By: James A. Gardner
On February 28, 2019, Governor Kate Brown signed into law Senate Bill 608, which drastically changed the landscape of Landlord Tenant Law in Oregon and the Country. with SB 608, Oregon is the first state in the nation with Statewide rent control.
This post is meant as a limited summary of SB 608 and what it may mean for you as a landlord. As always, you should speak directly with a lawyer for specific questions.
SUMMARY AND OUTLINE OF SB 608[i]
SECTION 1: establishes new for-cause eviction standard after12 months of occupancy.
A. Before first 12 months of occupancy, all landlords may continue to use no-cause notices:
1. Landlord may terminate a month-to-month tenancywithout cause with a 30-day notice. (ORS 90.427(3)(b))
2. Landlord may choose not to renew or extend a fixed-term leasewithout cause, with a 30day notice ifthe end date falls within the first year of tenancy. (ORS 90.427(4)(b))
3. No relocation assistance required in these circumstances (“*” see below relocation assistance)
B. Afterthe first 12 months of occupancy, New For-Cause Standard applies:
1. Month-to-Month Tenancies: A landlord may only terminate a month–to-month tenancy for cause. For-cause terminations can be either:
a. Tenant-based causes: These reasons are already in the law (e.g. Sale of Property after Trustee’s Sale (ORS 96.782(6)(c)); 144/72-hour notices for nonpayment of rent (ORS 90.394), 10-day notice or 30/14-day notice for cause ORS 90.393; 24-hour notice (ORS 90.396), and others. (ORS90.427(3)(c)(A))
b. Landlord-based causes:
- Landlord intends to convert the dwelling unit to a nonresidential use or to demolish the unit;
- Landlord intends to make repairs or renovations within a reasonable time and the premises is unsafe or the unit is unsafe or will be unsafe;
- Landlord or immediate family member plans to move into the unit as a primary residence; or
- Landlord has accepted an offer to purchase by someone who intends to live in the unit as a primary residence. (ORS 90.427(3)(c)(B), ORS 90.427(5))
- If termination is for a landlord-based cause, then:
i. Notice and relocation assistance: Landlord must give Tenant 90 days’ notice and pay an amount equal to one month’s rent* towards moving expenses. (ORS 90.427(6))
ii. Exception from relocation assistance: Landlords who own four or fewer units would be exempt from paying relocation expenses. (ORS 90.427(6))
2. Fixed-term Tenancies: Unless the parties agree to a new fixed-term tenancy, a fixed-term tenancy automatically rolls over to a month-to-month tenancy at the end of the fixed term, or unless there is a tenant-based or landlord-based cause for exemption from the rollover. (ORS 90.427(4)(a)&(c), ORS 90.427(5))
a. Additional tenant-based cause for fixed-term tenancies: A fixed-term tenancy does not roll over at the end of the fixed-term and the landlord may terminate on 90 days notice, if the tenant has violated the terms of the rental agreement 3 separate times during a 12-month period, with written warnings for each violation given contemporaneously with the violation; each notice must describe the violation, warn of the risk of non-renewal and landlord termination upon three such violations, and state that correction of the third or subsequent violation is not a defense to termination. (ORS 90.427(7))
i. Notice: Landlord must give Tenant 90 days’ notice. The 90-day notice may be given any time prior to the end date of the fixed term, to take effect at the end of the term or 90 days after issuance of notice, whichever is later.
ii. No relocation assistance: No relocation assistance required, regardless of how many units the landlord owns.*
C. Damages for violation: Three months’ rent penalty plus actual damages, defense to eviction, suit brought within one year of discovery of violation. (ORS 90.427(9))
D. Live-in Landlord Exception: The New Cause law does not apply to a landlord who lives on the same property as the tenant with 2 or fewer units. These landlords may continue to use a no-cause notice to terminate a month-to-month tenancy or to terminate a fixed term tenancy at the end of the term, regardless of the length of the tenancy, and these landlords are not required to pay relocation assistance.* (ORS 90.427(8))
* Check local ordinances (i.e. Portland)for any additional relocation assistance requirement.
SECTION 2 and SECTION 3: establishes statewide rent control for Month-to-Month and Fixed-Term Tenancies.
A. Section 2 (ORS 90.323) applies to the general landlord/tenant provisions; Section 3 (ORS 90.600) applies to Manufactured Home Parks.
B. Annual Allowable Rent Increase
1. A landlord may not increase the rent above 7% plus Consumer Price Index (CIP)[ii]in a 12-month period during a tenancy. (ORS 90.323(3)(c), ORS 90.600(2)(b)).
2. Landlord may re-set the rent to market rate at the start of a new tenancy, except:
a. No-cause notice during first year of tenancy (aka vacancy decontrol exception):A landlord terminating a tenancy with a 30-day notice without cause or allowing a fixed-term tenancy to end during the first year of a tenancy may not re-set rent for the next tenancy in an amount greater than 7% plus the CPI about the previous rent. (ORS 90.323(6))
a. New construction: If the certificate of occupancy for the dwelling unit was issued less than 15 years from date of rent increase notice, a landlord may raise the rent without limitation. (ORS 90.323(7)(a), ORS 90.600(4)(a))
b. Regulated affordable housing: The rent increase restriction does not apply when the landlord is providing regulated rent to the tenant as part of a federal, state or local program or subsidy. (ORS 90.323(7)(b), ORS 90.600(4)(b))
C. Damages for violation: Three months’ rent penalty plus actual damages, plus a defense to eviction. (ORS 90.323(9), ORS 90.600(5))
D. Calculation of CPI(ORS 90.323(2), ORS 90.600(1))
1. 12-month average of the Consumer Price Index (CPI-U) West Region as regularly reported and published by the U.S. Dept of Labor, Bureau of Labor Statistics.
2. The 12-month average will be calculated for the 12-month period ending the previous Sept. The CPI for September 2018 is 3.4%.
SECTIONS 4 and 5: Publication for maximum allowable rent increase percentage.
A. The Department of Administrative Services (which hosts the Office of Economic Analysis) will calculate the upcoming calendar year’s annual maximum rent adjustment no later than September 30th of each year.
B. DAS will issue a press release re: the maximum allowable increase to take effect in the coming year, along with information about 90.323 and 90.600, no later than September 30th of each year.
C. DAS will maintain publicly available information on its website for the prior, current, and upcoming year.
SECTIONS 6 through 10: cross-references and conforming amendments
SECTIONS 11 through 13: effective date and emergency clause.
A. Applies to Fixed-Term tenancies entered into or renewed on or after the effective date, February 28, 2019.
B. Applies to terminations of Month-to-Month Tenancies occurring on or after the 30th day after the effective date. The 30th day after the effective date is March 30, 2019.
C. Applies to all notices of rent increase issued on or after effective date, February 28, 2019.D. Emergency clause, takes immediately.
Having represented landlords in Oregon for nearly 40 years, we are very aware that many of our clients livelihood, savings, and retirements depend on their rental income. If you are a landlord in Oregon, we would be happy to meet with you to discuss how SB 608 may effect your investments. Please contact us today to set up an appointment.
[i]Taken from summary by John VanLandingham, Attorney at Law, Lane County Legal Aid/Oregon Law Center, Electronic Mail dated (March 7, 2019, 4:51 P.M.)
[ii]Consumer Price Index for Western Region is currently 3.4% for September, 2018. See https://www.bls.gov/regions/west/news-release/consumerpriceindex_west.htm