Do you know what to expect come March 1, 2020 when the City of Portland’s Fair Access in Renting (FAIR) ordinances go into effect? These ordinances dramatically alter the application screening and security deposit requirements! On February 18, 2020, Bluestone & Hockley hosted a class on the new ordinances, and their impact, to over 70 clients and colleagues! The class was presented by Russell White, Director of Residential Property Management at Bluestone & Hockley who not only has two decades of residential property management experience but has also been on top of this since the rulemaking process started!
If you were unable to attend the class, you may view the video of the class by clicking here or the image below. Additionally, we have summarized the myriad of changes into easy-to-read bullet points.
On February 20, 2020, Multifamily NW, a trade association whose members own or manage more than 30,000 apartments in Portland, filed a federal lawsuit in U.S. District Court alleging the FAIR Ordinances violate the Oregon and United States Constitution. Bluestone & Hockley is closely monitoring this developing situation.
What is FAIR and why do we have it?
“The heart of the Fair Access in Renting Policies is about addressing the criteria that continue to be used as a proxy for race, which includes criminal records, income requirements, and credit scores which leads to discrimination and disparate outcomes…”
– Commissioner Eudaly’s comments on FAIR
Application and Screening (30.01.086)
Advertisements must include:
- When applications will be accepted (no sooner than 72 hours);
- Criteria must be listed or provide a link to it;
- Screening fee; and
- *Whether or not the unit advertised is an accessible dwelling unit.
* An accessible dwelling unit is defined as a Type A Unit pursuant to the Oregon Structural Building Code and ICC A117.1. These are units specifically designed for wheelchair users throughout the unit.
Order of processing applications:
- For applications received from advertisements, a landlord must manually or digitally track the date and time the application was received;
- Any applications received prior to the open application period must be marked as received 8 hours after the start of the open application period; and
- If during the first 8 hours of the open application period a landlord receives an application for an accessible dwelling unit from an applicant that is mobility disabled, the landlord must give priority to such an application.
Application forms must include:
- A section for applicants to declare their mobility disability;
- City of Portland’s “Notice to Applicants relating to a Tenant’s right to request a Modification or Accommodation”;
- City of Portland’s Application and Screening Rights and Responsibilities which is in reference to where they can find a list of applicant rights from PHB;
- Landlord’s screening criteria must be included if a screening charge is enforced; and
- A place to include supplemental information from tenant to mitigate potentially negative screening results.
General Screening Process (30.01.086)
Landlord may not reject an applicant if applicant cannot produce a social security number or legal proof of lawful presence in the US. Acceptable forms of ID include:
- Social Security Card;
- Permanent Resident Card;
- Immigrant Visa;
- Individual Taxpayer Identification Number (ITIN);
- Non-Immigrant Visa;
- Any government-issued identification regardless of expiration date; and
- Any non-governmental identification or combination of identifications that would permit a reasonable verification of identity.
A household may choose which adult applicant(s) will be financially responsible. Landlord can use screening of financially responsible applicants for approval or denial.
A landlord can only require a household to make 2x the monthly rent. In some cases the income requirement can be 2.5 times the monthly rent. See the City of Portland’s Application and Screening Minimum Income Requirement form.
A landlord may require a guarantor if the household does not qualify. Such guarantor cannot be required to make more than 3x the monthly rent and cannot be held to an agreement that exceeds the rental agreement.
Screening Fees (30.01.086)
If the landlord conducts screening through a professional screening company, the landlord cannot charge the applicant more than the cost of using the screening company.
If the landlord conducts some of the screening and uses a professional screening company, the landlord must not charge the applicant more than 25% above the cost of the screening company.
If the landlord conducts all of the screening, the landlord must not charge applicant more than 10% what a screening company in the Portland Metro would charge.
