August 23, 2018
Author: ANNA S. McCORMACK
Organization: WarrenAllenLLP ATTORNEYS AT LAW
I. DEFINITION AND TYPES OF OREGON RENTAL AGREEMENTS
A. DEFINITION
As complex as landlord/tenant relationships may seem, they all have one thing in common: the rental agreement. Oregon’s Residential Landlord and Tenant Act (ORLTA) defines rental agreements as, \"all agreements, written or oral, and valid rules and regulations... embodying the terms and conditions concerning the use and occupancy of a dwelling unit and premises.\" ORS 90.100(32). That expansive definition forms a broad umbrella over all sorts of situations. It covers everything from week-to-week and month-to-month tenancies to fixed term leases. It covers oral agreements and it covers written agreements. Basically, if you allow a tenant to take exclusive possession of a dwelling unit and agree to accept something (usually rent) in return, you have created a rental agreement subject to the ORLTA.
NOTE: This content does not cover manufactured or floating homes.
B. ORAL VS. WRITTEN RENTAL AGREEMENTS
Though oral rental agreements are permitted in Oregon, there are many reasons to avoid them: (1) A landlord’s rights and remedies will be governed by the ORLTA only, instead of by a potentially favorable written agreement; (2) Tenants may allege that a landlord made certain oral promises, whether the landlord did or not; (3) The precise terms of the agreement will be open to dispute; and (4) The ORLTA has a number of disclosure requirements that landlords must make in writing. Written agreements are the way to go! They're clear, concise, and – provided they comply with the ORLTA – clearly define the rights and obligations of the parties.
A landlord must retain a copy of each rental agreement at the resident manager’s office or at the landlord’s address given to the tenant before the commencement of the tenancy. If the tenant requests to see the rental agreement, the landlord must make it available for inspection. If the tenant requests a copy of the rental agreement, the landlord must make a copy. The copying charges cannot exceed the lesser of 25 cents per page or the actual costs of copying. ORS 90.305(4).
C. TYPES OF OREGON TENANCIES
There are three types of residential tenancies in Oregon.
1. Month-to-Month Tenancy (ORS 90.100(26))
Month-to-month tenancies are just what they sound like: month long tenancies that automatically renew for successive monthly rental periods until terminated by one or both of the parties. Because oral rental agreements create month-to-month tenancies in Oregon, this is probably the most common type of Oregon tenancy.
2. Week-to-Week Tenancy (ORS 90.100(48))
A week-to-week tenancy only exists if:
a. There is a written rental agreement; and
b. Rent for occupancy must be charged on a weekly basis and be payable no less than every seven days; and
c. There are no fees or security deposits (although a screening fee is allowed).
3. Fixed Term Tenancy, aka Lease (ORS 90.100(15))
Leases fall into two categories. The first type of lease has a specific ending date. The second type of lease automatically renews at the end of the stated term unless there is a specific cause for termination. The latter type of lease is most common with older Section 8 leases and is rarely found elsewhere.
II. MANDATORY WRITTEN DISCLOSURES
A. PRE-RENTAL AGREEMENT FEE DISCLOSURES
1. Written List
The landlord must provide the applicant with a written list of all deposits, fees and rent that are charged by the landlord.
2. Timing
The list must be given to the applicant before the landlord enters into a new rental agreement with an applicant or accepts any payment from an applicant.
3. Amendments:
The landlord and applicant may agree to amend the written list before entering into the rental agreement.
4. Rental Agreement
The list may be included in the written rental agreement. The written rental agreement must, at a minimum, include a description of the fees that the landlord may charge. See below for more information regarding the ORLTA’s fee restrictions.
B. MANAGER AND OWNER INFORMATION
At or before the commencement of the tenancy, the landlord must disclose to the tenant in writing the name and address of the authorized property manager, and the name and address of the property owner or his authorized agent for service of process and receiving notices and demands. ORS 90.305(1). If a person authorized to manage the premises or enter into rental agreement(s) fails to comply with the foregoing rule, that person becomes an agent of the landlord(s) for service of process and receiving and receipting for notices and demands. ORS 90.305(3).
