Monday, June 29, 2020

What Oregon House Bill 4213 Means for Landlords

As noted in our post on Friday, the Oregon legislature has extended an eviction moratorium through September 30, 2020.

Multifamily NW is providing additional analysis of what that means.

NOTE: This is not intended as legal advice. Please obtain the advice of an attorney for any policy change or decisions regarding your individual residential and commercial Landlord-Tenant matters, as well as laws that impact your local jurisdictions. 

On June 26, 2020, the State of Oregon passed HB 4213 which added new restrictions limiting Landlords’ ability to enforce the right to rent payments, among other things. The new laws became effective upon passage. Consequently, you need to familiarize yourself with them immediately and adjust any policies or procedures accordingly. This legal update addresses these changes as they relate to residential tenancies only.

I. General

a. Governed period of time 

The law creates protections based upon three different time periods that are interrelated:

April 1, 2020 through September 30, 2020 (the “Emergency Period”);
October 1, 2020 through March 31, 2021 (the “Grace Period”); and
April 1, 2020 through March 31, 2021 (the “Regulated Year”).

b.  Defined terms 

‘Nonpayment’ is defined as “the nonpayment of a payment that becomes due during the emergency period to a Landlord, including payment of rent, late charges, utility or service charges or any other charge or fee as described in the rental agreement or ORS 90.140, 90.302, 90.315, 90.392, 90.394, 90.560 to 90.584 or 90.630.” It seems to include any debt incurred during the emergency period (4/1 – 9/30).

‘Nonpayment Balance’ is defined to “include all or a part of the net total amount of all items of nonpayment by a Tenant.”

‘Termination Notice Without Cause’ is defined as “a notice delivered by a Landlord under ORS 90.427 (3)(b), (4)(b) or (c), (5)(a) to (c), or (8)(a)(B) or (b)(B).” This includes:
  • Terminations without stated cause for month-to-month tenancies in the first year of occupancy.
  • Non-renewals without stated cause of fixed-term tenancies in the first year of occupancy.
  • Terminations without cause by live-in Landlords at a property with two dwellings or less (e.g. duplexes or homes with ADUs).
  • ”Qualifying Landlord Reason” (QLR) termination notices. These include:
  • Termination for plans for demolition or conversion
  • Termination for plans to repair or renovate
  • Termination because Landlord or Landlord’s family intends to move in
Note: Termination notice without cause does not include the QLR termination notice allowing Landlords to terminate a tenancy when they have accepted an offer from a buyer who intends to occupy the dwelling as their primary residence.

Note: Termination notice without cause does not apply to “3-strike” non-renewals so long as the underlying notices of violation are not based upon “nonpayment.” as described above.

II. Restrictions

a. Prohibited Conduct. The Regulated Year Restrictions (April 1, 2020, to March 31, 2021)

During the Regulated Year (April 1, 2020, to March 31, 2021), Landlords may not do or threaten (orally or in writing) to do any the following:
  1. Deliver a termination notice for Nonpayment Balance (4/1/2020 – 9/30/2020 debts);
  2. Initiate or continue an eviction action based upon notice of termination for nonpayment delivered after April 1, 2020;
  3. Take any action that would interfere with a Tenant’s possession or use of a dwelling unit based on a Tenant’s nonpayment balance;
  4. Assess a late fee or any other penalty on a Tenant’s nonpayment (4/1 – 9/30 debts); or
  5. Report a Tenant’s nonpayment balance as delinquent to any consumer credit reporting agency.
Practice Tip 1: Clients should inspect their forms to ensure language that threatens such action is removed during the applicable period.

