July 12, 2019

Are you a homeowner who rents your property for residential use?

The recent landlord-tenant law changes in Oregon, and Portland specifically, might have you wondering where you stand. The correlation between housing costs/availability and the homeless crisis has spurred lawmakers of the state and City of Portland to enact legally enforceable regulations regarding rent increase caps, no-cause eviction notification timelines, and sizeable penalties for such violations. One thing is for certain: the tenant-landlord regulations are more stringent, making it more important than ever for small-time landlords to know how to properly navigate them.

If you own four or fewer rental properties, you need to know that in some no-cause eviction cases, you will want to file an exemption and have it approved prior to providing your tenant a 90-day notice to vacate. The city lists those 12 exemptions on its website (also below). True to form, the devil is in the details, including times. An eviction notice should have not just the vacancy deadline date, but the time as well. For example, state: “November 1, 2019 by 11:59 pm.” Better yet, hire a rental management company who can help you with the details. Otherwise, you will want to review your options with a legal professional before making any decisions. In the meantime, here is a starting point for navigating the new regulations as they pertain to landlord-tenant law in Oregon and the City of Portland.

Oregon Senate Bill 608 summary reads:

Prohibits landlord from terminating month-to-month tenancy without cause after 12 months of occupancy. Provides exception for certain tenancies on building or lot used by landlord as residence. Allows landlord to terminate tenancy with 90 days’ written notice and payment of one month’s rent under certain conditions. Exempts landlord managing four or fewer units from payment of one month’s rent. Provides that fixed term tenancy becomes month-to-month tenancy upon ending date if not renewed or terminated. Allows landlord to not renew fixed term tenancy if tenant receives three lease violation warnings within 12 months during term and landlord gives 90 days’ notice. Limits rent increases for residential tenancies to one per year. Limits maximum annual rent increase to seven percent above annual change in consumer price index. Requires Oregon Department of Administrative Services to publish maximum annual rent increase percentage.

There are 12 exemptions for landlords who otherwise would be required to pay relocation assistance in the City of Portland.

1. Rental Agreements for week-to-week tenancies.
2. Landlords whose Principal Residence is in the same Dwelling Unit as the Tenant. *
3. Landlords whose Principal Residence is in the same Duplex as the Tenant. *
4. Tenants who live in an Accessory Dwelling Unit (ADU) on the same property as the Landlord.
5. Landlords who temporarily rent out their Principal Residence during an absence of 3 years or less. *
6. Landlords who temporarily rent out their Principal Residence during an absence due to active duty military service. *
7. Termination of a Rental Agreement so the Landlord can move an immediate family member into the Dwelling Unit.  The immediate family member CANNOT be the Landlord, their spouse, or any person who has been an owner of the Dwelling Unit within the past 12 months.
8. Dwelling Units regulated by federal, state or local governments as Affordable Housing for a period of at least 60 years.
9. Dwelling Units undergoing acquisition, rehabilitation or demolition for federally funded projects subject to the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970.  These Dwelling Units are subject to federal, rather than city, relocation assistance laws.
10. Dwelling Units rendered immediately uninhabitable NOT due to the action or inaction of the Landlord or Tenant.  Such events include, but are not limited to, natural or human-caused disasters.
11. Dwelling Units rented for less than 6 months while subject to a demolition permit submitted BEFORE the Rental Agreement began.
12. Dwelling Units where the Landlord provides a fixed-term Rental Agreement (example: 1-year lease), notifying the Tenant in writing BEFORE the Rental Agreement began that upon expiration of the lease the Dwelling Unit would be sold or permanently converted to a use OTHER THAN as a Dwelling Unit subject to Oregon’s Residential Landlord and Tenant Act.

*See Interim Administrative Rules for definition of principal residence.

Re-printed from PortlandOregon.gov

Rental Cap

Most importantly, the rental cap in Portland is ~7% plus prime (about 10% as of this publish date). How likely are you to rent or sell your investment property because of the landlord-tenant laws? Do you think these laws will affect the housing market in any way? Will renters have fewer options if landlords sell? Will future renters be protected by rent that has already seen historically high rates? As usual, time will tell. In the meantime, protect your investment by knowing what the rules are. If you are not in Portland, Oregon, please check with your city’s ordinance for particular Acts relating to landlord-tenant law.

Ordinances and codes are subject to change. I am not an attorney and may not dispense legal advice. Please contact me if you would like a referral to an attorney.