July 2020
A monthly newsletter published by the Rental Housing Alliance Oregon
rha est. 1927
www.rhaoregon.org
In this issue:
RHA Calendar of Events.......................................page 2 President’s Message ......page 3 Is a Delaware Statutory Trust Right for Me?............................page 4 Dear Maintenance Men..................... .......................................................page 5 Covid-19 Update....................page 6 The importance of Picture ID...................................................page 9 QuickFacts: Special Legislative Session Special Legislative Session update....................page 10
Rental Housing Alliance Events & Classes DATE
EVENT
LOCATION
TIME
07/08
Board Meeting
Zoom
4:00pm
07/18
Mentor Round Table
Zoom
11:00am
08/12
Board Meeting
Zoom
4:00pm
08/28
Mentor Round Table
Zoom
6:00 pm
INFORMATION
Registration/Cancellation Policy: To qualify for the early bird registration rate you must have your registration into the RHA office no later than 4:59pm on the listed early registration date in the advertising for the event. Deadline for refund/credit or cancellation of registration is up until 48 hours prior to the date and time of the class/seminar, up until 48 hours prior you will be refunded 100% of the cost to attend. If a registered guest/member does not cancel and/or does not show to the scheduled class/seminar then the registered guest/member will be required to pay the full amount of the class/seminar. All registrations are non-transferable. Those with prior registrations to the class/seminar will be seated first. Once the maximum capacity for the class or room is reached, walk-ins will not be accommodated. Registered attendees who arrive 15 minutes after the start of the class/seminar be aware that your chair may be filled. Our venues do have a limited capacity therefore at times registration to an event may close prior to the event.
DATE
CLASSES
LOCATION
TIME
INSTRUCTORS
07/07
Exchange your Rental for a Better Lifestyle
Online
6:30pm
Richard Gann w/ 1030 Capital Solutions
07/07
How to use Lanlord-Reference.com
Join.me
7:00pm
Richard Collier w/Landlord -Reference .com
07/09
Online Tenant Screening Class
WebEX
11:00am
Marcia Gohman w/National Tenant Network
07/09
Tanant Screening Best Practices
Zoom
6:30pm
Amber Clark w/ The Garcia Group
07/15
How to use Landlord-Reference.com
Join.me
7:00pm
Richard Collier w/Landlord-Reference.com
07/21
Section 8 Class
Zoom
6:30pm
Charles Kovas w/Charles Kovas Law
07/23
Online Tenant Screening Class
WebEx
7:00pm
Marcia Gohman w/National Tenant Network
07/23
How to use Landlord-Reference .com
Join.me
7:00pm
Richard Collier w/Landlord-Reference.com
07/28
Online Tenant Screening Class
WebEx
7:00pm
Marcia Gohman w/National Tenant Network
07/28
How to use Landlord-Reference.com
Join.me
7:00pm
Richard Collier w/Landlord-Reference.com
08/04 Online Tenant Screening Class
WebEx
11:00am
Marcia Gohman w/National Tenant Network
08/05 How to use Landlord-Reference.com
Join.me
7:00pm
Richard Collier w/Landlord-Reference.com
08/06 Online Tenant Screening Class
WebEx
7:00pm
Marcia Gohman w/National Tenant Network
08/13
Relocation Fees & No Cause
Zoom
6:30pm
Charles Kovas w/Charles Kovas law
08/13
How to use Landlord-Reference.com
Join.me
7:00pm
Richard Collier w/Landlord-Reference.com
08/18
How to use Landlord-Reference.com
Join.me
7:00pm
Richard Collier w/Landlord-Reference.com
08/20 Online Tenant Screening Class
Webex
11:00am
Marcia Gohman w/National Tenant Network
08/20 Plumbing:What Goes Down
Zoom
11:30am
Michelle Card w/Apollo Drain
08/26
Join.me
7:00pm
Richard Collier w/Landlord-Reference.com
How to use Landlord-Reference.com
For additional class/event information visit: https://rhaoregon.org/education
FIND EVICTIONS STRESSFUL?