C. PENDING LEGAL PROCEEDINGS
1. When Written Disclosure Required
Landlords renting a property with four dwelling units or less must give the tenant a written disclosure before executing a rental agreement if the property is subject to any one of the following: (a) any outstanding notice of default under a trust deed, mortgage, or contract of sale; (b) a notice of trustee's sale; (c) a suit to foreclose a mortgage, trust deed or vendor's lien under a contract of sale; (d) a pending declaration of forfeiture or suit for specific performance of a contract of sale; or (e) any pending proceeding to foreclose a tax lien. ORS 90.310(1). A landlord does not, however, have to notify a tenant that the property is being managed by a court appointed receiver. ORS 90.310(3).
2. Liability for Failure to Make Required Disclosure
If a landlord was required to make this disclosure but did not do so, and the tenant moves as a result of one of the four specified circumstances, the tenant can recover twice her actual damages or double her monthly rent, whichever is greater, all prepaid rent, and attorney fees. ORS 90.310(2).
D. UTILITIES AND SERVICES
1. Definition
Utilities and services include, but are not limited to, electricity, natural or liquid propane gas, oil, water, hot water, heat, air conditioning, cable television, direct satellite or other video subscription service, Internet access or usage, sewer service and garbage collection and disposal. ORS 90.315(1).
2. Required Disclosure
If the tenant will be paying any utility or service charges directly to the utility or service provider, and the utility or service directly benefits the landlord or other tenants, the landlord must notify the tenant of this in writing at or before the commencement of the tenancy. ORS 90.315(2). If the landlord knowingly fails to make this disclosure, the tenant can recover twice his actual damages or one month's rent, whichever is greater. ORS 90.315(3).
3. Garbage
Part of the landlord’s obligation to provide habitable premises includes provision of an adequate number of appropriate garbage receptacles throughout the tenancy, unless local ordinance provides otherwise or unless landlord and tenant agree otherwise in writing.
Accordingly, if the landlord is not going to provide and maintain the garbage receptacles, the landlord must specify this in the rental agreement.
E. SMOKING
1. Written Policy
Written rental agreements must include a smoking policy for the premises. The disclosure must state whether smoking is prohibited on the entire premises, allowed on the entire premises, or allowed only in specified areas on the premises. ORS 90.220;ORS479.305.
F. 100-YEAR FLOOD PLAIN DISCLOSURE
1. Definition
The term “100-year flood plain” means the level that flood waters may be expected to equal or exceed once each 100 years, as determined by FEMA’s National Flood Insurance Program.
2. Disclosure
If the dwelling unit is located in a 100-year flood plain, the landlord must disclose this in the rental agreement.
3. Remedy
If the unit is located in a 100-year flood plain and the landlord fails to disclose this in the rental agreement, the tenant may recover the lesser of tenant’s actual damages or two months’ rent, if the tenant suffers and uninsured loss due to flooding.
G. NON-REFUNDABLE FEES (ORS 90.302)
1. Certain Fees Prohibited
Landlords may no longer charge the following fees:
a) Administrative Fees
b) Move-In / Move-Out Fees
c) Pet Fees (Note: pet deposits are allowed)
d) Cleaning Fees (cleaning deposits are allowed)
e) Liquidated damages in any form, however designated
f) Any other fee not specifically permitted by ORS 90.302
2. Permissible Fees
The following fees are allowed, but only if described in the written rental agreement:
a) Late Fee
Per ORS 90.260, a landlord may charge a late fee only if the rent is not received by the fourth day of the rental period. The late fee may not exceed 1) a single flat fee per rental period in an amount customary in the market; or 2) a daily amount that accrues until paid or until that rental period ends, not exceeding 6% of the permissible flat fee; or 3) 5% of the rent, charged every five days until paid or until that rental period ends. Landlords cannot deduct a previously imposed late fee from a subsequent rental payment and then charge a late fee for the consequent delinquent rent payment.
b) Dishonored Check Fee
The landlord may charge a fee for NSF checks. The landlord may charge a $35 fee, plus any amount that the bank has actually charged the landlord for processing the NSF check.
c) Alarm Tampering Fee
The landlord may charge a $250.00 fee for removal or tampering with functioning smoke or carbon monoxide alarms (unless the Fire Marshall has imposed a civil penalty.
d) Noncompliance Fees *NEW LAW* ORS 90.302 allows landlords to ultimately charge a maximum $50 fee for noncompliance with statutorily specified written rules or policies: late payment of utility or service charge; failure to clean up pet waste outside the dwelling unit; failure to clean up garbage or trash outside the dwelling unit; parking violations; improper use of vehicles within the premises; smoking in a clearly designated nonsmoking unit or part of the premises; keeping an unauthorized pet capable of causing damage.
