Portland Update: Changes to FAIR Ordinance Bring (Some) Necessary Changes

Portland Update: Changes to FAIR Ordinance Bring (Some) Necessary Changes

Bradley S. Kraus
Partner, Warren Allen LLP

For years to come, no one will forget the year 2020 and the global pandemic it brought to our doors. However, just prior to COVID-19 reaching our doorsteps, a new piece of local legislation—Portland’s FAIR Ordinance—was passed. For the past two years, news about the same has obviously taken a back seat to the events of the world. Recently, a lawsuit against the City of Portland regarding the constitutionality of the FAIR Ordinance was settled, and as a part of that settlement, some much-needed changes were made the ordinance.

Most of the changes were made to PCC 30.01.087, the security-deposit portion of the FAIR Ordinance. Those who had the opportunity to review this ordinance as it was initially passed likely recall how absurd some of the provisions were as written. Some reason has now been injected therein.

One of those was the “condition report” requirement. Previously, landlords had to submit a condition report to their tenant prior to the “commencement date.” Simple enough, but the tenant thereafter was supposed to return their version of the condition report within seven days and, if the parties didn’t agree on the condition, and third-party validation was unsuccessful at resolving the dispute, “the tenant’s condition report” controlled (no matter what reality and the facts proved). Setting aside how ridiculous it is for anyone to believe that is how the law functioned, the new changes require landlords to attempt a “pre-commencement walk-through.” If one occurs, and the parties agree on the condition of the unit, there is no issue. If the parties do not agree, the dispute is simply preserved—as common sense dictates it would.

Another large change was to the requirements of the “Fixture, Appliance, Equipment, and Personal Property Addendum.” Previously, this required landlords to attach a value to each item in the unit that may be attached to a deposit—i.e., if any damages befell the same, the deposit could be withheld. This required a calculation of the depreciated value of each of those items, based upon an absurd formula whose origins are unknown to this author. Now, while landlords still must list all items in the rental agreement that the landlord intends to attach to the security deposit, should damage befall them, the items (a) do not need a depreciated value, and (b) they do not need to be categorized as “fixtures” vs. “appliances” or “equipment.”

Finally, additional changes were made with respect to repair/replacement of flooring material. FAIR previously contained restrictions to a landlord’s ability to charge for carpet cleaning, which was contrary to that listed in state law. That provision was removed, leaving only state law under ORS 90.300 with respect to carpet cleaning. Further clarification was also made to repairs/replacement attributable to a “discrete impacted area”, which now contains a necessary definition of the same.

The ordinance still has several issues and unnecessary burdens on landlords. Many of those burdens are overly cumulative due to state law requirements and court oversight already covering the same matters. The damages provision of the security-deposit portion of FAIR was also reduced to $250 per violation, which reduces some—but not all—of the punitive effects of the ordinance. However, Portland should consider additional changes in the same direction as the above, or risk further driving of small- and mid-sized landlords and “mom n’ pops” from the market. Small businesses such as those cannot absorb such unnecessary and punitive regulations, and research already shows it is negatively influencing the Portland rental market.

About the author:

Bradley S. 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. You can reach him at kraus@warrenallen.com or at 503-255-8795.
Portland Update: Changes to FAIR Ordinance Bring (Some) Necessary Changes
Bradley Kraus, Portland attorney

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