503-‐242-‐2312
Full FED Service First Appearances evict@landlord-‐solutions.com Small Claims
2
RENTAL ALLIANCE UPDATE July 2020
www.rhaoregon.org
President’s Message Ken Schriver, RHA Oregon President
Summer has finally arrived! The days are warm, the skies are blue, and all Oregon counties are in some stage of reopening. All is well with the world. Well, not quite. As I write this, the Oregon Legislature is meeting in a Special Session to pass legislation primarily related to the COVID-19 pandemic and police reform. I had hoped to write that with respect to the statewide moratorium on evictions put in place by Governor Brown’s executive order, a new, more balanced law was being put in place. However, that is not quite how it turned out. By the time you read this, I am sure there will have been several news reports and summaries regarding the legislation, House Bill 4312. Here is my short version: Oregon landlords may not terminate any lease or evict a tenant for non-payment of rent, or terminate any lease without cause, at least through September 30, 2020. One exception: landlords may terminate leases if they have accepted an offer to purchase the dwelling from someone who intends to occupy the dwelling. As exasperating as this legislation is, it does not go as far as the “rent forgiveness” position advocated by various tenant organizations. Unfortunately, it does place many landlords, especially the “mom and pop” landlords that comprise most members of RHA, in financial peril. We all recognize the moral hazard this bill creates by allowing any tenant to simply not pay rent until October 1, with no penalty and no guarantee that the missed rent will ever be paid. Despite testimony offered by landlords and organizations like RHA Oregon, MFNW, and ORHA, the legislature did not adopt a means test or restrict the rent deferral to those tenants impacted by COVID-19. This feature distinguishes Oregon’s approach from places like Los Angeles and New York City. I suspect that someone will file a lawsuit in response to this, but given the backlog caused by the closure of the courts, it is unlikely any such suit would be resolved before the end of the emergency period. So where do we go from here? Here is what Rental Housing Oregon will focus on during the next 90 days: • We will provide education in the form of virtual courses, panels, and mentor sessions to clarify the impact of the legislation; I encourage you to sign up for one of these Zoom presentations on our website at rhaoregon.org. • We will prepare forms for your use in October that meet the requirements for giving notice and negotiation a repayment plan for tenants. • We are advocating for rental assistance for landlords, in the form of legislation to be taken up in the next special session; please be prepared to add your testimony when that time comes! • As we are unable to hold either our Under a Starry Night event or our Annual Picnic this summer, we are instead undertaking fund raising to assist our members in severe financial distress. This is a great way that those of us who are not impacted by the COVID-19 crisis can assist our colleagues who are. I wish to thank our lobbyist and the members of the RHA Legislative Committee for their work and encouragement during the special session. I also thank everyone that participated in the RHA Oregon and MFNW rent surveys in April, May, and June. Your comments were especially helpful. We joined with MFNW to provide our members, the Governor, and the Legislature with a picture of the landlord-tenant landscape during COVID-19. We will take a break and see how the situation plays out for the next 90 days, with our next survey likely in October. Happy Independence Day! Ken Schriver RHA Oregon President
www.rhaoregon.org
RENTAL ALLIANCE UPDATE July 2020
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Is a Delaware Statutory Trust Right for Me? Austin Bowlin, CPA – Partner at Real Estate Transition Solutions
Strategic decision making requires a framework for breaking down the variables and evaluating options. Determining what to do with your investment real estate is no different. Most multifamily and residential rental owners have heard about the benefits associated with selling their appreciated investment property and performing a tax-deferred 1031 exchange into Delaware Statutory Trust replacement property. There is plenty of information regarding the benefits of DSTs (Why Consider Exchanging into a DST) as well as the risks and costs (DST Risks, Fees, Rules & Restrictions), but how does one know if DSTs are right for them? The answer to this question depends entirely on the individual owner’s financial and lifestyle objectives, as well as their overall financial picture. The goal of this article is to provide a framework for evaluating whether a 1031 exchange into Delaware Statutory Trusts may be a fit for you. Step 1 - Determine Your Financial and Lifestyle Objectives Real estate can be a tremendous investment for many reasons. Few assets can simultaneously generate income potential, appreciation, and shelter cash flow from income tax through depreciation. Furthermore, owners can influence their investments by choosing tenants, investing in improving the property, and refinancing the property when advantageous. Along with these positive elements comes variability in the level of income potential from year-to-year and month-tomonth, management effort, regulatory risk and concentration risk. While controlling and managing your real estate may be one of the best ways to build wealth, it may