The pace and scope of new rental laws across the United States has increased dramatically in recent years. As a result, keeping up with and complying with these regulations has become much more challenging for property owners and managers. We believe a landlord’s best approach in navigating these changes is to implement a carefully considered – and closely followed – set of procedures for selecting tenants and managing operations. New property management software gives owners and managers great tools to help refine and follow best practices.
Here we’ve assembled a sampling – certainly not complete or exhaustive – of the new regulations that are becoming common across the country. Depending on the location of your properties we highly recommend in-depth research or consultation with an attorney. Below we’ll discuss specific practices and tools to help navigate these new laws.
New rental laws in California
Rent control laws have been in place in many California cities, including San Francisco and Los Angeles, since the 1970’s. On January 1st2020 the AB-1482: California Tenant Protection Act of 2019(summary here) took effect, which extends regulations on increases in rent, as well as evictions, statewide. Any housing unit that was not previously covered by rent control – or “rent stabilization” – laws will now be covered by under this legislation. Most often, local rules are more restrictive on landlords than the new law is, and AB-1482 does not apply in those locations.
The significant impacts of the AB-1482 are:
- State-wide rent increases can not exceed 5% plus the change in the cost of living (also referred to as the “CPI” or “inflation rate”). This year the CPI is 4%, which would allow for no more than a 9% increase in rent. Only one increase per year is permitted, and rent cannot be raised by more than 10% in any given year. Buildings less than 15 years old are exempt.
- “Just cause” eviction rules are now applied state-wide. Landlords may only evict month-to-month tenants who have been residents for more than 12 months for breach of the rental agreement, or in some circumstances pertaining to the owner’s intended use of the property. Fixed-term leases still allow landlords to terminate a tenancy when they come to an end, however it’s wise to consult a lawyer when evicting a tenant under any circumstances. Buildings less than 15 years old are also exempt from the “just cause” eviction laws.
Nolo Press offers a California Landlord Bundle, a complete guide to navigating rental laws in California. Searching Nolo – be sure to select “articles” – also offers great in-depth analysis of all California rental laws.
New rental laws in NYC and New York State
Rent regulations are old news in NYC, some dating back to the post World War II era. Which units are covered by restrictions, and how they’re restricted, is complicated and is often manipulated by landlords as well as tenants. New rental laws, most applying to currently “rent-stabilized” (read: rent control), further restrict the amount of security deposit allowed, rates of rental increases, notice for rent increases, and conditions under-which eviction is permitted. Additionally, landlords will not be allowed to require new tenants to pay brokers fees, and de-regulating units or bringing them up to market rates has been made considerably more difficult.
The big news is passage by the New York State legislature of the Housing Stability and Tenant Protection Act of 2019. In addition to the tightening of restrictions on currently regulated rental units in NYC, the bill opens the door for municipalities state-wide to enact their own rental regulation laws. Along with Oregon and California, New York State leads the county’s move towards broad rent control laws. Here is a good summary of these new rental laws.
Rental laws in NYC, as in San Francisco, are VERY complicated and parsing-out the overlap between city and state laws is even now even more difficult. We recommend reading the articles linked-to above, and doing more research on your own if you need to know the laws in detail.
New rental laws in Washington
The City of Seattle is emerging as a pioneer in new rental laws, with many of the city laws coming to the legislation for statewide consideration. Here are some highlights of changes to rental laws in Washington over the last few years:
- Landlords may no longer consider criminal background in the selection of tenants.
- Landlords may no longer evict tenants during the months of December, January, or February.
- Rent increases for most tenants now require 60 days notice.
- “Pay or Vacate” notices based on unpaid rent must allow 14 instead of 3 days to be remedied.
- Deposits and fees charged at the outset of tenancy may not add up to more than one month’s full rent.
- Tenants may not be removed for failing to pay non-rent costs, which include late fees, damage costs, attorney’s fees, and deposits.
- Seattle’s “First-In-Time” law mandates that landlords set (and post in advertising) rigid criteria for the acceptance of applicants. Effectively this means no subjectivity may be used in the selection process – even in the case where a landlord wishes to lower their acceptance threshold based on an applicant’s situation.
- “Just cause” evictions for month-to-month tenants requires landlords to allow a tenant to stay in a unit for as long as they wish, unless certain very rigid conditions exist.
- Seattle requires landlords to offer payments plans to applicants who wish to spread out the expense of security deposits.
- Seattle now allows tenants to move-in family members, under certain terms, without having the landlord’s consent. New laws also make it easier for tenants to move-in roommates.
- Note: Rent control has been illegal in the State of Washington since 1984, so there are currently no restrictions on the amount of rent increases.
