More Details Emerge on Washington State's New Rental-Related Legislation

Courtesy of the Warren Allen Law Firm

The more things change, the more things stay the same. Late last week, the Washington legislature passed SB 5160 and HB 1236, and Governor Inslee promptly signed them into law. These new laws radically revise Washington landlord/tenant law and throw a new wrench into dealing with COVID-era balances and the ERP process. We’ll distribute a handout in the coming days, but I’ve summarized major points below. 

I. Inslee’s Proclamation
Before we jump into the new laws, it’s important to remember that Inslee’s Proclamation is still in effect in Washington—and will be until at least July 1 (and possibly longer; more on that below). Thus, for the next two months, we’ll be operating under both Inslee’s moratorium and the new laws. In the short term, Inslee’s moratorium will continue to operate as the most expansive restriction on landlords’ options with regard to nonpayment and termination strategies, i.e. the “ significant and immediate risk” standard. Once Inslee’s moratorium expires, the sweeping changes wrought by SB 5160 and HB 1236 will come to the forefront.

II. SB 5160
SB 5160 imposes many new tenant protections related to COVID balances.  Highlights include the following: 

A. COVID Balance Repayment Plans
SB 5160 is poorly written and convoluted, so we’re still working through the details. What we know now is that landlords are required offer a repayment plan with a maximum monthly repayment amount of 1/3 the monthly rent. For example, if your tenants’ monthly rent is $1500/month, you’re required to offer a repayment plan with a maximum monthly repayment amount of $500.00. The first payment cannot occur sooner than 30 days after the landlord makes that offer. Crucially, the failure to offer the required repayment plan  is a complete defense to any Unlawful Detainer Action. 

    1. So what does that mean for tenants we currently have repayment agreements with?

Many landlords have been acting in good faith for months, engaging in discussions with tenants on payment plans within the ERP program. (Remember, the payment agreements we’ve been negotiating and implementing were based on the “requirement” in Inslee’s Proclamation that landlords offer a reasonable repayment plan as a prerequisite to treating COVID balances as enforceable debts). The effect of SB 5160 on existing repayment agreements is unclear, but it certainly appears that the legislature intended to tie our hands on that point.  Given that SB 5160 is actual law, landlords with current repayment agreements should brace themselves, as it appears that they must now offer a repayment plan consistent with SB 5160, even if it’s less favorable than the one they currently have in place. 

    2. So what does that mean for the Eviction Resolution Program?

The ERP still exists, and has in fact been codified in SB 5160. The legislature has tasked the Administration of Courts with implementing rules and regulations, which I understand are currently in the works. 

It may be prudent to pause any ERP files that you have for a least a week, as the Administration of Courts met on Friday and will hopefully be putting through guidance shortly. I am a part of a weekly group that discusses ERP in Clark County; Judge Gregerson heads that group and is a part of the Administration of Courts. Accordingly, I hope to have further information on process/next steps this Thursday.  However, given the bumpy ERP road thus far, I won’t be surprised if it continues to evolve over the coming weeks.

B. Other Covid Balance Restrictions
SB 5160 imposed the following additional restrictions:

1. No late fees for rent that became due between March 1, 2020 and six months following the expiration of the eviction moratorium (so effectively, the rest of the year). 

2. Current landlords cannot:

• Report the COVID balance to prospective landlords
• Report any UDs filed as a result of COVID balance
  

3. Prospective landlords cannot deny applicants based on COVID balance or medical history (including COVID exposure)

III. HB 1236

A. No Cause Terminations Mostly Eliminated

HB 1236 is Washington’s “perpetual tenancy” statute. With limited exceptions, no cause terminations are now prohibited, as are non-renewals of term leases. These have been prohibited under Inslee’s moratorium anyway, but now they’re permanently prohibited unless any of the narrowly defined exceptions applies. 

B. Cause-Based Termination Options. 

HB 1236 defines and expands the “cause” necessary to terminate Washington tenancies. In additional to preexisting cause-based terminations (e.g. 10-Day Notices), HB 1236 has at long last created a much needed “repeat violation” strategy for continued nuisance violations. HB 1236 also created a “4-strikes rule” for cause termination option, which largely mirror’s Oregon’s 3-strike language found in ORS 90.427. 

C. Inslee Moratorium Sunset (?)

HB 1236 affirmatively states that Inslee’s eviction moratorium ends on June 30, 2021. Notwithstanding the same, many members of the legislature have apparently opined that this doesn’t actually preclude Inslee from extending his Proclamation. So much for 3 co-equal branches of government . . . 

Only time will tell. 

IV. Next steps
You can expect further updates and a lecture handout in the coming days and weeks. Again, all of these laws are very new, and our interpretation of the nuances may change over time.  However, while our analysis of the details may evolve over time, it’s clear that SB 5160 and HB 1236 enact another gut punch to Washington landlords still reeling from the last year. We’ll be there to help you navigate the new Washington landlord/tenant landscape. 

Bradley S. Kraus | Attorney at Law
kraus@warrenallen.com