Portland's Fair Ordinance and Tenant Screening

City of Portland FAIR Ordinance

On March 1, 2020, the FAIR Ordinance passed in the City of Portland. The ordinance is divided into two sections:

Evaluation of Applicants for Dwelling Units
Security Deposits, Pre-Paid Rent

The effect of the Evaluation of Applicants for Dwelling Units portion is stricter rules about how Landlords screen and evaluate applicants for residency at their properties. Landlords screen and evaluate applicants for residency at their properties. Landlords must make specific modifications to their applications and procedures regarding how advertising and processing of applications are done, then must choose between using their customary screening criteria or a new, “low-barrier” screening criteria described in the Ordinance. Each of those items are described below as follows:

Updating our Applications

Mandatory Changes to All Applications - all applications must contain the following information:

1. Whether the unit is an “Accessible Dwelling Unit” (per Oregon Structural Building Code and ICC A117.1) defined as a “Type A Unit”. These are very specific requirements, relating to the accessibility for persons with mobility challenges and containing requirements for things such as accessible routes, turning space and doorways, bathrooms with grab bars, shower seat reinforcement, kitchen configuration, etc.
2. Opportunity for the applicant to affirmatively disclose “Disability Status” or if the applicant is “Mobility Disabled” meaning that the person has a disability that causes an ongoing limitation of independent, purposeful physical movement of the body or one or more extremities and requires a modifiable living space because of, but not limited to, the need for an assistive mobility device.
3. Description of the screening criteria and evaluation process for applicants if Landlord charges a screening fee.
4. A disclosure that applicants may provide supplemental evidence to mitigate potentially negative screening results.
5. When screening for income, rent-to-income ratios limited to gross income of up to 2.5 times the monthly rent when monthly rent for the dwelling unit is below 80% Median Family Income as set forth by the Portland Housing Bureau (see enclosed table). All other applicants may be required to have up to 2 times the monthly rent. Income must be defined as including, but not limited to: wages, rent assistance, and monetary public benefits and be based on cumulative financial resources. Landlords should continue to base their analysis of rent-to-income ratios of applicants with local, state, or federal government rent voucher or housing subsidy on the applicant’s portion of the rent only.
6. Language offering other Applicants 30 days to appeal denied applications and giving Applicants the opportunity to correct, refute, or explain negative information forming the basis for denial. Applicants are also prequalified for any rental opportunities at the Landlord’s properties for three months following the approval date and all screening fees are waived for three months following the approved appeal. But, all Applicants under these circumstances will be required to certify in writing that no conditions have materially changed from those described in the Landlord’s approved application.
7. Both attachments from the Portland Housing Bureau containing: Right to Request a Modification or Accommodation Notice Required Under Portland City Code Title 30.01.086.C.3.B; and Statement of Applicant Rights and Responsibilities Notice Required Under Portland City Code Title 30.01.086.C.3.C must be included in application.
8. Although not directly required to be disclosed in the application, the following is strongly recommended because Landlords must accept the following types of documentation if applicants are required to verify their identity for screening:

1. 1. Evidence of SSN
  2. Valid Permanent Resident Card
  3. Immigrant Visa
  4. Individual Taxpayer Identification Number (ITIN)
  5. Non-Immigrant Visa
  6. Any government issued identification regardless of expiration date
  7. Any non-government identification or combination of identifications that would permit a reasonable verification of identity

Optional Changes to Applications - Landlords may, at their discretion, include the following items in applications:

1. Inquiries as to whether an Applicant is a current resident or has been a resident of Landlord in the last 365 days (at any property owned or managed by Landlord)
2. Landlords may refuse to process applications of Applicant who has “repeated and verifiable violations of the Rental Agreement within 365 days of the application submission date. “Repeated and Verifiable” means:
  1. At least 3 violations have occurred within 1-year period =, and the most recent violation occurred within 365 days before the Applicants submission date;
  2. The tenant received notice of each of the 3 violations in writing at the time each violation occurred;
  3. None of the 3 violations were dismissed, cured or resulted in a general judgment for the Applicant before the applicant submitted the application; and
  4. The Landlord provides the applicant with copies of the notices referenced above.
3. Disclosure that a Landlord may refuse to process an application that is incomplete, that fails to include information concerning an Applicant’s identification or income, or when an Applicant has intentionally withheld of misrepresented required information.
4. Language including verifiable friend of family assistance in the calculation of a financially responsible applicant’s income.
5. Guarantor provisions for financially responsible applicants who do not qualify under the rent-to-income criteria. Guarantors cannot be required to have income more than 3 times the monthly rent.
6. Language allowing applicants who fail to income qualify may, at Landlord’s discretion, be required to pay an additional security deposit in the amount of half a month’s rent.