not be the best fit as an owner begins to place greater value on stable potential income, diversification, estate planning, and free time. We encourage all owners to reflect on and evaluate the following objectives: •Income – How much income do you both currently have and want? How important is income stability to you? •Appreciation Potential – Are you focused on growing your investments? •Desire to Actively Manage Property – Do you enjoy managing properties? Who would manage your properties if something were to happen to you? •Preservation of Capital – Are you concentrated in one property type and/or one geographic area? Do you have the investment timeline to hold through a full real estate market cycle? •Estate Planning – Are your properties staged for an eventual transition to beneficiaries? Will your beneficiaries have to co-own and manage properties together? •Risk Tolerance – Are you diversified? Do you feel comfortable with factors outside your control such as the landlordtenant laws or potential re-zones? •Tax Mitigation – Do you have depreciation remaining in your properties? Objectives should be evaluated based on not only what you are looking to accomplish today, but also over the coming years and decades. One thing we cannot stop is the passage of time, which means owners must consider the future right now in order to be staged for success down the road. Step 2 – Evaluate Your Properties Once an owner has determined their objectives, the next step is to evaluate whether their current properties meet those objectives. By no means is this an “all or nothing” decision. Some properties may have a strong history of low management effort, stable income potential, appreciation, and little deferred maintenance. For others, this may not be the case. If income is an objective, a worthwhile exercise is to review your most recent tax return and compare the net cash flow from your Schedule E (if the property is 100% owned by you) or K1 (if the property is owned in a partnership or multimember LLC) to the net equity in the property. The net equity can be calculated by taking the property’s estimated value and subtracting any outstanding loan. This figure, expressed as a percentage, is the property’s ROE (return on equity). If the ROE is below 5%, from our experience there may be other options, such as Delaware Statutory Trusts when suitable, that have the potential to enhance your income. Note, when performing this analysis there should be an expense taken for management, even if you manage the property yourself. Your time has value and the cost of your time should be considered and reflected in the analysis. (continued on page 8) 4
RENTAL ALLIANCE UPDATE July 2020
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Dear Maintenance Men by Jerry L’Ecuyer & Frank Alvarez
Dear Maintenance Men: I have noticed the base molding in the living room and leading into the kitchen is starting to come off the wall. The corners are splitting and it is starting to look very rough. What do you think is causing this? I don’t see any water anywhere. Randy Dear Randy: We would bet you do have a water problem somewhere. Chances are it will be traced to the refrigerator. There might be two issues you can look at. First check that the drain line for the defrost cycle is not clogged and two if the refrigerator has an icemaker, that the line is not leaking. Chances are the icemaker line has a hole or the drain line is leaking and the walls are sucking up the water. That is why you don’t see any standing water. Look under the fridge or pull out the fridge and look at the water line. It should be a small quarter inch nylon or polyethylene line; often they are white or translucent in color. If the water line goes though the cabinets to the kitchen sink; follow the line and look for rough spots or kinks in the line. Because these small water lines often leak for a long time before they are discovered, your walls may very well be saturated. The swelling baseboards are an indication they are full of moisture. The repair for this leak goes far beyond repairing the pinhole leak in the icemaker line. You will have to remove the drywall in order to allow the walls to dry properly. Chances are you will also have a major mold issue inside the walls. You should seek professional help for an evaluation of the potential mold issues involved. Please note when replacing icemaker or filter lines, only use tubing specified for that use. Ask for icemaker tubing, it will be marked icemaker compatible. Dear Maintenance Men: While walking around my building, I found white powdery stuff growing on the surface of the building’s concrete foundation. What is this and do I need to worry about it? Fred Dear Fred: The effect is called efflorescence and it is a natural occurring condition on wall or floor material such as concrete, brick and stucco. These porous materials absorb water and when the water evaporates, it leaves behind an alkaline salt. The efflorescence appears as a white, crystalline powder. Water is always the culprit. First thing to check would be sprinkler locations and if the spray www.rhaoregon.org
