of the landlord’s immediate family to occupy the dwelling unit as a primary residence and the landlord does not own a comparable unit in the same building available that is available for occupancy; or 4) the landlord is selling the property separately from any other unit to a buyer who intends in good faith to occupy the dwelling unit as their primary residence.

    It’s becoming clear that especially for sellers of single-family homes, planning will need to start well in advance of offering their property for sale.

    Buying or Selling a Single-Family Home

    For an owner selling a single-family home occupied by a tenant for longer than one year to a buyer who wants to occupy the home as their primary residence, the new law requires that the tenant be provided with a 90-day notice of termination, and that at the time the notice is delivered the landlord also provide written evidence of the offer to purchase the unit not more than 120 days after acceptance (names and private information can be blacked out), and state that the buyer intends in good faith to occupy the dwelling unit as a primary residence.

    How is a seller to know if a buyer will want to keep the property as an investment and be willing to take on the existing tenancy, or if they want to purchase the home to live in? They won’t until they get an offer. If a buyer does want to live in the property and makes an offer, most buyers will need to get a mortgage to purchase, have an interest rate lock that expires in 45 days, and be required to occupy the home within 30 days after closing, so what are buyers and sellers to do?

    For a full cash sale, once the offer is accepted, the seller can provide the tenant(s) with ORHA Form #5A - Notice of Termination-Qualifying Landlord Reason, check the correct box, provide the evidence of the accepted offer to purchase, and pay the tenant the relocation expense of one-months’ periodic rent unless exempt. (Owners of four or fewer dwelling units are exempt from the payment of relocation expenses.) The notice must be prepared and served in accordance with ORS 105, and will remain in effect for the next owner. Even with an all-cash sale, however, the buyer could end up purchasing a huge liability if the seller failed to prepare and serve the notice in accordance with the law. The tenant could choose to stay and challenge the notice. If the buyer proceeds to eviction court, and they have inherited a defective or imperfectly served notice of termination, they could lose the case in court, have a judgment against them, possibly have to pay the tenant’s attorney, and start over again.

    In a case where a seller believes that it is likely the property would be sold to a buyer who wants to live in the property, and will need to get a mortgage to purchase, the best option may be to remove the tenant for another Qualifying Landlord Reason, such as the owner intends to undertake repairs or renovations to the unit within a reasonable time and the unit will be unsafe or unfit for occupancy during repairs or renovations.

    The question then becomes, how significant do the repairs or renovations need to be in order to claim the right to terminate? It depends. The owner may be challenged and have to justify their decision to a judge, so need to be prepared to think about this ahead of time. Many repairs or renovations would make a property unsafe or unfit for occupancy, and most contractors will refuse to do substantial work in a unit with tenants in place, but sellers should make sure they can justify the level of work they are doing to prepare to sell.

    Realtors encourage sellers to spruce up the unit prior to marketing, so a full interior repaint would likely qualify as would replacement of flooring throughout, kitchen or bath remodels, etc., but things like new windows may not as new windows can be installed from the outside and would not make the property unfit for occupancy during the install. (As a side note, remember that your insurance company will likely not provide full coverage for your unit if it is vacant for more than 30 days, so sellers should have a plan for that, such as a house sitter.)

    The Duplex Rule

    SB 608, does provide a narrow exception to the new termination rules for owners with two units on the same tax lot where one unit is their primary residence. The new law continues to allow termination of tenancy for no-cause with a 60-day notice, or with a 30-day notice if the property is to be sold and the buyer intends in good faith to occupy the tenant’s unit as their primary residence. If the buyer does not intend to occupy the tenant’s unit as their primary residence, then the tenant comes with the property. There are pitfalls in this scenario as well, and while the exemption exists for this type of property, landlords are still obligated to payment of the relocation expense of one-months’ periodic rent at the time the notice is delivered, unless exempt. (Owners of four or fewer rental dwelling units are exempt from payment of the relocation expense.) Use ORHA Form #5C – Notice of Termination – Two-Unit/Owner-Occupied Property.

