Property managers can get in trouble in Oregon with some innovative services due to the archaic Oregon Landlord/Tenant Act attorney Brad Kraus points out this month.
Bradley S. Kraus
Attorney at Law, Warren Allen, LLP
With the COVID-19 outbreak and shutdowns running strong after three months, now is likely a fantastic time to discuss something different. Given the changing dynamics between landlords and tenants, I often hear of new, exciting programs and innovative services presented to my clients.
The moment I hear about these programs, the wheels begin to spin, analyzing what exposure, if any, these programs present for my clients.
The Oregon Residential Landlord and Tenant Act governs landlord-tenant relationships in the state of Oregon. Enacted in the 1970s, this body of law has failed to catch up to the times regarding many issues or interactions between landlords and their tenants. As such, many new and innovative approaches to certain landlord/tenant interactions are challenging to enact without risk, given the archaic nature of this body of law. It is, unfortunately, within that archaic body of laws that any new programs must be analyzed.
There are only three types of recurring charges recognized by the ORLTA: rent, utilities, and fees. Each has a statutory definition under the ORLTA. Any charges a landlord imposes on a tenant must fit within—and comply with the requirements of—one of those particular statutes. Many companies trying to market products for Oregon landlords have products that either (a) do not fit into one of these three categories, and/or (b) require the landlord to charge tenants illegal fees. That makes them problematic and presents potential exposure for landlords.
What the rent statute category says
Whether something can be classified as “rent” is the first—and easiest—portion of the analytical discussion. If something is not “rent,” it must be either a utility—and be properly billed as such—or comply with the fee statute.
What the utilities category says
A utility or service under ORS 90.315 is defined as “include[ing], but is not limited to electricity, natural or liquid propane gas, oil, water, hot water, heat, air conditioning, cable television, direct satellite or other video-subscription services, Internet access or usage, sewer service, public services and garbage collection and disposal. Many services offered by out-of-state companies do not neatly fit into this definition. Even if they do, and the landlord wishes to charge back any costs to the tenant, there are required monthly billing disclosures that present additional hurdles.
What the fee statute says
If any charge is not “rent” or a “utility,” then it must be a “fee.” The fee statute, ORS 90.302, strictly defines the fees for which a landlord can charge. This list is exclusive; if the fee is not listed in ORS 90.302 (and it is not rent or a utility), the landlord cannot charge for it. Common examples I see are things like “notice service fees” or “month-to-month fees.” Such fees are illegal in Oregon. Similarly, if a company provides a service that requires you to pass along a fee of some kind to your tenant, such a fee is likely illegal, and should give you pause.
As landlords continue their attempts to provide better customer service and amenities to their tenants, there will always be companies marketing new and exciting services. Those companies will try their hardest to sell you on their products. Some of the innovative exciting services that could get a property manager in trouble in Oregon involve services related to security deposits.
As landlords, do not fall for the “shiny red ball” trick. Carefully analyze any such services with your attorney. The potential exposure for any missteps can be costly.
Brad Kraus is an attorney at Warren Allen LLP. His primary practice area is Landlord/Tenant law, but he also assists clients with various litigation matters, probate matters, real estate disputes, and family law matters. A native of New Ulm, Minnesota, he continues to root for Minnesota sports teams in his free time. He is an avid sports fan, enjoys exercise, spending time friends and his fiancée, Vicky. You can reach Mr. Kraus via email at firstname.lastname@example.org, or by phone at 503-255-8795.