hits the wall, relocate the sprinkler. Another problem is moisture wicking up into the stucco from the ground. Older buildings built before 1974 probably do not have a “weep screed” at the bottom of the wall. A weep screed is a metal flashing designed to act as a vapor barrier and transition between the concrete slab or stem wall & wood framing. Installing a weep screed after the fact is not feasible. A solution would be to locate the transition between the slab or stem wall and the wood framing. Saw cut through the stucco to the base plate. Now fill the saw cut with a bead of silicone sealant. The silicone will act as a vapor barrier, effectively stopping the moisture from wicking up into the stucco. Refinish your stucco and paint to suit. Dear Maintenance Men: I am having a very difficult time with an acoustic textured ceiling I am trying to repair. Fortunately my building was built after 1980 so my work should be simple and straight forward. Well its not. I am trying to make spot repairs in an occupied unit with “acoustic spray” in the can, not only are the repairs horrible but the weight and consistency of my “spray” keeps pulling down the existing acoustic around my patches. Can anything be simple? Paul Dear Paul: We have never seen a decent patch job by using “acoustic in a can”. We do not recommend the use of acoustic spray from a can unless it is in a very inconspicuous area like a closet or very small area that does not warrant a proper and more involved repair. For areas larger than one square foot or in clearly visible areas, we recommend the use of a hopper gun fed by an air compressor for a professional finish. The hopper gun is actually easier to use and control. Mix together water and dry acoustic material to the consistency & look of oat meal. Pour the mixture into the hopper and test on a piece of cardboard for texture and consistency; if acceptable point it at the ceiling at a distance of two to three feet away and shoot. Make two light passes in different directions and a final pass one foot outside the patch area to blend into the existing texture. Do not over apply as it will tend to fall or sag. Obviously, shooting texture in an occupied unit is challenging, but can be done. Plastic sheeting is your friend! Using painter’s plastic or 6-mill visqueen; (continued on page 9) completely cover the floor RENTAL ALLIANCE UPDATE July 2020
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Covid 19 Update
By Ron Garcia w/The Garcia Group I want to give you an update on the status of Covid Housing policies. However, I want to be candid and tell you that I wish I had more to say than I do, or at least something better to say than I do. But here goes... Currently we are into the 3rd month of the 90 day Non-Eviction Order as mandated by Governor Brown. The statistics have been about 15-17% of tenants have not paid rent in either April or in May, statewide, and our company has seen the same. It is predicted that the number of non-payments will increase in June, as many tenants who have paid at first, have used up their resources. At our company, we have tenants from all income brackets that cannot pay rent, from housing voucher contributions of $400 per month up to leases more than $2,500 per month. Business Owners that rent housing and are unable to work are just as affected (sometimes even more affected) than tenants who work at minimum wage jobs. As the tenants’ debt mounts and the economy continues to tank, it does not take a lot of imagination to see that many people will not be in a position to repay the delinquencies even in the six month period that they were granted by the State. Additionally, it should be understood by everyone here that the Governor and State Legislature are aware of this dynamic and they are no doubt crafting some plan that they will announce at some point. My guess is that they will toss a small bone to Owners, while new restrictions may be imposed on them that provide even more protection for vulnerable tenants. So what are we doing about all of this? The truth is that we don’t have many tools at our disposal here. We have reached out to all of our non-paying residents and asked them to fill out and sign our Covid Deferral Plan - which simply spells out the terms they would agree to repay the back-rent owed. About 50% of the tenants have signed this and 50% have not. Our working plan (AFTER the 90 day ban is lifted) is to contact those tenants who did NOT sign the agreement and did NOT pay part or all of the rent, and let them know we need to make those arrangements or they would face the prospect of an eviction for non payment. Then if they didn’t sign it we would send the FED (Forced Entry Detainer). BUT - here’s where it is going to get complicated, because I suspect that either: 1. The State will forbid evicting anyone for non payment of rent during the quarantine period, (so that messaging will be moot) and/or 2. Even for those that legitimately could be evicted - the courts will be 90 days backlogged as they have been closed for the last 2 months to all but extreme cases, essentially not hearing any rental related issues. So the entire process will be prolonged and the losses from continued non payment of rent would mount. It will be at this point in time that Rental Property Owners will be at ground zero of the pandemic (much as restaurants and retail stores were at the beginning). It will be at this time that we begin the bartering and negotiating and risk management with all of our tenants and clients. It will be at this time that we will need to create new policies and procedures to address unforeseen issues. (Remember, we are still dealing with State and Local rent restrictions and housing regulations limiting everything we do more and making the process ever more complicated.) DISCLAIMER: I may be wrong and it may all work out okay. I feel a little like an oceanfront homeowner boarding up for an approaching hurricane, while my neighbors are having a bar b que. The