    If the duplex is being held as an investment property and the seller does not live in one unit, but the buyer wants to occupy one side as their primary residence after closing, the same rules would apply as if for a single-family home. If the tenancy has been in place for more than one year on the side the buyer wants to live in, the seller would either have to issue the 90-day notice of termination – Qualifying Landlord Reason, for one of the four reasons allowed by law, or sell the property as-is and the buyer can issue the notice for the qualifying reason of wanting to live in the unit as their primary residence. Once the notice expires and the tenant vacates, the buyer can then move in.

    Cash for Keys

    This is a tried and true method for regaining possession of a property and nothing in the new law prohibits both parties from making a mutual termination agreement. Just make sure that the terms are clearly spelled out in writing, and that the agreement states what will happen if the tenant complies and what will happen if they don’t comply (It’s a smart decision to have an attorney draft the agreement). Also, don’t hand over the cash until the resident is ready to hand over the keys.

    Marketing an Investment Property

    SB 608 does not impact property sales where the seller and buyer are both investors and the buyer won’t be living at the property, but there are still issues that can make the property easier or more challenging to market – mostly in regards to the price of rents, the quality of the tenancies, and the completeness of the seller’s documentation.

    Owners who have under-market rents will find that their properties cannot prove sufficient cash flow to meet the demands of sophisticated investors, and they won’t be able to command the same price. If you are planning to sell an investment property in the not-too-distant future, and your rents are below market, plan ahead to increase rents within the limits imposed by SB 608 until your rents are market rate so that your property can command the best sales price.

    The quality of the tenants can help or hurt investment property sales as well. Residents who are keeping to their lease and caring for the property are a fantastic marketing asset for sellers; problem residents are not.

    The completeness of the seller’s tenancy documents can also help or hurt the sale. If there are gaps or flaws in your paperwork, fix them now before you market your property for sale, or be prepared to accept a lower price as a buyer will have to agree to accept the increased liability and correct the deficiencies.

    Paperwork Pitfalls

    What does good paperwork look like? The rental agreement and all addenda are complete, initialed, signed and dated by all adult occupants; the seller has good documentation on the condition of the units on move in; there are accurate tenant ledgers; and good notes and copies of notices regarding lease violations during the tenancy.

    Without good paperwork, a buyer may be purchasing liability. For example, the seller is marketing their property built prior to 1978, but has no signed lead-based paint disclosure. The penalty for this violation if reported to the EPA, is $6000. The buyer could require as part of the sale, that the seller fixes the deficiency in the paperwork so that they are not taking on that kind of liability. Or the buyer could agree to accept responsibility for fixing that problem after the sale, but use that deficiency to negotiate a lower price. To ensure they are fulfilling their fiduciary duty to their clients, Buyer’s Agents should request copies of all leases, addenda, and tenant ledgers and review them for completeness, or have an attorney review them. Also, any existing notices of termination should be reviewed by an attorney or professional consultant to ensure that they will hold up in court if the buyer purchases a property before a notice of termination expires.

    Planning ahead

    Depending on the timeframe required for renovations, if owners are planning to renovate ahead of marketing their property, they should think about providing notice to vacate in November, December or January to hit the sweet spot on the sales season. I can’t stress enough how essential it is that owners ensure their notices of termination are prepared and served perfectly. A defective notice of termination can result in a loss in court. For sellers that can mean a lost sale; for buyers it can mean a long delay in being able to occupy the property; and for both it can mean a court judgment against them, payment of attorney fees to the prevailing tenant, and starting the process all over again.

    Also, sellers need to consider that even with a good notice of termination in place, the tenants may not move out, requiring an owner to initiate an eviction action in court. If uncontested, the court process takes two or three weeks, with more time added if there’s substantial abandoned property to address; if contested, the process can be delayed further, so owners should factor that into the timing of the notice to vacate. And just to complicate matters even more, remember that tenants may still provide just 30 days’ notice to vacate which could throw off the timing as well.

    The takeaway

    A property sale with tenants in place for more than one year now requires better advance planning by sellers, more thorough investigation by buyers, and for realtors, it requires a higher level of due diligence than ever before. Fulfilling their fiduciary duty to their clients means educating themselves on the mandates of SB 608 and all of its intricacies to provide their clients with the best information possible as to the benefits, drawbacks and possible outcomes of selling rental property.

