René Nelson, Pacwest Commercial Real Estate, and Jim Straub, Legislative Director Oregon Rental Housing Association, look at the issue of no-cause evictions and four new reasons that landlords can give a no-cause notice according to Oregon Rent Control Senate Bill 608.
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René Nelson: Talk with me about the no-cause evictions after a tenant’s first 12 months in a rental agreement.
Jim Straub: First, I think it’s important to note that in a month-to-month tenancy in the first year, landlords still retain the right to give a no-cause notice for any reason whatsoever, and we can do that up to the 364th day. It’s after the first year that things change a little bit with the new Senate Bill 608. After the first year, we have the normal law that allows us to give a with cause notice. If a tenant violates any of the terms and conditions of their rental agreement, we can give them a notice. They still have the right to cure it, and if they do cure it, they’re allowed to stay. If they violate the same conditions that we originally gave the notice on within the next six months, then we can give a 10-day repeat violation notice.
Jim Straub: There are four carve outs for additional reasons why we can give a no-cause notice to a tenant with Senate Bill 608:
- The first allows the landlord to renovate, remodel the property to the extent that it’s not going to be habitable. So we can give a with cause notice to the tenant for that, and they have to lawfully move out.
- We can give them a notice telling them that we’re going to demolish the unit, and they have to move out.
- We can tell them that our friend or family member is going to move in, and they will have to move out for that.
- Last one is if a landlord receives an offer in good faith to purchase the property, then they can give a notice to the tenant for them to move out.
Under all of those last four new landlord-based causes to give a notice, we would be required to give a tenant a one-month’s rent relocation fee. And that relocation fee is required to be given to the tenant at the time of the notice, not at the time of move out.
René Nelson: Okay, so the concept there is you’re basically helping give the tenant the money that they would need to go out and find a new place?
Jim Straub: That’s correct.
René Nelson: Because we hear that repeatedly when tenants need to move, they don’t have the cash that they need for a first month deposit or what they would need to move into a new property.
Jim Straub: That’s correct.
What Oregon Rent Control Senate Bill 608 Says About the Relocation Fee if a Tenant is Buying the Property?
René Nelson: Okay, so let me clarify one of those four carve outs. If a landlord has received an offer from someone who intends to buy it, the buyer has to occupy one of those units, correct? That was my understanding of the carve out.
Jim Straub: That is correct. If the buyer occupies one side of the unit, then it does not trigger the relocation cost.
René Nelson: Oh, I see. Okay.
Jim Straub: But if a buyer makes an offer to purchase the property in good faith, we’re still able to give the tenant, or tenants, a notice for them to vacate. They can’t argue against that. They still have to move, but we still have to give them one month’s rent relocation expense.
René Nelson: Okay, so basically if a landlord has a tenant and their new buyer wants them to move, the seller just needs to factor that in as a sales cost?
Jim Straub: Correct. The majority of this bill just creates another line item on spreadsheets. So for a good investor, they’re able to plan accordingly.
How Do I Get Rid of a Bad Tenant?
René Nelson: Okay, so now answer the million-dollar question. I have a problem tenant, in an apartment complex, and they’re wreaking havoc. They’re noisy. They’re maybe not clean. They just leave stuff laying around all the time. The other tenants are disgruntled, and it’s starting to drive out my good tenants. And that tenant’s been there longer than a year. How do I get rid of a bad tenant?
Jim Straub: Just the way most landlords would now, a with cause notice for the behavior. They’re disturbing the peaceful enjoyment of others. You identify what the behavior is, when it’s happening. On or about this date in time you acted in this manner, which disturbed the peaceful enjoyment of other occupants of the property. You give them the notice. And if they continue to act in that manner after you give them the notice, you just simply give them a repeat violation notice and they need to move, no relocation expense.
René Nelson: Okay, did I read in the bill that it takes three of those notifications of issue? So you have to notify the tenant three different times, and then they have to move and you don’t have to pay relocation fees?
Jim Straub: No. That’s a common misconception. There’s a provision in the bill that says after the first year of occupancy that the tenant has an almost automatic right to renew. As long as they are paying the rent on time, taking good care of the property, then they’ll be offered the right to continue to stay there as long as we don’t raise the rent more than the set amount. There is a three strikes rule that allows the landlord to regain control of the property if we simply don’t, for lack of a better word, like the individual that’s living there. We don’t have to rent to jerks. Jerks are not a protected class. So as long as they are not fulfilling the terms of their contract to its entirety, the three strikes rules apply. That if over the term of the year that they’re leasing the property or renting the property from us, we give them three written warnings for violations of their contract, then we don’t have to offer them the renewal of the lease agreement.
Jim Straub: So they didn’t pay the rent on time. We give them a written warning for that. They fail to maintain the landscaping in like manner in which they receive, so we give them a warning for that. They leave packages, their belongings or clutter, on the exterior of the unit. We can give them a written warning for that. Pretty much anything that they do that violates the terms and conditions of the rental agreement, we give a written warning. And as long as there are three within a one-year period, the landlord is under no obligation to renew the lease, and, as I understand it, no obligation to give the relocation expense.
Will Landlords Have to Make Changes to Their Rental Agreements?
René Nelson: I know some landlords have rental agreements that say at the end of 12 months it does not become a month-to-month rental agreement. Are landlords going to have to change their rental agreements once the Senate Bill passes?
Jim Straub: We’ll know more once the Senate Bill goes from the Senate to the House, and whether or not there are minor tweaks to it. As it sits now, as long as you give notice to the tenant that the contract ends on the 365th day, and they’re not allowed to stay after that point, then you’re completely fine. That’s essentially a 30-day no-cause notice given at the beginning of the tenancy. That you’re informing them that their tenancy ends at specific date. As long as it’s on the 365th day or earlier, you’re fine.
René Nelson: Okay.
Jim Straub: Because that’s within the first year. You can’t do it after the 366th day. Then you’ll get into the relocation expense.
For more information about the Oregon Rent Control Senate Bill 608 and how it affects Oregon rental property owners, call me today: René Nelson, CCIM, (541) 912-6583 / email@example.com / www.eugene-commercial.com