strain on our company from the pandemic has taken a toll - we hired new staff in February for staff that left in January, but they were gone by March for their inability to work and our inability to properly train them. However - we hired a key manager, who has brought incredible resources to bear. This month, we have just formed a new Portfolio Team as we are actually anticipating a growth surge due to the complexities of managing residential properties at this time. I am personally going to manage this group of properties as well to make sure we get it right. We will continue to outsource most of our maintenance to companies that are geared and prepped to operate in an on-going health crisis. My political days are on hold for now (and if you want to see that messaging just click here to my website at gogarcia.org). Our business is built on relationships; with Owners, with Tenants, with Vendors. Our product is problem solving and communication. Whenever a crisis occurs, those that are able to go to work. Often those people are called on to work harder. It is time for us in the residential property industry to go to work and help all of those who are affected (Tenants and Landlords) with the best advice and perspectives and resources we can locate and offer. In closing, it is still too early to know who will or will not pay rent this month. Please know we are carefully watching it and getting ready to do what is needed. Ron Garcia owns The Garcia Group Residential Property Management in Portland, He is past president of the Rental Housing Alliance, Oregon and a (former) candidate for Oregon’s
House of Representatives. He can be reached at ron@garciagrp.com 6 RENTAL ALLIANCE UPDATE July 2020
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Considering Selling Your Investment Property? Considering a
1031 Exchange? ASK US ABOUT:
1031 Exchange Solutions Real Estate Investing Seminars and Workshops Passive Investment Opportunities – No More Tenants Toilets and Trash! Delaware Statutory Trust (DST) Properties Triple Net Leased (NNN) Properties 721 Exchange UPREIT Properties – How to 1031 Exchange into a Real Estate Investment Trust (REIT) Opportunity Zones Preferred Return Investment Opportunities
Learn More at www.kpi1031.com or call 1.855.466.5927
CALL TODAY
FOR A FREE BOOK ON 1031 EXCHANGES YOU WILL ALSO GET FREE 1031 EXCHANGE LISTINGS! 1.855.466.5927 or visit www.kpi1031.com
This material does not constitute an offer to sell nor a solicitation of an offer to buy any security. Such offers can be made only by the confidential Private Placement Memorandum (the “Memorandum”). Please read the entire Memorandum paying special attention to the risk section prior investing. IRC Section 1031, IRC Section 1033 and IRC Section 721 are complex tax codes therefore you should consult your tax and legal professional for details regarding your situation. This material is not intended as tax or legal advice. There are material risks associated with investing in real estate, Delaware Statutory Trust (DST) properties and real estate securities including illiquidity, tenant vacancies, general market conditions and competition, lack of operating history, interest rate risks, the risk of new supply coming to market and softening rental rates, general risks of owning/operating commercial and multifamily properties, short term leases associated with multi-family properties, financing risks, potential adverse tax consequences, general economic risks, development risks and long hold periods. There is a risk of loss of the entire investment principal. Past performance is not a guarantee of future results. Potential cash flow, potential returns and potential appreciation are not guaranteed. Securities offered through WealthForge Securities, LLC. Member FINRA/SIPC. Kay Properties and Investments, LLC and WealthForge Securities, LLC are separate entities. Preferred return is not guaranteed, and subject to available cash flow. www.rhaoregon.org
RENTAL ALLIANCE UPDATE July 2020
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Is a Delaware Statutory Trust Right for Me? CONTINUED FROM PAGE 4 Step 3 – Evaluate Your Potential Tax Liability If it appears your properties may not meet your objectives, the next step is to consider whether an exchange is warranted. No one likes to pay taxes. Fortunately, 1031 exchanges allow for investment real estate to be sold and reinvested while deferring the tax liability that would otherwise result from a sale. In Oregon State, taxes on the sale of investment real estate can be as high as 37.7%. Determining the tax liability associated with a potential sale is not overly complicated but does require an understanding of the property’s value and remaining tax basis. If you are interested in understanding the tax liability associated with your property, I encourage you to reach out to us to receive a complimentary copy of our Real Estate Investment Tax Analysis Worksheet. The amount of tax that warrants an exchange depends on the owner’s financial situation and objectives. Step 4 – Understand Your Available Options There are many forms of investment real estate, each of which presents its own benefits, opportunities, and risks. Knowing your options is key to making informed decisions. If you would like to learn more about your options, I encourage you to visit our website and sign up for our 1031 Exchange Replacement Property Options webinar series. An informed investment property owner will be much more effective in staging themselves and their property to accomplish their objectives.