Low Barrier Criteria (30.01.086)
A landlord may not reject an applicant for criminal history under the following circumstances:
- An arrest that did not result in conviction, unless the resulting charge is pending on the date of the application;
- Participation in or completion of a diversion or a deferral of judgement program;
- A conviction that been judicially dismissed, expunged, voided, or invalidated;
- A conviction for a crime that is no longer illegal in the State of Oregon;
- A conviction or any other determination or adjudication issued through the juvenile justice system;
- A criminal conviction for misdemeanor offenses for which the dates of sentencing are older than 3 years from the date of the application, excluding court-mandated prohibitions that are present at the property for which the applicant has applied; or
- A criminal conviction for a felony offense for which the dates of sentencing are older than 7 years from the date of the application, excluding court-mandated prohibitions that are present at the property for the which the applicant has applied.
A landlord may not reject an applicant for credit history for:
- A credit score of 500 or higher;
Insufficient credit history, unless the applicant in bad faith withholds credit history information that might otherwise form the basis for a denial;
- Collections in amounts less than $1000;
- Balance owed for prior rental damage in an amount less than $500;
- A Bankruptcy filed by the applicant that has been discharged;
- A Chapter 13 Bankruptcy filed by the applicant under an active repayment plan; or
- Medical or educational/vocational debt.
A landlord may not reject an applicant for rental history for:
- Eviction if it:
- was dismissed;
- was 3 or more years before the date of the application;
- was entered fewer than 3 years before the date of the application if:
- it was a no cause eviction;
- Eviction was a failure to appear, and applicant presents credible evidence to the landlord that the applicant had already vacated the unit before the court date.
- was subsequently set aside or sealed pursuant to procedures in state law.
- Rental References, except:
- Defaults in Rent;
- 3 or more material violations of a Rental Agreement within one year;
- Outstanding balance due to the landlord;
- Lease violations that resulted in a termination with cause;
- Insufficient rental history
Landlord’s Screening Criteria (30.01.086)
If a landlord chooses to use their own screening criteria, if any single criterion is more prohibitive than any of the Low-Barrier screening criteria, the landlord is required to conduct an Individual Assessment before issuing a denial to the applicant. They must consider:
- the nature and severity of the incidents that would lead to a denial;
- the number and type of incidents;
- the time that has elapsed since the date the incidents occurred; and
- The age of the individual at the time the incidents occurred.
If still denied, the landlord must ensure:
- denial is not discriminatory; and
- they provide a Notice of Denial to the applicant within 2 weeks of the denial which includes an explanation.
An applicant can appeal a denial for up to 30 days.
- Applicant can correct, refute, or explain negative information;
- If appeal is approved the applicant will be prequalified for rentals at the landlord’s properties for 3 months; and
- Waive the applicant’s screening fee for the 3 months after the appeal approval.
Section 30.01.086 does not apply to a process for leasing of a dwelling unit that is:
- regulated as affordable housing by a federal, state or local government;
- Not rented to, or advertised for rental to the general public, including advertisements on online platforms with or without a fee;
- Shared with a landlord, roommate, or a sub-lessor using the dwelling unit as a primary residence;
- tenancies where the applicant would occupy one dwelling unit in a duplex where the landlord’s principal residence is the second dwelling unit in the same duplex;
- tenancies where the applicant would occupy an accessory dwelling unit, as defined by PCC 33.205, that is subject to the Act in the City of Portland so long as the owner of the accessory dwelling unit lives on the site; or
- tenancies where the owner occupies the accessory dwelling unit and the dwelling unit the applicant would occupy is on the site.
IMPORTANT: Wherever local, state, or federal funding or loan requirements for tenant screening conflict with any portion of Section 30.01.086, the funding or loan requirements will take precedence over only those portions in conflict.
Security Deposit Amounts (30.01.087)
If a landlord collects last month’s rent at move in, they can only require half of one month’s rent as a deposit. Alternatively, if a landlord doesn’t require last month’s rent, a security deposit of more than one month’s rent can be required. The additional amount above one month’s rent for deposit cannot exceed half of one month’s rent. The applicant must be allowed to pay the additional amount in installments up to 3 months after move in.