The noncompliance fee statute has been significantly revised. As of January 1, 2014, the first noncompliance notice must be a warning only, with no fee applied. For the same or similar noncompliance within one year of the warning notice, the landlord can then impose a $50 fee. For a third noncompliance for the same infraction within one year of the warning notice, the landlord may impose another $50 fee, plus 5% of monthly rent.
However, the landlord must elect to either impose the noncompliance fee or terminate the tenancy (via a 30 day notice of termination with cause). The landlord cannot charge the fee and terminate the tenancy. Finally, if a noncompliance fee is assessed, the landlord cannot deduct it from a rent payment.
e) Early Termination Fee (aka “Lease Break Fee”)
If the written rental agreement so provides, when a tenant terminates a fixed term tenancy without cause, the landlord may charge a fee not to exceed one and one-half times the monthly rent. However, if the landlord elects to charge this fee, the landlord cannot also charge rent for any period after the landlord reasonably should have known that the tenant vacated, and cannot recover damages for costs associated with re-renting the premises. If the rental agreement does not have a “lease break fee” provision, the landlord has a duty to make reasonable efforts to re-rent the unit, and can only charge for actual damages (lost rents, advertising).
3. Other Permissible Charges
The 2013 amendments clarified that landlords may assess certain specified charges without running afoul of the fee statute:
a) Charges for improvements or other actions requested by the tenant and not required by law or the rental agreement, including the cost of lost key replacement.
b) Credit card processing fees, as long as the fee is being charged by the credit card company and the landlord is simply passing along the cost, and as long as the landlord allows the tenant to pay with cash or a check instead.
c) Renter’s insurance: Landlords can now require tenants to procure and maintain renter’s insurance, and this requirement is not equivalent to a fee.
III. PERMISSIBLE AND PROHIBITED PROVISIONS
A. PERMISSIBLE PROVISIONS
Many of the rental agreement forms floating around the state contain more provisions than are required by law. That is because the ORLTA allows landlords to include a variety of additional terms and conditions in their rental agreements. See generally ORS 90.220(1) and ORS 90.262. Common terms and conditions include the time and place for making rental payments, provisions allowing service of notices by posting and mailing, and provisions regarding pets. A landlord can include any term in a rental agreement that is not prohibited by law. Some specific examples follow.
1. Fees and Deposits
A rental agreement can insert terms and conditions requiring tenants to pay any fees and deposits legally permissible under the ORLTA. These can include (without limitation) late fees, cleaning fees, security deposits and last month’s rent deposits. See above for more information regarding fees.
2. Rules and Regulations
A landlord may adopt rules and regulations concerning tenants' use and occupancy of the property at the commencement of a tenancy, or, with greater difficulty, once a tenancy is in place.
a. At Start of Tenancy
Rules and regulations imposed at the start of the tenancy are valid as long as the rules :
1) Promote the convenience, safety or welfare of tenants, preserve the landlord’s property from abusive use, or provide for a fair distribution of services and facilities;
2). Are reasonably related to their intended purpose;
3) Apply fairly to all tenants;
4) Are clear and explicit enough to inform tenants of what they are and are not allowed to do;
5) Are not designed to avoid the landlord’s legal obligations; and
6) Are given to the tenant in writing to the tenant upon entry into the rental agreement. ORS 90.262(1)(a-f).
b. After Tenancy Commenced
If the tenancy is a fixed term tenancy, the landlord can only adopt rules after the commencement of the tenancy if a) they do not substantially modify the agreement; or b) the tenant consents to the rule in writing. If the tenancy is a month-to-month tenancy, as a practical matter the landlord can impose lawful rules and regulations as a condition of renewing the tenancy for the following month.
3. Occupancy Guidelines
A rental agreement can contain occupancy guidelines; however, all such guidelines must not run afoul of the Fair Housing Act. See the “Screening” section above.
