Residential Landlord Tenant Update 2016

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Residential Landlord Tenant Update 2016

Residential Landlord Tenant Update 2016

By: The Loeffler Law Group PLLC

There have been several important changes in landlord-tenant law in 2016. First, the Seattle City Council enacted an ordinance to require landlords to rent premises on a first-in-time basis. Second, HUD officially took the position that it is improperly discriminatory to adopt a policy rejecting all tenants with a criminal history. Third, Seattle enacted legislation prohibiting discrimination based on source of income. The Washington legislature extended the time period for providing an accounting of security deposits to 21 days and created a mechanism for sealing.

The First-in-Time Ordinance

The Seattle City Council enacted ordinance 125114 in August. The “First in Time” Ordinance requires landlords to offer a rental property to the first qualified applicant based on who submitted the completed application first. The stated purpose of the ordinance is to reduce discrimination by limiting the landlord’s ability to choose to whom to rent.

To comply with the ordinance, Landlords are required to process completed applications chronologically in the order in which they are received and keep records of each application’s date of submission. Landlords also should list their tenant selection criteria. The city intends to hire specialized officials to develop and implement an enforcement strategy. This likely will include “sting” operations. This ordinance will be effective January 2017. Landlords are strongly advised to revise their tenant selection criteria and procedures accordingly.

Criminal Background Checks

In April 2016, the United States Department of Housing and Urban Development (HUD) published a memorandum opining that tenant screening criteria discriminating against tenants and applicants based on their criminal history is a violation of the Fair Housing Act. HUD observed that minorities have a disproportionately higher rate of arrest, conviction and incarceration rates than the general population. A screening program or criteria prohibiting all tenants with any criminal history is therefore prohibited as it is more likely to affect minorities.

This does not mean all criminal screening is banned or that a landlord is required to rent to all convicted criminals. To satisfy HUD requirements, screening criteria must be carefully tailored to prevent discrimination. This will require Landlords to review tenants’ criminal history on a case-by-case basis. Landlords are advised to consider the nature and severity of the crime, the time that has passed, and whether the tenant has complied with terms of any sentence (i.e. paid fines, completed probation, etc.). 

Source of Income and Place of Employment Discrimination

The Seattle City Council enacted an ordinance prohibiting landlords from discriminating against tenants for their source of income or place of employment. Landlords may not refuse to accept a tenant who receives a rent subsidy from a public entity such as Section 8 or a private entity such as the YWCA. Landlords are also prohibited from favoring tenants based on employer, such as providing rental incentives for employees of Microsoft or Amazon. 

When calculating rent for a tenant receiving a rent subsidy, the rent is effectively reduced by the amount of the subsidy. For example: a landlord requires tenants to have a monthly income three times the amount of rent, the rent is $1,000.00, and Section 8 provides monthly $800.00 subsidy. The tenant needs to only show income of $600.00, or three times the rent after applying the subsidy payment.

Lengthening the Time to Account for a Security Deposit

In late 2015, the Court of Appeals ruled that the landlord’s “passive delay” in accounting for the security deposit at the end of a tenancy “falls woefully short” of showing that circumstances beyond the landlord’s control prohibited it from accounting for the security deposit within 14 days. The landlord, therefore, must demonstrate that it actively attempted to determine its damages at the end of the tenancy within the statutory deadline. The Washington State legislature subsequently determined to lengthen that deadline from 14 days to 21 days. While the additional seven days is helpful, landlords are advised that the courts will look more carefully at how the landlord used the time allotted in determining whether the landlord properly and timely accounted for the tenant’s security deposit. 

Order of Limited Dissemination

The Legislature added a new section to the Residential Landlord-Tenant Act. RCW 59.18.367. This new section authorizing the court to order an unlawful detainer action to have limited dissemination if the case was without basis, the tenant reinstated its tenancy by law, or for “other good cause.” The tenant has the option to move the court for an order that effectively prohibits tenant screening service providers from disclosing the unlawful detainer action in a tenant screening report or using the report as a factor for determining whether to recommend that tenant for future tenancies. 

An order of limited dissemination does not prohibit a landlord from doing its own court search for an eviction and using that information. It only limits a screening company’s ability to disclose the information to the landlord. 

This new rule may be used as a negotiation tool for existing and past tenants. Tenants who desire clean rental histories may be more willing to pay old judgments or pay their rent current in order to get a landlord’s cooperation for an order of limited dissemination.

Evan Loeffler is the principal at the Loeffler Law Group PLLC in Seattle. Mr. Loeffler’s practice emphasizes landlord-tenant relations and real estate litigation. He is the author of several chapters on landlord-tenant law in the Washington Lawyers Practice Manual and is on the faculty for several landlord-tenant CLE programs.

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