Charles Hillestad Oregon Coast Real Estate Law Office

I'm a lawyer. But, I'm here tonight to help you avoid lawyers. Or, more accurately, I'm here to help you avoid our expensive services. I hope to do so by encouraging you to always practice PREVENTIVE LAW.

It's a pretty simple concept, much like preventive medicine, defensive driving or, for that matter, safe sex. It is a way to help you stay out of trouble.

What are the principles of Preventive Law? They essentially boil down to thinking ahead as to all the things that could go wrong and planning for their possibility.

It's not that hard. Honest. For 95% of it, you don't need a lawyer to interpret it for you. Most of the governing rules and regulations are in relatively plain English.

There are some occasional ambiguities of course. One tip for reading the statutes is that if there appear to be two meanings for a specific sentence, one of which favors the tenants and one favors you, adopt the most conservative interpretation and err on the side favoring the tenant. That way you are less likely to step in something smelly later.

While not everything will make sense initially, at least having familiarized yourself with the appropriate sections, you should be able to recall later when something comes up as to whether or not the Legislature expressly discussed it. You will know where to look.

So, if you have never done so before or have not done so for a while, sit down and read Chapter 90 of the Oregon Revised Statutes. Read it from beginning to end. Do so maybe a couple of times.

Definitely do so before you attempt to make any changes in an existing rental understanding with tenants or attempt to enforce any assumed right that you think you may have as a landlord of a residential unit. Even I try not to give a legal opinion off the cuff, unless I just researched a particular topic within the last couple of months and the legislature has not been in session. Consequently, always look it up and see if your memory is correct before doing something irrevocable.

The most current version can usually be found on the internet by going to www.oregon.gov and then seeking out the sub heading to the left regarding statutes.

At a bet, some of your cherished assumptions about landlord/tenant relations will turn out to be wrong. Almost certainly, some of your assumptions are bound to be, especially if you are relying on some other layman's opinion or an out of date copy of the statutes. These laws can change every couple of years and sometimes dramatically so.

It tends to be even worse if you are relying on the general landlord guidebooks you buy in bookstores, particularly those written in other states. The laws are simply not the same from state to state. They may sound similar in outline, but the devil is in the details. For example, in Colorado where I also practice, once you have an eviction order you can merely toss the tenant's personal property on the street. If it is stolen, too bad. In sharp contrast, in Oregon, you must carefully store it. While you might be able to charge for the storage and might ultimately be able to sell the stored items to ultimately recoup your warehousing costs, follow the procedure set forth in the statutes very carefully. Otherwise, you might end up paying for losses the tenant suffers. And, somehow it always seems that what they left behind was a mink coat or diamond tiara. Don't give them the opportunity to make the argument.

It not only is something you should be doing as a good business practice and holds disputes to a minimum, it really improves your chances if you ever have to get into court.

Among other things, "good order and repair" means, insure you have a water tight premises, no broken windows or locks. Insure all the fixtures and equipment are both working and safe. Have a functioning smoke detector, hot running water, intact stairs and railings, trash free with receptacles. If not, I guarantee you will have a counterclaim in any eviction process. Read ORS 90.320.

Moreover, document the excellent condition in which you keep your property. Do so with photos, preferably dated ones. Remember, film is cheap and court is not. Take lots of photos. You don't have to develop it unless controversy arises. Just make sure the film cartridges are well labeled.

Make sure you have fully disclosed to prospective tenants any potential problems regarding the physical condition property.

Among the advance disclosures of adverse conditions that you may need to make to tenants is when there is pending litigation on some physical attribute. Say, for example, the city has given you a code violation notice. If the number of rental units at that location total four units or less, you should disclose that fact to the prospective tenants in advance. Do it in writing so you have some proof you did so.

Also disclose if any utilities are not separately metered and some other spaces shares the tap. Tenants, according to the Legislature, deserve notice of that so they can make up their mind whether or not to rent from you. Remember, the penalty for a dispute the tenant wins is the higher of twice actual damages or double month's rent plus court costs and attorney fees. Ouch. If you want to learn more, it's ORS 90.375.