    About the Author: Tia is a licensed property manager with more than seventeen years of management experience. She currently manages four low-income senior & disabled and family housing complexes, as well as her own rental properties. Tia serves as President of the Board of Directors for the Lane County Rental Owners Association, Chair of Programming and Bulletin Committees and Co-Chair of the Education Committee. She is a state delegate and Secretary for the Oregon Rental Housing Association, and the Forms Committee Chair. Tia is a volunteer instructor for St. Vincent de Paul's 'Renters Rehab' program. She also teaches classes to landlords on topics including evictions, the move-in process, tenant issues, and fair housing & advertising. Last year, Tia developed and taught a curriculum for high school seniors on the risks, rights and responsibilities of being a tenant with a goal of providing instruction to all young people throughout the state as part of essential life skills education.

    This column offers general suggestions only and is no substitute for professional legal counsel. Please consult an attorney for advice related to your specific situation.

  • Friday, July 26, 2019 11:59 AM | Oregon Rental Housing Association (Administrator)

    By Tia Politi, ORHA Forms Committee Chair

    Dear Local Associations of the ORHA,

    Usually, when ORHA produces a new Forms Manual or Law Book, we work to create an insert or guide that can be added to the previous manual that allows it to be used longer, saving our members money. With the addition of so many new forms, and so many updates to established forms, the board feels that this is not a good option. We are encouraging you to urge your members to purchase the new ORHA Forms Manual 2019 and dispose of the old one. We are moving toward the idea of creating a system or how-to guide for property management in Oregon, and so have revamped the order of the Forms Manual by putting the educational sections, “Delivery of Notices” and “Delivering Possession,” before the forms themselves.

    We exist to protect and serve the interests of our members, and one of the most valuable things we can teach them is the importance of perfecting service of notice. Failure to select the right form, fill it out properly, calculate time correctly, and serve it perfectly are the most common cause of landlord loss in the courtroom and imposition of money judgments owing to the tenant.

    Cloud Miller of TVRA is encouraging members who are reluctant to get a new manual by requiring them to have one if they want his help on the Helpline related to forms. He then teaches them how to find the answers by taking them through the answer in the manual. It has the added benefit of reducing calls.

    Lane ROA is selling the manuals at a lower price now and plans to increase the price in November, and is letting members know. Use whatever strategy you feel would work to get this important reference book into the hands of your members.

    Violet Wilson of SRHA, created a class for her members on the new Forms Manual, that ORHA has purchased to distribute to all of you for the low, low price of $20. Violet’s presentation is designed for a three-hour class and runs attendees through service of notice, the different types of notices, and how to use the manual. Please contact Virginia at the office if you would like a copy of the PowerPoint presentation. She will email it to you, and all it takes is a class facilitator to run through the material. You can print handouts for classes as needed in whatever layout works. Educate your members, create interest in your association, and make money to further your mission – what’s better than that?

    And finally, just in case you haven’t read the rundown on the new forms, here’s the skinny:

    The 2018 Forms Manual was complete and ready to go to print, when word came that there would be a major change coming to the Landlord-Tenant Act – ORS Chapter 90. The board of directors decided it would be best to delay the release of the manual until new forms could be created and incorporated. The final version of SB 608 instituting rent control and limits on no-cause termination of tenancy, was signed into law on February 28, 2019, with an emergency clause. The Act became effective on the Governor’s signature for rent increases, fixed-term leases entered into or renewed on or after the effective date, and terminations of month-to-month tenancies occurring on or after the 30th day after the Governor’s signature. 

                The Forms Committee introduced several new forms earlier in 2019, including Septic Agreement (Form #61), Well Agreement (Form #62), Fireplace, Wood Stove, Pellet Stove Agreement (Form #63), and Pest Agreement (Form #64). This year we are also rolling out a new Exterior Property Care Addendum (Form #65) that address issues of yard care and other exterior care issues, as well as a new Weatherization Addendum (Form #66) to clarify the responsibilities of Landlords and Tenants in protecting the property in case of severe weather events. We have added a Co-Signer Application (Form #52A), to make screening co-signers easier, and have changed our satellite agreement to include cable hookups and security systems. This form is now called the Cable/Satellite Dish/Security System Agreement (Form #24). We also updated several forms in response to user feedback and attorney review, including both the Application (Form #1), Month-to-Month Rental Agreement (Form #2A), Fixed-Term Rental Agreement (Form #2B), Rules and Regulations (Form #33), Add or Delete Tenant Agreement (Form #59), Deposit Refund Checklist (Form #21), the Pet Agreement (Form #3), the Assistance Animal Agreement (Form #46), 24-Hour Notice to Enter (Form #18), and both the Medical Marijuana Agreement (Form #10) and the Marijuana Agreement (Form #10A).

