Portland Property Management Blog

Oregon Rent Control - Part 2

Oregon Rent Control - Part 2

Last week, I discussed the new Oregon Rent Control Law and how it affects Rent Increases.  This was Senate Bill 608 that was signed into law and effective February 28, 2019.  Rent increases are capped at 7% plus the CPI published in September of each year.  

Part of Senate Bill 608 also affects how you can end a tenancy.    This part of the bill is a tad complicated.  I would not be surprised to see a few court cases later this year contesting some of the exceptions.

According to law makers, the intent of the bill is to help end homelessness that we are facing.  However, it is blatantly ignoring your rights as a property owner.  The bill is briefly summarized below.  Here you can read the entire Enrolled Senate Bill.

FIRST YEAR OF OCCUPANCY
  • First year of occupancy can be terminated with a 30 day notice for MTM and 30 day notice for a lease to end no sooner than the lease-end date or 30 days from issuance.  Must be issued before the first year of occupancy has passed. 
  • Three or more violations - can choose not to renew
AFTER FIRST YEAR OF OCCUPANCY

Termination of Tenancies AFTER first year of occupancy are now prohibited with limited exceptions - and must include payment of one month's rent (cannot offer last month's rent free).  Payment of last month's rent does not apply to landlord who has ownership in 4 or fewer units
  • Three or more repeat violations - this part of the law has remained unchanged
    • Must encompass a 12-month period
    • Certain verbiage is now required on each notice
    • Payment of one's month rent is void (not applicable). 
  • Landlord intends to demolish unit/convert to another use
  • Landlord intends to undertake repairs/renovations that make the unit unsafe to live in
  • Landlord intends for landlord or member of immediate family to occupy as primary residence
  • Landlord has a duplex and lives on site
The final exception to end a tenancy is the part of the law that is up for debate - and I predict will end up in the courts.
  • Landlord has an accepted offer to purchase.  It is recommended by several Landlord Attorneys that the termination notice should be given along with the accepted offer (personal info on the offer can be redacted)
    • Notice must state RA will term upon designated date not less than 90 days after delivery of the notice 
    • Specify the reason for the termination
POTENTIAL ISSUESPhoto of keys and a house representing tenancy and rent control

This is huge if you want to sell.  Did you note that it said "accepted offer"?  In other words, you will have to list your home for sale while it is still occupied!  This brings up a myriad of questions - and potential problems.  A tenant is entitled to "Quiet Enjoyment".  This covenant (or promise) means that the landlord will not do anything to disturb the tenants’ rights to peacefully and reasonably use their rented space—and that the landlord will act in a way that allows for peaceful use. Tenants, therefore, can make showing a property difficult.

Tenants can also be messy and defensive - because they know they will have to move soon.  The property may not show as well with it still tenant occupied.  It does not give you, the owner, a chance to do needed improvements, such as painting, carpet, or repairs if the tenant is living there - and the potential for lost equity by listing for a lower price than if those improvements had been made.  

Most buyers want to occupy the property right after it closes.  They do not want to wait 90 days.   Most loans require you to take possession within 60 days of closing.   The timing of serving the tenants notice to vacate, closing on the sale, and date of possession for the buyer has the potential to be a big can of worms!

The Alpine Group will be watching the courts for any challenges and rulings in this controversial law.  
 
And just a reminder, if you have property in the City of Portland, relocation assistance still applies.  The amounts are:
  • Studio or SRO (single room occupancy) - $2,900
  • One Bed - $3,300
  • Two Bed - $4,200
  • Three Bed or Larger - $4,500
Portland city council has agreed to deduct the State requirement of one month's rent from the relocation assistance they require and the remaining due would be relocation assistance.
PENALTIES

Gavel and coin jar representing occupancy violations

The penalties for terminating a tenancy after the first year of occupancy in violation of SB 608 subjects the landlord to:
  • Three month's rent; and
  • Actual damages sustained by tenant (I'm thinking moving costs, first month's rent and SD at new residence) and
  • Potential Attorney Fees and legal costs; and
  • Is a basis for a defense against an eviction action.
Attorneys are estimating a violation could cost you, the owner, upwards of $10,000 or more.

-Tiffany Laviolette
President & Principal Broker for The Alpine Group, Inc.
Questions or comments on this article?  E-mail Tiffany 


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