4. Tenant Repairs
Landlord and tenant can agree that the tenant will repair, maintain, or remodel specific items provided that the agreement satisfies four criteria:
a. The agreement is made in good faith, and not for the purpose of avoiding landlord obligations;
b. The agreement doesn't diminish the landlord’s obligations to other tenants;
c. All the terms of the agreement are clear, fair, and fully disclosed; and
d. The landlord gives the tenant adequate consideration (e.g., rent credits, money, or something else of value), and the agreement specifically sets forth the consideration. ORS 90.320(2)(a)-(c)
5. Maintenance and Landscaping
The landlord and tenant can enter into a written agreement allowing the landlord to enter the premises (excluding the dwelling unit) without notice, at reasonable times, and with reasonable frequency to perform yard maintenance or grounds keeping. ORS 90.322(1)(e).
6. Prohibition Against Subleasing or Assignment
The ORLTA does not prohibit subleasing. Accordingly, to prevent subleasing, the rental agreement must prohibit it in writing. Many standard form rental agreements contain such a prohibition.
7. Joint and Several Liability
It may be important to indicate on your rental agreement that the tenants are jointly and severally liable for the rent, especially when they are unrelated (nonrelatives).
8. Renter’s Insurance.
The 2013 amendments clarify that a landlord is allowed to require a tenant to procure and maintain renter’s insurance, subject to the following:
a) The rental agreement must specify this requirement
b) The landlord must also have comparable liability insurance and either post proof in the office or provide it upon tenant request
c) The landlord cannot require a particular insurance company
d) The landlord cannot require the tenant to name landlord as an additional insured under the policy
e) A landlord cannot require it in subsidized housing or where the tenant’s income is less than 50% of the area median income.
9. Other Terms
The foregoing list is not intended to be all- inclusive. A landlord can insert any terms and conditions into the written rental agreement, so long as they comply with all applicable laws.
B. PROHIBITED PROVISIONS
A rental agreement cannot provide that the tenant
1. Agrees to Waive Rights or Remedies under the ORLTA;
2. Authorizes Any Person to Confess Judgment on a Claim Arising out of the
Rental Agreement;
3. Waives or Limits Claims for Negligence or Willful Misconduct or Purports to Indemnify the Landlord from the Same;
4. Agrees to Payment of Liquidated Damages (except for permissible lease break fee under ORS 90.302(2)(e)).
A provision prohibited by the ORLTA is unenforceable. If a landlord deliberately uses a rental agreement containing provisions known by the landlord to be prohibited and attempts to enforce such provisions, the tenant may recover, in addition to the actual damages of the tenant, an amount up to three months’ periodic rent. ORS 90.245(2).
C. USE OF FORMS
Utilization of good, Oregon-specific rental agreement forms is often very advantageous to a landlord, both in terms of cost and effectiveness. Whatever you do, don’t try to create your own forms. Obtain current forms from a reputable company that specializes in the creation of landlord/tenant forms tailored to the needs of Oregon landlords (e.g., Rental Housing Association of Greater Portland, Metro Multifamily Housing Council, Moco). In my opinion, these companies will provide better, and more current, forms than most office supply warehouses. Do not use random forms pulled off the internet!
1. Non-Oregon Forms
There are a variety of forms floating around Oregon from other jurisdictions (usually Washington or California). The laws of other jurisdictions may vary significantly from the laws of Oregon. Accordingly, the use of Non-Oregon forms is discouraged. Most forms found on the internet are not Oregon-specific, even when they come up as the result of a search for “Oregon lease” and similar terms.
2. Modifying Forms
Some of the more simplistic forms available (e.g., some short forms available on the internet) can be modified so as to comply with the ORLTA. However, this is a dangerous practice for non-attorneys, or even attorneys who do not have specialized knowledge of Oregon landlord/tenant law.
3. Addenda
The use of an addendum can expand the rights and remedies of landlords. Many pre-printed rental agreements contain stock rules and regulations. If a landlord’s property demands more specialized rules and regulations (e.g., those relating to pools, common areas, fitness facilities, etc.), the landlord can use addenda that are incorporated into the rental agreement. Of course, all such rules and regulations must comply fully with the ORLTA.