If your property is in a recycling area and there are five units or more at the site, you may have to accommodate recycling and notify the tenants of that fact. Similarly, if you are leasing movable personal property, it pays to disclose that and detail what it is so there are no questions later. If there are limited common areas, make it clear what those are.

Speaking of disclosures, if any of you are also licensed real estate agents or brokers, disclose that too.

Your tenants have a right to know about you, but you have a limited corresponding right to know about the tenants. Have a written rental application which also makes it clear you are relying on whatever is said and that material misrepresentations are grounds for eviction.

You can even charge a reasonable amount for checking tenants out, in other words a screening fee, but there is a whole list of things to do if you do charge. See ORS 90.295 and 297 for more details.

Contact former landlords. Contact references. Assume nothing. Watch out for unexplained gaps in their rental history. It might mean they owned during that period. Or, it might mean they were in jail.

You can check out their credit, their bank accounts, and their employment history. However, get permission in writing to make such checks. Most office supply stores probably have a permission form for that which the tenant signs giving authority to the creditors to release such information.

Innkeepers catering to the overnight trade pretty much have to rent to everyone unless they are drunk, contagious or broke. It has to do with early English cases when it was dangerous to turn away travelers at night and inns were few and far between. Renting to permanent residents however is different. You do not have to rent to everyone if your customers are not "transients."

There is a wonderful case I recall from law school. A female attorney wanted to rent an apartment. The landlord said no. As a result, she used her newly minted law diploma to sue. Yet she lost. Anyone know why?

The answer is that the landlord successfully proved he didn't refuse to rent to her because she was a woman. He demonstrated it was because she was a lawyer and everyone knows lawyers are trouble makers. If you don't want lawyers around, it's okay.

In general, you have a certain leeway on picking and choosing among tenants, more so than as an employer. But, don't go too far and cross the line on protected minorities. What you cannot discriminate on is on the basis of race, color, sex, marital status, religion, familial status, national origin or source of income. Familial status, if you are wondering, usually pertains to when there is someone younger than 18 living with the parent.

You also cannot discriminate against disabled persons. For instance, when showing apartments do not assume they will only want the first floor rooms. And, don't keep their guide dogs out because you have an anti-pet policy. Make a reasonable accommodation for them.

Don't confuse this with what you have heard regarding the ADA. In the first place, the horror stories you have heard are almost invariably wrong. More importantly, the ADA is not applicable. Nevertheless, other laws accomplishing similar goals may be. Thus, the disabled tenant can insist upon his or her own reasonable ramp or similar items if they pay for it. You can also make reasonable restrictions and insist it all be removed at the end of the term.

As a tip, never give a knee jerk response to anything. Do some analysis first. For example, having just compiled some expert testimony, I can tell you that a simple wooden unobstructed ramp to bridge a one foot high entry could cost as low as $300 and probably should not exceed $1,000 even for an all concrete one assuming you hire an honest contractor.

If you have some accessible apartments to rent, frankly, you should have a competitive advantage. The census says nearly 20% of all Americans are disabled and half of those seriously so. Four out of five Americans are disabled, at least temporarily, during some portion of their lives. Plus, we are all growing older and getting more creaky as we move around. Using what is known as "Universal Design" costs little, if any, more when building or remodeling. It increases your potential market.

Once you have selected new tenants, make sure you get everything in writing.

It may seem obvious, but make sure you have at least included the names and addresses of both the managers and the owners. A common mistake is where the building is owned by a corporation for limited liability purposes, but you sign in your own name. If something goes wrong and you have forget to name the right parties, among other things, you can probably forget limited liability protection. You might even find your insurance company balking at reimbursing you as to damages, if applicable.

And, make sure you get the full and proper names of everyone including the tenants correctly on the documents. You would be surprised to learn how often that is forgotten in the rush. Unfortunately, it becomes pretty tough to enforce a rental agreement against Jones if Smith is the one who actually signed. As a lawyer, I have some tricks and arguments to get past that defect, but it suddenly got more expensive for you and less assured as to the outcome.

In addition, have the written document state that they have read and understand it and received a copy. Have it also say that it replaces all prior agreements including oral ones and that it is not to be construed against the party that drafted the agreement. That helps eliminate claims they were promised something different.

