These days one of the most common question I hear from smaller landlords goes something like this: “How can I terminate my tenants if I want to sell my rental?”
When I first hear it, I wonder where these folks have been for the last few years? But I realize how complex newer tenant protection laws have become! So, I roll up my sleeves and start “the chat”…
The answer is “You cannot terminate your tenants in order to sell your rental.”
In 2019 the Oregon Legislature passed SB 608. This law specifically eliminates the option of terminating a tenancy after the tenant’s first year of occupancy for anything other than a For Cause eviction (or by proving there were 3 documented violations during the current lease), and it only allows four landlord-based exclusions for tenant terminations: 1) property demolition, 2) undertaking major repairs, 3) an owner or family member intending to re-occupy, or 4) the sale of the unit.
But here’s how it works: The exclusion for the sale of a property requires that the owner provide written evidence to the tenant (after the property has already been sold) that the purchaser intends to owner-occupy the unit. The tenant then has 90 days, or the lease termination date (whichever is longer) to move out. When serving that notice, the owner must show the tenant the Purchase Contract and pay any applicable relocation fees to the tenant, as required by the state and/or locality.
“So,” the landlords ask, “we can’t evict the tenants so we can get into the property to fix it up, to help us get ‘top dollar’?” No.
“And we have to list the property for sale while the tenants still live there?” Yes.
“Then we can only have it shown to prospective buyers by posting a 24-hour notice of entry?” Yes.
“But isn’t it common that a tenant occupied listing is harder to sell and that it doesn’t show as well because they don’t really want to move?” That is the historically based stereotype, yes.
“And after all that, we still have to pay them a relocation fee to move out?” In Portland, yes. In the rest of the state yes, but only if you own 5 or more units.
“Why is the government making it so hard on landlords these days?!” I have no good answer for that.
The logic behind SB 608 was to keep tenants housed by preventing no-cause terminations and capping the amount of rent increases per year. The eviction moratorium during the pandemic added a host of additional burdens and regulations, and it heightened owner anxieties. Consequently, even while most tenants have continued to pay rent during this time, many landlords have become ever more agitated over the increasing risks of owning rental properties.
Thus, many are considering to just get out of the business, and that’s when they call.
With all this discussion, what seems to be the outcome of all these calls and concerns? After a moment of initial confusion, the frustration subsides. Many feel stronger about selling. Many others pause…
I once heard that “confusion leads to doubt; doubt leads to fear; and fear leads to the desire to escape” (the flight or fight response). It is hard to fight an invisible enemy. It’s as though a new “housing pandemic” has been stimulated, and the deadly symptoms of this disease are fewer rentals due to sales and more tenants with higher rents. With the current legislative trends, there does not seem to be any immunity in sight.
Maybe we need a new vaccination – one that prevents the spread of greater state regulations against landlords – one that might actually balance tenants’ rights with those of housing providers. If there is any way to fight this virus (instead of giving up) perhaps we should emulate the model we’ve lived through in the last year; social distancing, self-quarantines and wearing masks.
In the rental housing business, we can translate those actions into: staying up to date with new laws, avoiding conflict with tenants, and keeping our properties well maintained.
As for getting that “shot in the arm”? Maybe it’s time we all roll up our sleeves and just go out and buy another rental in order to cure and save the system!