The Battle Over Tenant Screening Fees in Eugene, Oregon

 

In this episode with attorney John A. DiLorenzo, Jr., partner Greg Frick discusses the controversial screening law in Eugene. Learn why limiting screening fees to $10 sparked a legal battle and how it affects landlords and prospective tenants. Discover the court ruling that deemed the local ordinance preempted by state statute, and find out why the City of Eugene is appealing that decision. 

Transcript:  (Edited for clarity)

Greg: Now to the City of Eugene the screening law, when they tried to pass the law about the criteria on screening and the cost.

John: This is typical of a circumstance when people who are making decisions about housing have never managed housing and have never owned housing. Okay. So, the city council in Eugene comes up with this idea that they should limit screening fees to $10, because paying $40 for a screening is just way too expensive for some. Well, the problem is you can't find a company to screen for under $40, and it was even worse because, you know, at 40 bucks or 50 bucks for a screening, prospective tenants are somewhat circumspect as to where they apply, right? So, they actually read the criteria first before they spend the 50 bucks. If it's only 10 bucks, it's like a shotgun. And so, you end up having a landlord have to be $40 a piece in the hole every single time for people who have no intention of living there or who will never be able to qualify. So, who ends up paying for that?

Greg: The property owner.

John: The existing tenants and the property owner. Yeah, I mean, so, we believed that that offended a statute, an Oregon statute that allows landlords to recover their average costs. And so, we filed suit in circuit court in Eugene and Judge Fennerty ruled that the local ordinance was preempted by the state statute. And so, that brought an end to the Eugene screening ordinance, but undaunted, Eugene asked its legislators to introduce a bill in the legislature that was going to abolish that preemption statute. So, we had to fight that. We are able to kill that in committee. So, instead, they've now appealed their loss to the court of appeals, so we'll see what happens.

Greg: So, they're not going the legislative way, they're gonna try to appeal the...

John: Yeah, they're gonna try to appeal that at the court of appeals.

Greg: And what's your thought on that?

John: Well, I think they're gonna lose. And I mean, I think it's pretty clear that the state statute preempts that sort of thing.

Greg: And the reasoning behind, I mean, what was their argument for this? Just that the rental housing providers are making a load of money on running credit checks?

John: Well, yeah and they believed some tenant advocates who came in who said, "Oh, we could do screening for $10." Well, I don't know who "we" are. You know, any reputable screening company is gonna charge 40$ or 50$. And we did a survey, we did a survey around the state, and that's what it costs.

Greg: So now we've gotta wait and see when this appeals and how that happens.

John: Yeah.

Greg: Are there any other cities talking about this? 

John: Well, there were going to be until we beat them in court, so that's one of the reasons why it's so important to either try to maintain a presence in the legislature and in the courts at the same time, because sometimes you can get in the legislature what you can't get in the courts, and sometimes you can get in the courts what you can't get in the legislature.