Choose your Screening Criteria

After making the mandatory and optional changes in Step One, Landlords have the option to continue to use their current criteria, but with an additional requirement that the Landlord do an “individualized assessment” prior to denying any applicant. Or, Landlords may instead choose to adopt a “Low Barrier Criteria” set forth in the Ordinance and avoid the individual assessment requirement.

With the Low Barrier Screening Criteria, no individual assessment under the Ordinance requirements. If using Low Barrier Criteria, Landlords cannot reject an applicant for criminal history that includes:

Arrest records (pending charges can still be considered)
Diversion or deferred judgments
Convictions that have been judicially dismissed, expunged, voided or invalidated
Convictions for crimes no longer illegal in Oregon
Juvenile convictions
Misdemeanor convictions of any kind for which the dates of sentencing are older than three years from application date
Felony convictions of any kind for which the dates sentencing is older than seven years from the date of the application

Landlords can also not reject applicants for credit history that includes:

Credit scores of 500 or higher
Insufficient credit history (NA score)
Negative information provided by a credit agency for a past due, unpaid obligation less than $1,000
Prior rental property damage less than $500
Discharged bankruptcy
Chapter 13 bankruptcy under an active repayment plan
Medical, education/vocational training debt

Finally, Landlords may not reject applicants for rental history that includes:

Dismissed evictions
Eviction judgments entered 3 or more years before the date of application
Eviction judgments entered less than three years before the date of application for termination based on a no-cause notice or the result of a default judgment due to failure to appear and the Applicant can prove they vacated the unit at the time of the notice of the action was served
Insufficient rental history
Verbal or written references from prior Landlords except for:
- Defaults in rent
- 3 or more material violations of a rental agreement within one year of the application resulting in notices issued to the tenant
- Outstanding violation resulting in a termination with cause

Advertising

The ordinance places additional limits on how Landlords must advertise, especially for multiple units at the same time. If Landlords simultaneously advertise the availability of more than one dwelling unit in the same property, Landlords may not begin processing applications for 72 hours after they publish combined notices for availability. Landlords advertising one available unit at a time would not be subject to the 72-hour waiting period.

A Landlord’s published “notices” must incorporate the following, either in the advertisement itself, or provide an address, website address, internet link or other method of communicating where the following information is available to applicants:

The number of dwelling units available
The range of number of bedrooms in the available units
The range of available dwelling unit sizes
The range of rents available for dwelling units
When the Landlord will begin to accept applications
The Landlord’s screening criteria and if the Landlord charges a screening fee
Which specific units, if any, are “Accessible Units:

Processing Applications

For Landlords simultaneously advertising the availability of more than one dwelling unit in the same property (and subject to the 72-hour waiting period) the “open application period” begins on the date and time the Landlord will begin processing applications. If multiple applications are received earlier than the open application period, every complete application must be recorded as being received 8 hours after the start of the open application period. For Accessible Dwelling Units, first priority must also be given to the applicants with a household member who is Mobility Disabled and applied before or during the open application period.

Landlords must digitally or manually record the date and time of the receipt of completed applications and process those completed applications in order of receipt.

There is also a difference between a Financially Responsible and now a Non-Financially Responsible Applicants. If there are multiple applicants for a dwelling unit, the applicants can choose which applicants who will be “financially responsible” and which applicants will have no financial responsibility. Only the “financially responsible” applicant may be screened for financial responsibility (including credit score) but all applicants can be screened for factors relating to maintaining the property, conduct consistent with the health, safety or peaceful enjoyment of the premises by other residents or the Landlord. If the financially responsible applicant is approved but the non-financially responsible applicant is denied, Landlord may not deny the household entirely, but must accept the qualifying financially responsible tenant without the disqualified applicant.