- Proposed in Seattle: Extending Just Cause law to term leases, effectively granting tenants the ability to renew their leases whether a landlord consents or not.
- Proposed: Despite the state ban on rent control, a proposal has been brought up in the Seattle City Council that would limit rent increases to the rate of inflation, and make it illegal to bring units up to market rents upon turnover. Only one increase per year would be allowed.
New rental laws in Oregon
Oregon was first to pass state-wide rent control law, though compared with cities such as NYC or San Francisco the terms are fairly generous. Property owners are limited to raising rents by 7% plus the rate of inflation in any given year. Upon turnover rent may be raised to market levels. Buildings newer than 15 years old would be exempt from the new law.
Governments have also passed “Just Cause” eviction rules, making the removal of tenants very difficult without a long and documented list of lease violations.
How property management software can help you navigate new rental laws:
Time stamp received applications
If your locality has new rental rules requiring that you process applications in the order received, taking applications online will allow you to document when you received them. The software also will ensure the applications are complete before submission so there is no wasted time asking and waiting for additional information from the applicant.
Online application software will also collect screening fees directly from the applicant tenant. In some places, a landlord cannot charge a tenant more than the actual cost of a screening report. An online application ensures compliance as well as notifies the applicant which credit bureau is being used.
Screen well, don’t discriminate
Objectively set criteria and use tenant screening reports to evaluate data.
Some places have created new rental laws that do not allow landlords to use criminal history in their rental criteria. Some software products like SparkRental allow landlords to choose which reports applicants must submit in their screening package. If you specifically do not ask for a criminal history report, you do not risk receiving criminal background and subjecting yourself to claims of unfair practices.
Pick and choose screening reports with SparkRental’s free Landlord App. Sign up for easy access!
Location-specific leases
Many states have their own rules and regulations regarding landlord tenant laws. Therefore, signing a location-specific lease with your tenant ensures you are abiding by any new rental laws that may govern your rental agreements.
Don’t delay: Create and send notices in a timely matter
Create and send adverse action notices for credit report not meeting criteria. If an applicant does not meet your credit criteria, you may be required to submit an adverse action report within a “reasonable amount of time” letting the applicant know the reasons of denial. The notice must also indicate the name and contact information for the credit bureau providing the score. Property management software will provide access to notices such as this, making it quick and easy to create one and send it to the applicant immediately.
Create “pay or vacate” notices in a timely manner. Some jurisdictions have new rental laws that lengthen this period from 3 to 14 days. Any additional delays in creating these notices might mean delaying eviction proceedings for months, if you have new rental laws that prevent landlords from evicting tenants in the winter. Property management software will ensure you use the correct forms, which makes it easier to properly complete them in a quick and efficient manner.
Collect rent online
Automatically collect rent online and add late fees if necessary. Software can make it easy and cheap to collect rent online. Landlords can ensure that rent has been sent on time, and not wait for the proverbial “check in the mail.” Software and also automatically include late fees if the tenant is submitting rent after the due date. Again, delays in following up with late or unpaid rent can mean the difference in finding a new, paying tenant before or after the winter months, as new rental laws in Seattle now dictate.
With Buildium, residents can authorize their bank accounts or credit cards in the resident site, and then set up a recurring payment schedule. Rent will never be late, because it’s deposited into your bank account automatically. Sign up for a free 15-day trial!
Set reminders
As rent control rolls through, it becomes ever more important to keep your rents at market rates, otherwise you may lose the ability to catch up later. Create reminders to get notified well before your leases expire to ensure compliance with rent increase notices. Most places have requirements outlining how far in advance landlords must give for rent increases. Many are passing new rental laws that extend this period to as much as 60 days in advance.
Furthermore, make sure you give yourself enough time to give proper notice and create a new lease. Otherwise you may find your previous fixed term lease has expired and turned into a month-to-month tenancy. And as a result, subject yourself to new just cause eviction ordinances and a limited list reasons to justify evictions.
With Buildium, each resident profile includes contact information and lease status. Store important documents in the cloud, and access them from anywhere at anytime. Sign up for a free trial today.
Taking Action
We use software tools to manage the many aspects of property management – from marketing through the end of tenancy – and we believe landlords large and small can benefit from doing the same. We’ve summarized some of the best products available here, with links to in-depth articles on each product.
Disclosure: Some of the links in this post are affiliate links and Landlord Gurus may earn a commission. Our mission remains to provide valuable resources and information that helps landlords manage their rental properties efficiently and profitably. We link to these companies and their products because of their quality, not because of the commission.
Feature photo by: Karla Alexander @ Unsplash