Practice Tip 2: Ensure that your procedures or automated actions do not violate these restrictions. For example, if your software automatically sends cases to collections you should ensure that any agent, including a collection agency, is not reporting “nonpayment balances” to credit reporting bureaus.

b. Application of payments during Regulated Year (4/1/2020-3/31/2021)

Landlords shall apply payments in the following order, to:
  1. Rent for the current rental period
  2. Utility or service charges;
  3. Late rent payment charges; and lastly to
  4. Fees or charges owed by the Tenant under ORS 90.302 or other fees or charges related to damage claims or other claims against the Tenant.
c. Notices regarding balances during the Emergency Period (4/1/2020 – 9/30/2020)
During the Emergency Period, Landlord may give Tenants written notice stating that Tenants continue to owe any outstanding rent. However, if a Landlord elects to send such notice, it must include a statement that eviction for non-payment is not allowed before September 30, 2020.

d. Prohibition on delivery Termination Notice Without Cause during the during the Emergency Period (4/1/2020 – 9/30/2020)

During the Emergency Period, Landlords may not issue a Termination Notice Without Stated Cause or file an eviction action based upon one. For any tenancy in which the first year of occupancy has or will end during the Emergency Period, the law extends the first-year occupancy for a period of 30 days after the Emergency Period (i.e. until October 30, 2020).
e. Prohibited Conduct during the Grace Period (October 1, 2020, to March 31, 2021)

Tenants have until March 31, 2021 to pay Landlord any outstanding Nonpayment Balance.

On or after October 1, 2020, Landlords may give written notice to Tenants that substantially states:

The date the Emergency Period ended (Sept 30, 2020);
  1. That if rents and other payments that come due after the emergency period are not timely paid, the Landlord may terminate the tenancy;
  2. That the nonpayment balance that accrued during the emergency period is still due and must be paid;
  3. That the Tenant will not owe a late charge for the nonpayment balance; 
  4. That the Tenant is entitled to a six-month grace period to repay the nonpayment balance ending on March 31, 2021;
  5. That within a specified date stated in the notice given under this subsection that is no earlier than 14 days following the delivery of the notice, the Tenant must pay the nonpayment balance or notify the Landlord that the Tenant intends to pay the nonpayment balance by the end of the six-month grace period described in HB 4213 Section 3, subsection (6);
  6. That failure of a Tenant to give notice to the Landlord of utilization of the grace period described in HB 4213 Section 3, subsection (6) may result in a penalty described in subsection HB 4213 Section 3, subsection (10); and
  7. That rents and other charges or fees that come due after the emergency period must be paid as usual or the Landlord may terminate the tenancy under ORS 90.392, 90.394 or 90.630.
Landlord’s letter may also offer an alternate voluntary payment plan for the Nonpayment Balance. If the Landlord chooses to do so, the notice must state that the alternate payment plan is voluntary.
If Landlord delivers the notice described above, the Tenant must notify the Landlord by actual notice of their intent to use the Grace Period to pay the Nonpayment Balance by the deadline in the notice. “Actual notice” means communicating the request verbally, by leaving a voicemail, by written notice given personally, left at the rental office, by fax, posted to the Landlord’s residence, or by fist class mail, by electronic means, or any other method permitted in the lease.
Tenant’s failure to timely give the required noticed entitles Landlord to receive 50% of one month’s rent following the Grace Period (i.e. on April 1, 2021).

f. Landlord penalties

If Landlord violates any of the provisions of the law, including those summarized herein, Tenants may obtain injunctive relief to recover possession or address any other violation. In addition, Tenants may cover up to three month’s periodic rent plus any actual damages.

g. Waiver not applicable to acceptance of partial payments

The new law limits the application of waiver by acceptance of partial payments. Specifically, “ORS 90.412 does not apply to a Landlord that accepts a partial rent payment.”

III. Sunset Clause

The laws described above are automatically repealed on March 31, 2021.

IV. Tolling of Statute of Limitations

The new law tolls Landlords’ claims for Nonpayment or Nonpayment Balance until March 31, 2021. Normally, residential Landlords only have 1 year to commence an action from the date of lease violation. Exactly how much time a Landlord has after March 31, 2021 to file a claim will depend on the underlying facts of the claim and the interpretation of when HB 4312’s tolling date commences.

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NOTE: The above is not intended as legal advice. Please obtain the advice of an attorney for any policy change or decisions regarding your individual residential and commercial Landlord-Tenant matters, as well as laws that impact your local jurisdictions. 

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