The Portland Fair Ordinance may have gotten a little lost during the Covid-19 issues, but it is still out there and attorney Brad Kraus reviews some of its issues for landlords and property managers.
By Bradley S. Kraus,
Attorney at Law, Warren Allen, LLP
Throughout most of 2020, the world dealt with the COVID-19 pandemic. This massive upheaval of our lives and the legislative actions that followed shifted the focus away from one of the largest changes in the law since Senate Bill 608.
Effective on March 1, 2020, Portland’s FAIR Ordinance dramatically changed how landlords in Portland deal with applications, screening, and security deposits. While the FAIR Ordinance is too convoluted to cover in this short article, as we near the end of the COVID-19 pandemic, it may be prudent to revisit these changes for your Portland properties.
One of the largest changes to the law after the implementation of FAIR is how landlords may screen their prospective tenants. The Portland FAIR Ordinance provides for two screening methods: low-barrier and landlord-choice. The low-barrier model sets specific standards for items such as criminal history, credit history, and rental history. If a tenant fails to meet these low standards, a landlord can usually deny the applicant consistent with the ordinance. However, it is important to note that a landlord, when using the low-barrier model, is required to perform an individualized assessment for any criminal basis for which he or she intends to deny an applicant.
The very concept of an individualized assessment does not lend itself to a checkbox approach and is difficult to describe within the space this article provides. However, it involves weighing the supporting/mitigating evidence provided by the applicant as it relates to the criminal history, against a variety of factors—including an analysis of the crimes themselves, length of time since criminal activity occurred, evidence of rehabilitation, and other relevant mitigating documentation. This analysis, and an evaluation of risk assessment with your attorney, results in a decision to either overturn the denial and accept the applicant or keep the denial in place. While this process is described within FAIR, savvy landlords should also be familiar with this process, as it is a Fair Housing Act requirement.
If landlords choose to utilize the landlord-choice model, they may set their own screening criteria as they would have pre-FAIR. The difference, however, is that if a landlord uses this method, he or she are required to perform an individualized assessment for any basis upon which the landlord intends to deny the applicant. That means if the applicant is being denied based upon credit history, the landlord is required to consider any mitigating evidence provided by the applicant as to this issue. The failure to do so is a violation of FAIR.
The Portland FAIR ordinance also dramatically alters both the amount of the security deposit landlords can collect and the process by which landlords are able to withhold monies from the security deposit. As to the former, the ordinance now puts an upper limit on the amount of the security deposit based on whether the landlord also collects a last-month’s-rent deposit. As to the latter, the FAIR ordinance now requires significant documentation as to the age, diminished value, and condition of any items for which the landlord wants the security deposit to cover. Finally, the ordinance also requires the inclusion of a Notice of Tenants’ Security Deposit Rights with the accounting required under ORS 90.300, along with other documentation in support of any damages the landlord may claim.
While many landlords may not be accustomed to these requirements as they do not exist under state law, the failure to follow them can prove costly. A landlord’s failure to comply with FAIR’s requirements for the security deposit not only potentially prevents the landlord from withholding the deposit, it also potentially creates exposure under FAIR’s draconian damages provision—twice the amount of the deposit and exposure to attorney fees. While there are some exemptions to the FAIR ordinance, most landlords will be required to comply with the same. Accordingly, connecting with the attorney of your choice to evaluate your processes and procedures is critical to avoid the minefield that is Portland law.
Brad Kraus is a partner 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. You can reach him via email kraus@warrenallen.com or 503-255-8795.
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