and in Portland, OR. To schedule your free consultation, simply call 206-686-2211. About Real Estate Transition Solutions Navigating the Exchange process successfully can be challenging and complex. For over 20 years, Real Estate Transition Solutions has helped investment property owners navigate and execute tax-deferred 1031 Exchanges, Delaware Statutory Trusts (DSTs), complex real estate investments, and tax planning strategies. Our team of dedicated 1031 Exchange consultants will help you select and acquire Exchange properties that seek to meet both your financial and lifestyle objectives. To learn more about Real Estate Transition Solutions, visit our website at www. re-transition.com Austin Bowlin, CPA – Partner at Real Estate Transition Solutions, provides exit strategy analysis, execution, income and equity replacement options for investment property owners.
Step 5 – Schedule a Complimentary Consultation with Real Estate Transition Solutions At Real Estate Transition Solutions, our focus is on educating investment property owners and developing strategies that will help reposition their investment real estate so that it helps meets their objectives over the years and decades to come. We work with property owners to determine their objectives, analyze their properties, and provide suitable tax-efficient recommendations to help stage them for future success. Each, and every, property owner is unique. Working with a trusted 1031 Exchange partner that understands your specific goals and has both the experience and expertise to assist you in a transition will help you as you navigate the next chapter of life. If you are interested in discussing your objectives and properties, I encourage you to reach out. We are always happy to provide a complimentary consultation. Our consultations can be done over the phone, via web conference, or in person at our offices located in Mercer Island, WA, 8
RENTAL ALLIANCE UPDATE July 2020
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Maintenance Men Cont. CONTINUED FROM PAGE 5
directly below your patch and then cover the plastic with a drop cloth. Using a staple gun, attached more plastic sheeting to the ceiling forming a circle creating a “cocoon”. The sheeting cocoon should drape from the ceiling to the floor. This should adequately protect the surrounding area from overspray. And if you were wondering, yes, you need to stand inside the cocoon to spray the acoustical mixture, so make it big enough to move around in it. Use goggles, mask and other recommended safety equipment as well as disposable coveralls as it will be messy. WE NEED Maintenance Questions!!! If you would like to see your maintenance question in the “Dear Maintenance Men:” column, please send in your questions to: DearMaintenanceMen@gmail.com
Bio: If you need maintenance work or consultation for your building or project, please feel free to contact us. We are available throughout Southern California. For an appointment please call Buffalo Maintenance, Inc. at 714 956-8371 Frank Alvarez is licensed contractor and the Operations Director and co-owner of Buffalo Maintenance, Inc. He has been involved with apartment maintenance & construction for over 20 years. Frankie is President of the Apartment Association of Orange County and a lecturer, educational instructor and Chair of the Education Committee of the AAOC. He is also Chairman of the Product Service Counsel. Frank can be reached at (714) 956-8371 Frankie@BuffaloMaintenance.com For more info please go to: www.BuffaloMaintenance.com Jerry L’Ecuyer is a real estate broker. He is currently a Director Emeritus and Past President of the Apartment Association of Orange County and past Chairman of the association’s Education Committee. Jerry has been involved with apartments as a professional since 1988.