Appeals

Applicants have 30 days to appeal denied applications during which time they may correct, refute, or explain negative information forming the basis for the denial. Applicants must be prequalified for any rental opportunities at Landlord’s properties for three months following the approval date. Landlords must waive all screening fees for three months following the approved appeal, but Applicants under these circumstances may be required to certify in writing that no conditions have changed.

Exemptions from the Ordinance

A Dwelling Unit is exempt from the Ordinance if it is:

Subject to coordinated access system or a formal referral agreement between a Landlord and a non-profit service provider or government agency working to place low income or vulnerable tenants into housing.
Not rented to or advertised for rent to the general public (including advertisements online with or without a fee).
Shared with a Landlord, roommate or sub-lessor using the dwelling unit as a primary residence.
Tenancies where the applicant would occupy one dwelling unit in a duplex where the Landlord’s principal residence is the second dwelling unit in the same complex.
Tenancies where the tenant would occupy an Accessory Dwelling Unit so long as the owner of the Accessory Dwelling Unit lives on the site.
When local, state or federal funding or loan requirements for Tenant screening are in conflict with the ordinance.

Damages

Landlords failing to comply with the Ordinance are liable to the Applicant for an amount up to:

$250 per violation;
Actual damages; and
Reasonable attorney fees and costs.

Fair Access in Renting Ordinance Security Deposits

How much can be charged for a security deposit?
1. Half a month’s rent if the Landlord requires pre-payment of last month’s rent
2. One month’s rent if no pre-payment of last month’s rent is required
3. An additional half a month’s rent can be added to 1 or 2 if applicant is conditionally approved subject to applicant’s demonstration of financial capacity or to offset risk factors identified by a screening company under the applicant screening portions of the FAIR Ordinance.
What disclosures are needed?Landlords must disclose on rental agreement the name and address of the financial institution where the security deposit is being held and if the security deposit is held in an interest-bearing account.
After Move-in
- Day 1 – Landlords must provide the Tenants with a Condition Report on the first day that the Tenants may take possession of the unit. Tenants have 7 days to complete the form noting any damage.
- Day 8 – if Tenant fails to complete and submit the Condition Report, Landlord must complete and provide the Tenant a Condition Report including digital photos (preferably with date and time stamp).
- Day 14 – within two weeks after payment for the security deposit and/or pre-paid rent, Landlords must deposit those amounts into segregated account.
- Day 17 – this is the last day for a Landlord to provide the Tenant a Condition Report as described above.
- Accounting
Landlords must provide Tenants with a written accounting of the use of any security deposit funds toward costs of repair or replacement within 30 days and refund the unused amounts to Tenants no later than 31 days following termination of tenancy.
Landlords may not apply security deposits to: interior painting except to repair specific damage beyond wear and tear or unauthorized painting by Tenant, and repaid of any damage or replacement of malfunctioning or damaged appliances or fixtures not noted on the Condition Report. The accounting must include itemization describing any repair and replacement in accordance with the fixtures, appliances, equipment or personal property incorporated into the Rental Agreement and provide that to the Tenant with the accounting of the security deposit, photos of the all the damage, and if labor costs are higher than $200 back to the Tenant, documentation demonstrating that labor costs are reasonable and consistent with typical hourly rates in the metropolitan region.
Damages - Failure to comply with the Ordinance shall result in liability for: Amounts double the amount of security deposit, reasonable attorney fees and costs.

About TMG Property Management Services NW

TMG Property Management Services NW is here to help you navigate through the changing tenancy laws and ordinances in Oregon and Washington. Rated as one of the top property management firms in the Portland Metro area by the Portland Business Journal, TMG leads the way in full-service property management across Oregon and Washington. TMG Property Management Services NW is a branch of the TMG Family of Companies and provides fully integrated property management, asset management, and leasing services to multifamily and single-family homes.