                With the passage of SB 608, the Forms Committee updated the Notice of Termination – No-Cause (Form #5) to clarify that it only applied to first-year tenancies. The committee kept the options for 30, 60 or 90 days because in certain jurisdictions or in subsidized housing, termination timeframes are different. The committee also created new termination forms:  Notice of Termination – Qualifying Landlord Reason (Form #5A), Notice of Non-Renewal of Lease (Form #5B), and Notice of Termination – Two-Unit/Owner-Occupied Property (Form #5C), to help landlords comply with the new requirements. The Notice of Rent Increase (Form #13) was updated to include language consistent with the requirements of law, and created a form Notice of Lease Renewal (Form #67) that provides a way for landlords to incentivize lease renewals rather than allowing the tenancy to convert to a month-to-month agreement.

    To make it easier for landlords to provide warning notices to tenants under a fixed-term lease and potentially terminate a lease under the Three Strikes rule, the following forms have had new language included that states:  “If you are on a fixed-term lease, be advised your landlord has the option to terminate your tenancy at the end of your lease if you have received three or more notices for noncompliance (including non-payment of rent) within a 12-month period preceding the end of the fixed term. Owner/Agent may terminate the tenancy by issuing a 90-day notice prior to the lease end date, or 90 days prior to the date designated in the notice, whichever is later. Correcting the third or subsequent violation is not a defense to the termination. This is your                   violation in the last 12 months.”

    This language has been added to all non-compliance forms, including:

    ORHA Forms #4 & #44 – 72/144 Hour Notice of Non-Payment of Rent

    ORHA Form #6 – Unauthorized Pet Violation

    ORHA Form #14 – Past-Due Rent Reminder

    ORHA Form #34 – Parking Violation

    ORHA Form #35 – Notice of Non-Compliance

    ORHA Form #38 – Notice of Termination with Cause

    The forms committee also included language on all of our termination notices to comply with a new law requiring landlords to make veterans aware of the community resources that may be available to help them. Even though this law does not take effect until January 1, 2020, we thought it would be prudent to include the language now.

    Two other bills that passed this term, but won’t take effect until January 1, 2020, are necessitating changes as well. After the law takes effect, a landlord may only require an applicant to pay a single applicant screening charge within any 60-day period, regardless of the number of rental units owned or managed by the landlord for which the applicant has applied to rent. This prompted a change to Application Screening Charge Receipt (ORHA Form #42) reminding landlords of the new rule.

    Another change to screening guidelines:

    • 1)      When evaluating an applicant, the landlord may not consider drug-related convictions based solely on the use or possession of marijuana.
    • 2)      When evaluating an applicant, the landlord may not consider the possession of a medical marijuana card or status as a medical marijuana patient when making a determination about the suitability of an applicant. Affordable housing providers subject to federal laws prohibiting the use or possession of marijuana (including medical marijuana) by resident on the premises may continue to enforce those rules with their residents.

    This prompted a change to Application Screening Guidelines (ORHA Form #45) reminding landlords of the new rule.

    As we work at the state level to provide the best updates to forms and our manual to serve your association, we know you share the desire to keep our members’ interest paramount. Please encourage them to only use the most updated forms.

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PO Box 20862, Keizer, OR 97307
Contact ORHA (click here)
ORHA Support Team: support@oregonrentalhousing.com
ORHA Office: office@oregonrentalhousing.com

The Oregon Rental Housing Association (ORHA) is a non-profit educational landlord association -- ORHA Board Members, Mentors, Staff, and/or other related ORHA affiliates do not give legal advice. Please be advised that any information provided  is no substitute for professional legal counsel and any advice or guidance given does not constitute legal advice.  Please consult an attorney for legal advice related to your specific situation.

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