With Oregon’s ever-changing landlord-tenant laws, every year brings new compliance headaches for landlords including the new security deposit law.
The new security deposit law, HB 3521, sets new rules Oregon landlords must follow when accepting holding deposits.
So adjusting procedures to meet the new law requirement means a change for landlords. For years, many property owners treated holding deposits as an early step in the leasing process. A a prospective renter expressed interest, submitted an application, and often provided money to reserve the home while screening was completed.
That approach is no longer permitted under Oregon law. The new rules require landlords to wait until an applicant has successfully completed screening before collecting a holding deposit. The law also adds disclosure requirements and creates financial consequences for landlords who fail to follow the statute.
So to help landlords avoid issues with the new law, here are 5 ways landlords may unintentionally violate the new security deposit law.
1. Collecting a Holding Deposit Too Early
Landlords generally may collect a holding deposit only after approving an applicant and entering into an agreement to hold the rental unit. Landlords who continue using older rental applications that request a holding deposit before approval should review those forms carefully.
2. Failing to Refund a Holding Deposit When Required
The new law expanded the situations in which a holding deposit must be returned. If a landlord fails to execute the rental agreement as promised, the deposit generally must be refunded within five business days. The law also requires refunds when an approved applicant discovers material habitability problems that would violate Oregon’s habitability standards. Examples include unsafe electrical systems, significant mold, lack of essential services, or other serious defects.
3. Missing Oregon’s 31-Day Deadline
After a tenancy ends, Oregon law generally requires landlords to either return the remaining security deposit or provide a detailed written accounting within 31 days after the tenant returns possession of the property.
4. Providing Vague Deposit Deductions
Oregon law requires landlords to provide a written accounting that specifically explains the basis for each deduction. Detailed invoices, receipts, and documentation help support deductions if challenged.
5. Assuming the New Law Doesn’t Apply Because ‘I’ve Always Done It This Way’
Rental applications, holding deposit agreements, lease forms, move-in documentation, and internal office procedures should all be reviewed whenever Oregon landlord-tenant laws change.
While Oregon is not conducting statewide inspections of landlord security deposit files, tenants who believe their deposits were improperly withheld may pursue claims in court.
Landlords need to remember not to rely on forms they created years ago or downloaded from the internet. With HB 3521 now in effect, this is a good time to review application packets, holding deposit agreements and security deposit procedures to make sure they reflect current Oregon law.
Editor’s Note: This article is intended for educational purposes only and is not legal advice. Landlords should consult qualified Oregon legal counsel regarding specific situations.