Be sure to give them a copy of the agreement. A few of you don't for some reason. It is to your advantage though. Sometimes the things said in rental agreements are not legally enforceable. On the other hand, when printed, psychologically the tenants assume they are valid and don't bother to check. In any event, a written document setting forth the agreement is one of the surest ways to stay out of court or assure you can win if you are forced to go there.

If you highlighted nothing else from this discussion, write that down about "writing it all down." No joke. I would say maybe half the problems arise from the failure to have a written agreement.

You don't have to reinvent the wheel. With a few adjustments, the standard form Stevens-Ness residential rental agreement form is generally okay for most of you. Even without adjustments, it is better than nothing.

As to adjustments for improvement, I would recommend including a statement making it clear any further amendments must also be in writing. It is very difficult for oral agreements to be enforced. Even when the other side is honest, they may simply remember it differently from you. Why take the chance when getting it in writing is so easy.

There is one general exception to the rule on amendments to be in writing. You want to include in the original rental agreement an expressly reserved right to reasonably, but without consent, change the rules and regs with proper advance notice or approval. Although, even if you reserved that right, be sure to give at least a month's notice before enforcing anything new.

If you do have some rules already in place, attach a copy and make reference to it on the document that it is attached. Be clear as to any restrictions on pets, parking, number or type of vehicles, number or type of occupants or subleasing. The general rule is that unless you specifically restricted it, tenants can do it.

Similarly be very clear about any third party fees such as utilities or insurance coverage. By the way, if you are going to have the tenant pay utilities, personally confirm they were changed over so you are not still paying.

Generally, make no assumptions. You should never assume you can unilaterally change anything once signed if you don't like it. Having said that, if it is truly just a month to month rental agreement and not a lease for a specific term, you can change some things such as rental amount. However, that requires a minimum of thirty days advance notice.

As to other tweaks to the standard form, perhaps include a clause that requires the tenants to give notice if they are going on extended absences in excess of seven days. Perhaps include a clause prohibiting the presence of hazardous materials and detailing what they might be.

Perhaps include a clause about the agreement being terminable upon prohibited conduct taking place such as drugs, prostitution or gambling. And if you do discover that is going on, notify the authorities and proceed with eviction. Otherwise, you might be vulnerable to government seizure of the property being part of a criminal activity.

There is a potential problem on attorney fees if you are relying on just the statutory language. You might want to specify in writing it is the full reasonable amount collectible even if the dispute never goes all the way to court. You might also want to state the prevailing party gets attorney fees plus costs for mediations, arbitrations, bankruptcies and appeals too.

Definitely, detail your remedies on default and be clear about what actually is a default. Be careful though about drafting a list and forgetting to add a catch-all phrase such as "including, but not limited to." Otherwise, you might be limited in what you can claim as a genuine default.

Late charges can be charged. They can be a flat fee or a per diem, but it must be a reasonable amount. By the way, the word "reasonable" is defined as what the average person plucked off the street thinks is reasonable, not you personally.

If you want the right to claim a late charge, it must be in writing and cannot start sooner than the fourth day late. By the way, on this and other remedies you plan to pursue, be sure to double check the latest statutes to make sure the legislature has not changed the rules since you last looked.

On a related topic, contrary to what some of you seem to think, non-payment of late fees, by themselves, are not sufficient grounds for 72 hour eviction for non-payment of rent. Also, you cannot charge more than one late fee for the same missed period.

You can charge for dishonored checks and for lost keys, but get it in writing that you have that right. You can also charge for interest for failure to pay things like insurance for instance. Just don't get greedy.

You can have as well a non-refundable cleaning fee, but, once again, be sure to state so in writing. By the way, be sure to keep those funds separately accounted for when keeping records.

Definitely restrict assignments and sublets. Definitely restrict alterations without consent.

Think about alternate dispute resolution procedures such as mediation or arbitration for some things. Maybe tenants will agree. Oftentimes, such ADR is quicker, cheaper and less intimidating than court. Of course, if you just want the tenants out, stick with the court route. In terms of normal litigation, evictions move at greased lightening speed.

If there is a default taking place, be cautious about taking partial payments of rent.

Also be really careful how you write renewal clauses, especially as to determining new rent on renewal terms. That is often a huge battle. There are many ways to do it, fixed step, CPI, third party appraisal, landlord dictates. Make sure a procedure is specified.