Rental Agreements (30.01.087)
Rental agreements must now include:
- an itemized list of all landlord provided appliances, equipment, fixtures or personal property. List must include description, condition and replacement cost;
- Banking institution name and address where deposits are held; and
- provide a condition report to the tenant at move in.
Depreciated Value (30.01.087)
The depreciation schedule breaks down into the following categories:
- Appliances or Equipment- 15 years of 6.67% per year;
- Fixtures 1- 10 years of 10% per year. Includes carpet, vinyl, blinds, curtains, etc.
- Fixtures 2- 20 years or 5% per year. Includes faucets, sink, toilet, cabinets, permanent flooring; and
- Personal Property- 30 years or 3.34% per year.
A landlord may provide documentation reasonably acceptable to a tenant demonstrating why a different calculation is justified for a particular item so long as the documentation includes:
- the current depreciated value;
- an explanation of why the depreciated value is different; and
- a justification of how the alternative value was calculated.
Condition Reports (30.01.087)
A tenant has 7 days to complete and submit to the landlord a condition report noting:
- the condition of all fixtures, appliances, equipment and personal property listed in the rental agreement;
- the condition of the leased premises; and
- noting any damage.
An unresolved dispute as to the condition of the dwelling unit as of the commencement date will be resolved in favor of the tenant.
If a tenant does not complete a condition report, the landlord will complete and provide to the tenant a Condition Report, including digital photos of the premises, within 17 days following the first week of tenancy. The landlord must update the Condition Report to reflect all repairs and replacements impacting the dwelling unit during the term of the Rental Agreement and provide the updated Condition Report to the tenant.
Termination or Move Out (30.01.087)
Within 5 days of a termination notice being sent, by landlord or tenant, the landlord must complete a rental history form and give it to the tenant.
Within one week following the termination date the landlord must conduct a walk-through of the dwelling unit with the tenant or a tenant’s representative to document any damage beyond ordinary wear and tear not noted on the Condition Report (the “Final Inspection”).
The landlord must prepare an itemization describing any repair or replacement in accordance with the itemization incorporated into fixtures, appliances, equipment, or personal property identified in the Rental Agreement. Additionally, the landlord must document damage with photos and provide to the tenant with a written accounting. For any cost greater than $200, the landlord must provide documentation demonstrating that labor costs are reasonable and consistent with the typical hourly rates in the metropolitan region.
Security Deposit Changes (30.01.087)
A landlord may apply Security Deposit amounts only to actual costs reasonably incurred to repair the premises to move-in condition, not including:
- routine maintenance;
- ordinary wear and tear;
- replacement of fixtures, appliances, equipment, or personal property or fixtures that failed or sustained damage due to causes other than the Tenant’s acts or omissions; and
- for any cost that is reimbursed by a Landlord’s property or comprehensive general liability insurance or by a warranty.
A landlord may not apply the tenant security deposit to the cost of cleaning or repair of flooring material except as expressly provided in ORS 90.300 (7)(c) and only if additional cleaning or replacement is necessitated by use in excess of ordinary wear and tear and is limited to the costs of cleaning or replacement of the discrete impacted area and not for the other areas of the dwelling unit.
A landlord may not apply the tenant security deposit to the costs of interior painting of the leased premises, except to repair specific damage caused by the tenant in excess of ordinary wear and tear or to repaint walls that were painted by the tenant without permission.
A landlord may only apply security deposit funds for the repair and replacement of those fixtures, appliances, equipment, or personal property that are identified in the Rental Agreement and to which a depreciated value is attached in accordance with the depreciation schedule published on the Portland Housing Bureau website.
Notice of Rights (30.01.087)
Upon delivering a tenant their final accounting, a landlord will also need to include:
- security deposit notice of rights;
- contact information for the closest legal aid services of Oregon; and
- physical address of the Oregon State Bar.
If a landlord fails to comply with all of the screening ordinances the applicant can seek $250 for each failure to comply.
If a landlord fails to comply with all of the security deposit ordinances, a tenant would be eligible for:
- an amount which is double their deposit;
- reasonable attorney fees; and
- actual damages.