As of March of this year, Portland City Code 30.01.087 led to big changes in Portland home management. If you’re a landlord with tenants or a property owner considering whether to rent, these updated guidelines may affect you. From setting the amount that a landlord can charge in the security deposit to requiring documentation throughout a tenancy, there are many new regulations to navigate.
At Rent Portland Homes by Darla Andrew, we bring our years of expertise in Portland home management to the table when dealing with new ordinances such as these. Here are a few tips for landlords who have rented or intend to rent their property after March 1, 2020.
How Much Can You Charge For A Security Deposit?
The maximum security deposit you can charge depends on whether you require prepayment of the last month’s rent. If you do require prepayment of the last month’s rent, you can charge no more than half of one month’s rent for the security deposit. Alternatively, if you do not require the last month’s rent up-front, the security deposit can total up to one month’s rent.
Lastly, if you approve a tenant conditionally, you may require an additional half a month’s rent on top of the security deposit. The tenant must have the option to pay the additional deposit in installments for up to three months.
How Do You Handle The Security Deposit?
Of course, Portland home management involves much more than finding tenants and making repairs. By law, you must also keep careful track of your finances. Portland City Code 30.01.087 specifically defines how landlords must handle the money from a security deposit. You must keep the deposit and prepayment of the final month’s rent in a separate bank account. Furthermore, landlords must deposit the funds within two weeks of receiving them. They must also provide the bank’s name and address in your rental agreement.
If the account earns interest, you must return those additional funds to the tenant at the end of the tenancy. You can hold back five percent of the interest, however, for administrative costs. The tenant can request an annual accounting and receipt of interest earned.
What Documentation Should You Provide?
When a tenant moves into your property, you must provide them with a Condition Report. This report lists the condition of all “fixtures, appliances, equipment, and personal property” in the rental agreement, as well as their value and replacement cost (accounting for depreciation). It must also include the condition of the leased premises and note any existing damage. The tenant then has seven days from the beginning of their lease to complete a Condition Report of their own, which will flag any other damage.
If the tenant doesn’t submit a Condition Report within the seven-day timeframe, a landlord should provide the tenant with a Condition Report, including digital photos, by the 17th day of the tenancy. These Condition Reports provide a foundation for future questions or negotiations. When navigating the business of Portland home management, a thorough accounting at the beginning of a tenancy is key.
If you make any repairs during the tenancy, make a note of the cost deducted from the deposit within 30 days. Also, be sure to update the Condition Report and provide the tenant with an updated copy. Portland home management can get complicated due to these stricter regulations. However, carefully following them will save lots of trouble in the long run.
What Costs Can You Deduct?
When a tenant terminates their lease, it’s time to assess what portion of the security deposit you might need to withhold. Portland’s home management regulations make some specific provisions. Within seven days of the tenant ending their tenancy, conduct a walkthrough with the tenant to assess the unit. During this walkthrough, you must document any new damage beyond ordinary wear and tear.
The cost of repainting the walls, cleaning carpets and floors, or other unavoidable issues cannot be deducted from the security deposit, unless excessive damage requires a more costly repair. However, here are the things landlords can deduct from the deposit.
- Repair and replacing fixtures, appliances, equipment, or personal property listed in the rental agreement if the damage was the tenant’s fault.
- The actual cost of repairing the unit to its condition at the beginning of the lease.
Landlords can deduct a broad range of costs from a tenant’s deposit. However, Portland home management law carefully specifies the things they are not allowed to deduct. Here are a few things you are not entitled to deduct from your tenant’s security deposit:
- Routine maintenance.
- Ordinary wear and tear, including cleaning the floors and repainting.
- Replacement of appliances or fixtures damaged through no fault of the tenant.
- Repairing damage listed in the Condition Report as having existed before the tenant moved in.
- Any costs that a landlord’s insurance policy or warranty will reimburse.
Once you’ve determined what you need to deduct from the deposit, you must take action within 31 days. In that time, either return the tenant’s security deposit or send an accounting of the deductions. Photograph all damage. Then make sure that you are not attempting to charge the tenant for any damages listed in the Condition Report. Within the same 31 day window, you must also provide the tenant with a Notice of Rights relating to their security deposit.
The city code carves out a few more details for property owners in the Portland home management business. For one, if a portion of the floor is damaged, you can use some of the security deposit to replace it. However, you cannot replace all of the flooring if only part of it is damaged. And remember, you must base the replacement or repair cost for any damaged items on their depreciated value.
Keep Up To Date On Portland Home Management
The legal ins and outs of Portland home management are complicated. However, landlords who don’t follow these regulations may face heavy penalties. An adverse court decision could force you to pay double the amount of the security deposit, plus attorney fees and costs. In all likelihood, neither you nor your tenant wants to get tangled up in a legal battle. By remaining aware of changing ordinances, you can protect yourself from hassles and financial setbacks.
If you’re looking for a guide through the tangle of local and state property regulations, Rent Portland Homes by Darla Andrew is at your service. We’re experts in Portland home management with years of expertise. Rather than spending your time double-checking regulations, let our team handle the details. We’ve seen many changes to the Portland home management legal landscape, so we know how to stay ahead of the curve every time the law changes. We handle all interactions with the tenant, including managing the security deposit. If you’d like to learn more about what we offer, call or text us at (503) 515-3170 or fill out the contact page on our website.