Same for holdovers. Otherwise, you might be between a rock and a hard place with new tenants expecting to get in.

Remember that mobile home space leasing agreements and the section of statutes governing them are different from other residential rentals. Same for business leases.

You might be saying to yourself at this point, "But, I only do residential rentals so that doesn't apply to me." Suppose though that one of your tenants elects to have a business office which customers visit. If so, you may have a problem. Arguably, that might be interpreted as a "public accommodation." If so, what is the ADA access like? Landlords and tenants are deemed jointly liable under the ADA and the fine for first offense could be up to $50,000.

If nothing is said, it is not necessarily presumed that the tenant's permitted uses are strictly restricted to residential. Why take chances? Spell it out.

Get good (i.e. high) security deposits. While you are at it, specify you can intermix them with your own funds, that there is no interest due nor a requirement to set up an escrow account. (Caveat: If you are a licensed property manager, there may be restrictions on that however. The licensing agency may mandate deposits in interest bearing accounts.)

Deposits can include last month's rent, but if so that earmarked amount can only apply to that precise and particular use unless the tenant's agree in writing otherwise.

Deposits cannot be raised in the first year. You often can thereafter if you have a month to month tenancy, but it takes at least three months advance notice. That is one of those little surprises when "assumptions" can bite you. Since most of the clauses in the statute discuss thirty days notice, we all have a tendency to forget that some specific situations may require more.

Before tapping into any deposits, have your paperwork in order. For instance, if you make repairs, save the invoices for proof when you apply that against the deposits. Save the photos of damages too.

Something often forgotten is the landlord's obligation, within 31 days of repossession, to either return all the deposits or itemize what is being kept and why. Don't wait for the last moment to give that accounting. There is a specific procedure and you must take mailing time into consideration.

Don't be late. The damages for doing it wrong can be twice the amount that was illegally kept, plus of course, court costs and attorney fees.

Don't get greedy either. Charge only for actual expenses and not just ordinary wear and tear. The few extra bucks you might collect most times will not be worth the single time you are dragged into court.

Store them in a secure location. Keep them all at least six years. And, don't forget to back up your computers periodically.

Also, remember that if you set a pattern, you may be stuck with it. For example, if you routinely accept late payments, even though you have a written provision allowing you to collect them, that might be deemed waived. Notify the tenants that commencing next month, you will be enforcing that once again.

In other words, be careful about entering without permission. Specify in writing in the original rental you have a right to do it on advance notice of 24 hours or w/o notice in emergency.

Even if you did reserve that right, if the tenants leave word not to enter, do not do so without a protective court order.

If for any reason you do enter on a true emergency, within 24 hours give notice you have been there. ORS 90.322.

The only real exception to notice is if tenants have requested repairs in writing. In that event, you don't need notice if you do it within seven days and at a reasonable time.

And, if it is not you personally entering, provide the contractor with a letter indicating your approval so the tenants can be shown it.

If in the course of making inspections, you discover everything is not okay, document the condition with dated photos showing it before any repairs.

Speaking of inspections, you might also want to reserve the right to show the property to potential buyers or lenders or appraisers.

In any event, at all times, no matter what the provocation, be unfailingly pleasant and polite so you don't fuel unnecessary hostility. Remember, the penalty for a dispute the tenant wins is the higher of actual damages or one month rent plus court costs and attorney fees.

Keep in mind that merely because tenants are not paying rent doesn't protect you from your own obligation to repair and provide utilities. They are what is known as "independent clauses."

By the same token, you cannot demand an advance release of the landlord or a waiver of remedies in the rental agreement. Feel free to put them in the document if you want. You might bluff out some tenants not represented by lawyers, but they would be unenforceable in a court of law.

You can get the tenants to do certain simple repair and maintenance work in exchange for lowered rent. They would not be your "employees" if that is all they got out of the exchange. If you do, never forget that if the tenants screw up the work, it does not relieve you from your obligation to provide habitable spaces.

Also, if tenants are doing any repairs, watch out for potential mechanics lien filings and failure to get permits or follow code. You are the one ultimately responsible.