The importance of Picture ID By:Marcia Gohman NTN – North West
When you are accepting an application from a prospective renter, one of the most important things you should be doing is checking their picture ID. Why? Because all of the information from the Driver’s License or government issued picture ID, could help you make sure that you have the correct information on the correct person. We all know that applicants may “Fudge” just a bit when filling out the application, and this is the best way to catch any “mistakes” before the person becomes your resident. Things you should get from the Picture ID Correct spelling of the name This is very important as many records are sorted by name only. If you have an incorrect spelling of the first or last name you will miss important records. Date of Birth Criminal records are filed by name and date of birth alone. There are no Social Security numbers attached to any criminal records, and the criminals know this. They will change the numbers around hoping that you will miss the record(s) that they have due to incorrect information. Address Many times the address from the ID or driver’s license is not listed on the application. This is generally because the person has either been evicted, is going to be evicted, or has recently made his current landlord unhappy and the applicant doesn’t want you calling the landlord to find out why. You can take a picture of the ID for your records with your cell phone. When people are coming to view a rental, I recommend you ask them to bring their license and a recent pay stub because if they apply for the rental that is information you will need, and find very helpful. You also need to be careful with Out of State, Out of Date driver’s licenses. If the person just moved to Oregon from California they should have a valid California driver’s license with their most recent address on it. If they have lived in Oregon for five years, according to their application, but have an Arizona driver’s license that expired two years ago, you should be alarmed. Taking an extra minute to do this one extra step will save you untold time and money in the long run. The more information you get up front, the better you are in the end.
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RENTAL ALLIANCE UPDATE July 2020
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QuickFacts: Special Legislative Session Special Legislative Session update regarding residential and commercial tenancies and property-related loans affected by COVID – 19 Pandemic
By Cliff Hockley, President Bluestone and Hockley
In a record-shattering short summer special session that opened on Wednesday the 24th of June and closed on Friday the 26th of June 2020 the house and the senate voted to pass two bills that affect both commercial and residential real estate investors law. The first, House Bill 4213: Extends the state’s moratorium on residential and commercial evictions, which was set to expire on June 30. Instead, evictions will now be banned in most cases until Sept. 30. Renters will have until March 31, 2021, to pay back unpaid rent, but will be expected to pay current rents accrued beginning Oct. 1, 2020. The second, House Bill 4204: A companion to the eviction ban, prohibits lenders from pursuing foreclosures against homeowners and Real estate investors through Sept. 30. 2020. Gov. Kate Brown has the authority to extend the moratorium past that date. Missed payments will be due at the end of a borrower’s loan term if some other arrangement is not made with the lender. More Details These bills are of remarkable importance to both Residential and Commercial Landlords. In a session that was mostly conducted online, rules were set to protect tenants that are unable to pay their rent and Landlords that could not pay their mortgages. HB 4213 Salient Items defined in the bill: 1.“Emergency period” is now defined as the period beginning on April 1, 2020 and ending on September 30, 2020. (even though the Governor can change the emergency timeframes if she so deems it necessary, we have a tentative beginning and an end defined to the emergency). 2.During and after the emergency period and notwithstanding this chapter or ORS 105.105 to 105.168, a landlord may not, and may not threaten to: (a) Deliver a notice of termination of a rental agreement based on a tenant’s nonpayment balance; (b) Initiate or continue an action under ORS 105.110 to take possession of a dwelling unit based on a notice of termination for nonpayment delivered on or after April 1, 2020; (c) Take any action that would interfere with a tenant’s possession or use of a dwelling unit based on a tenant’s nonpayment balance; (d) Assess a late fee or any other penalty on a tenant’s nonpayment; or (e) Report a tenant’s nonpayment balance as delinquent to any consumer credit reporting 3.Rents may include: (a) Rent for the current rental period; (b) Utility or service charges; (c) Late rent payment charges; and (d) Fees or charges owed by the tenant under ORS 90.302 or other fees or charges related to damage claims or other claims against the tenant. Repayment of these charges needs to be applied by the landlord in this order as well. 4.Following the emergency period, a tenant with an outstanding nonpayment balance has a six-month grace period that ends on March 31, 2021, to pay the outstanding nonpayment balance, this applies for both residential and commercial tenancies. 5.Rents and other charges or fees that come due after the emergency period must be paid as usual or the landlord may terminate the tenancy under ORS 90.392, 90.394 or 90.630. 6.If a landlord violates the bill, a tenant may obtain injunctive relief to recover possession or address any other violation of this section and may recover from the landlord an amount up to three months’ periodic rent plus any actual damages. 7. Notwithstanding ORS 12.125, the period of limitation is tolled until March 31, 2021, for claims by a landlord based on a tenant’s nonpayment or nonpayment balance, HB 4204 The language in this bill is groundbreaking because during this pandemic ( defined as 8 March 2020 – 30 September 2020 ) it obligates a lender to negotiate with a borrower of real property and enables the borrower to pay missed loan payments at the end of the loan period. (continued on page 11) 10
RENTAL ALLIANCE UPDATE July 2020
www.rhaoregon.org
Salient Points: 1. During the emergency period, a lender may not treat as a default a borrower’s failure to make a periodic installment payment or to pay any other amount that is due to the lender on or in connection with an obligation that is subject to a financing agreement if at any time during the emergency period. Lenders are limited in their actions regarding taking a borrower to court to foreclose on a real estate loan. 2. A borrower does not need to provide a notification to a lender under paragraph more than once. 3.If the subject property is a residence with four or fewer dwelling units, the notification must attest that the borrower’s failure to pay is a result of a loss of income related to the COVID-19 pandemic. 4.If the subject property is a commercial property or residential property with more than four dwelling units, the notification must include financial statements or other evidence that demonstrates a loss of income related to the COVID-19 pandemic and must disclose any funds the borrower received from the United States Small Business Administration under the Paycheck Protection Program, as implemented under the Paycheck Protection Program Flexibility Act of 2020 (P.L. 116-142) or other state or federal relief programs. 5.Establishes temporary limitations on lenders being able to enforce default remedies on obligations secured by mortgages, trust deeds, land sale contracts, or other instruments. 6.Provides for certain exemptions. Requires lenders to defer payments if lender and borrower do not otherwise agree on loan mitigation, deferral, or other foreclosure avoidance measure and permits borrower to pay deferred amounts at end of loan term. 7.Provides that lender may adjust escrow impound payment and take into account deficiencies or shortages that result from deferring borrower’s payments. 8.Requires borrower to provide notice to lenders if the borrower cannot make periodic installment payment. 9.Prohibits lenders from collecting various fees, penalties, and charges during the emergency period and from undertaking specified practices. 10.Requires courts to dismiss foreclosure proceedings brought during the emergency period without prejudice. 11.Permits borrower that suffers ascertainable loss of money or property because lender took prohibited action to bring action for actual damages.
seen what will happen as the Covid -19 virus continues to linger in Oregon and the United States. Currently, unemployment in Oregon is running at 14.2% up from 3.5 % in February. The governor’s emergency orders regarding COVID -19 on hotels, restaurants, and fitness centers, in particular, have had a major impact on the employment of Oregon residents in the larger metro areas and their ability to stay in business and pay rent. These bills are just a stopgap on the way to finding a permanent solution to our new COVID – 19 reality.
Both bills were declared emergencies and will become Law as soon as the Governor signs them. It remains to be www.rhaoregon.org
RENTAL ALLIANCE UPDATE July 2020
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Avoiding a Window Fall
Each year, Tualatin Valley Fire & Rescue responds to incidents involving children falling out of windows. Most of these incidents occur during the spring and summer months when windows are open due to warmer weather. In the most serious of cases, children have fallen from second-story windows and have been transported to a hospital.
To help you avoid a tragedy, we encourage you to take some simple precautions: Talk to your children about the risk of window falls and teach them to play a safe distance from windows. Keep furniture such as beds, dressers, and shelves away from windows to reduce your child’s temptation to climb near the window. Only allow windows to open 4 inches and install a window stop to keep children from opening them further. Be sure an adult can open the window in an emergency.
STOP AT 4”
Do not rely on insect screens to prevent a window fall. Screens are to keep bugs out, not kids in. When buying new windows; ask for the type with built-in safety hardware. For more information visit www.stopat4.com
NOTE: Whatever device you use, ensure that it is easily removed should you need to exit your home due to fire!
PE-12 (1/13)
For additional safety information, visit our website at www.tvfr.com or call us at (503) 649-8577