And, in particular, do not let the tenants do electrical or plumbing installation work for you.

Speaking of repairs, are you fully insured to include earthquake and flood which require separate endorsements? Read the full policies, especially the exclusions. Ask your agent to explain anything not immediately clear.

Use the right address, especially the latest one of which you have knowledge. Screw up and you start from square one and the clock is reset.

In addition, use the right type of mailed notice. Sometimes return receipt is the wrong one. Sometimes, you are supposed to do first class mail. When in doubt, do both.

If you want the right to have service to one be service to all, so state in the rental agreement. Otherwise, serve everyone.

As to other miscellaneous thoughts regarding landlord notices, if posting one, it would be useful to bring a credible, preferably unbiased, witness along to observe the posting and make notes as to when, where, who and how. Dated photos are good too.

Use the right time period for giving notice. It is thirty days for ordinary termination without cause unless there is a written agreement requiring a longer period. When in doubt, use the longest.

It is a ten day period if they have illegal pets, but be sure you specified no pets in the written agreement. Silence on the issue means there is no restriction.

It is 24 hours notice if there is a threat to harm neighbors. By the way, you might want to warn the threatened neighbors and the police too. Assume all threats are credible and take them seriously.

What is the most common mistake regarding notices? When counting time periods, don't forget to add the three extra days if you mailed the notice. In other words, a 24 hour notice becomes a four day notice if mailed.

Suppose you both post and mail? Once again, when in doubt, use the longer period because otherwise, you might end up having the court tell you to start from scratch.

Whatever you do, keep a copy marked indicating exactly when and how it was sent.

Don't wait long on defaults. Start the clock officially ticking as quickly as possible.

Don't be too hasty though. If you are sending the seventy-two hour notices for failure to pay rent, there is a built in grace period of seven days minimum. You can lower that to four, but it must be in writing. Remember, if the rent is mailed within the grace period, then it is considered timely.

Don't ignore notice of bankruptcy stay orders. That trumps you totally until the bankruptcy court rules.

If you don't throw the tenants out and they violate again within six months, you might be able to terminate upon only ten days notice for month to month tenants, less for weekly tenants. ORS 90.400.

You can't demand certain things. For example, you cannot demand a confession of judgment in the rental agreement.

Decide what your priorities are. You might want to separate the possession issue from debt. Possibly use small claims court to recover the missing money if the amount is small enough. Otherwise, it might result in delay recapturing possession.

If you have to go to court, be prepared for the court hearing with all your evidence and witnesses. You get one shot. If all the witnesses fail to show up, it's your problem, not the court's or the defendants.

Be prepared to compromise, but don't leave that court room without making it part of an official court order on exactly when the tenant is vacating.

Let's assume you win at court and have a court order. You can't throw out tenants yourself even if you do. You must get the sheriff involved. That takes a special paper and a minimum of seven days.

Similarly, you can't just throw out F,F&E of the tenants yourself. You need the sheriff, intelligent movers and secure storage. Take photos so that they cannot later claim you lost that mink coat and diamond tiara mentioned earlier.

That includes things you might not suspect would create a problem for you like finding old vehicles on the property. While you might be able to toss rotten food immediately, other things need to be safeguarded until you have ascertained it is truly abandoned. There is a lengthy discussion in the statutes. Read it if the issue comes up. It's ORS 90.425.

Make sure you take no retaliatory conduct of any sort if tenants somehow win this time out.

As a rough rule of thumb, it is going to be assumed to be retaliatory if you try again within six months. ORS 90.385.

In closing, if circumstances do require you to hire you an attorney, I'll leave you with a little secret. There is a national rating service on attorneys. It gives an opinion about whether one attorney is better than another in terms of legal skills and ethics. It's what attorneys use to find co-counsel or to refer clients out of state.

It is called the Martindale-Hubbell Legal Directory. Most law libraries have a set. They are about 12 volumes and take up ten feet of shelf space or one whole CD. Recently, they are also found on the internet. You can search for a lawyer by expertise and locale, but then when you have narrowed it down, look for the ratings.

Legal skills are rated A, B and C with A the highest of the published ratings. Any rating below C does not get published. As to ethics, the attorney must achieve a rating of V for very high or nothing will be published.