Changes to Oregon Debt Collection Laws Under the Family Financial Protection Act

In a move aimed at bolstering consumer protections and easing the burden of debt collection practices, Oregon has taken significant strides with the enactment of the Family Financial Protection Act (SB 1595).

The FFPA, signed into law on March 4, 2024, introduces several key provisions designed to ensure fairness and transparency in debt collection processes. One notable aspect of the law is its emphasis on safeguarding consumers from abusive and harassing debt collection practices.

The FFPA will protect Oregon families while paying off debt or fighting unfair collections by:

  • Increasing the amount of wages that are protected from garnishment;
  • Protecting $2,500 in someone’s bank account so they can pay for their basic needs, like rent, while paying off debt;
  • Increasing protections to prevent Oregonians from losing their homes during debt collections;
  • Extending the amount of time consumers have to file a complaint against a debt collector to 3 years from the date of injury;
  • Protecting consumers from unfair attorney fees resulting from civil lawsuits for unlawful collections practices.

Before the enactment of the FFPA, Oregonians did not have adequate protections to ensure that bank account balances could be available to pay for necessities, had to  go through a difficult and expensive court process to get debt collectors to verify that they were going after the right person or the right amount, and only had one year to file a complaint but were often unaware of an unlawful debt collection practice until after the statute of limitations had run out. Meanwhile, collectors had six or more years to collect on a debt.

As an Oregon attorney, it’s imperative to stay informed about these changes to debt collection laws. By familiarizing yourself with the Family Financial Protection Act, you can effectively advocate for your clients’ rights and navigate the evolving landscape of debt collection practices in Oregon.

Sources:

To learn more about FFPA, register for the May 3, 2024 Consumer Law CLE Series: Changes to Debt Collection Laws Under the Family Financial Protection Act from 12 – 1 pm here.

Emily Templeton, Attorney                                                                                                                   LinkedIn                                                                                                                                           Underdog Law Office

Court Ruling Exposes Oregon Landlords to New Legal Liabilities

A fresh Oregon Court of Appeals opinion stands to expose landlords and property managers to a host of new legal claims, including punitive damages.

The ruling in Jackson vs KA-3 Associates, LLC decided that the landlord tenant act does not cover habitability issues in the common areas of apartment complexes. 331 Or App 574, 577 (2024). So, while landlords are now exempt from liability under the landlord tenant act for conduct pertaining to the common areas of their complexes, they face new heightened liabilities for the same conduct under Oregon’s Unlawful Trade Practices Act. ORS 646.605-656.

Before the Jackson opinion, tenants could not bring claims for unlawful trade practices against landlords because common areas were covered under the landlord tenant act. For instance, the landlord tenant act had historically been ruled to have covered common areas of apartment complexes, like common area garbage dumpsters, common area elevators, and any other areas outside a dwelling unit that were under the control of the landlord. See ORS 90.320(1)(f), (g). And Oregon’s Unlawful Trade Practices Act specifically did not apply to these common areas because they were covered by the landlord tenant act. See ORS 646.605(6)(b)(A).

However, after the Jackson opinion, landlords and property managers now face exposure to new legal liabilities for common area conditions under Oregon’s Unlawful Trade Practices Act, including claims not previously available under the landlord tenant act, such as punitive damages, statutory damages, and one-way attorney fees. See ORS 646.638; Ivie v. Mission Rock Residential LLC, No. 3:21-CV-01122-SB, 2022 WL 2612215, at *9 (D. Or. May 27, 2022) (denying a landlord’s motion to dismiss a tenant’s Unlawful Trade Practices Act claims because the claims were not covered by the landlord tenant act).

People familiar with the Jackson case expect the opinion to be modified on reconsideration or on appeal to the Oregon Supreme Court. But as of now, Jackson is good law, and until it is changed, landlords are now subject to claims for unlawful trade practices pertaining to the common areas of their premises.

The opinion of the Court can be read here: Jackson v KA-3 Associates, 331 Or App 574 (2024).

Written by Michael Fuller, Founder, Underdog Law Office

Courthouse Eviction Defense: What and Why

At 8 a.m. on a given weekday, at the Multnomah County Circuit Courthouse downtown Portland, we pick up a docket with between 30 and 50 tenants slated for a first court appearance in their eviction case. Few know when they walk in that 30-49 other people have the same hearing scheduled for 8:45 am, and any of them could be there until midday. Since January, 51% of Oregon’s eviction cases were filed in Multnomah County; most – 88% – were for nonpayment. Almost all begin and end without the person facing eviction receiving legal advice.[1]

Five days a week, tenants arrive before “first appearance” and find a seat in the Crane Room, an open lobby area with tall windows and ample tables and chairs. They wait to be called into the courtroom, where the judge does roll call through the day’s docket. A look around the Crane Room reveals people facing eviction are not a representative sample of Multnomah County’s population. There are more people of color, more women, and they are generally older.

In the Crane Room, 51% of tenants we helped identified as a Person of Color, compared to 31% in Multnomah overall.[2] Adults over 50 are the fastest growing homeless demographic in the county, are mostly homeless for the first time, and age 3-4X faster than their housed counterparts.[3] That tenants in eviction court reflect the homeless population is not a coincidence; eviction is the leading cause of homelessness.[4]

Members of The Commons Law Center’s Tenant Eviction Defense (TED) team walk around the Crane Room and approach tenants, who are unsure of what they are supposed to do next, asking if they are interested in free legal counsel for the day’s hearing. Usually, they have questions about the service, then are interested in speaking with our attorney. Something clients often say is I’m here because I can’t pay, so there’s nothing I can do to stop eviction. This is not necessarily true, but it shows that tenants know little about their rights and options even after they show up to court, where large television displays scroll through informational slides about new laws and available rental assistance, where rental assistance sits at a nearby table.

Over the intercom, sometime before 9 a.m., anyone present for a landlord-tenant matter is instructed to go to Courtroom A. The courtroom door opens and tenants sit and wait for the judge to roll call the cases. In most cases – 80% – a landlord lawyer or agent approaches the bench to show they are handling the negotiations for the plaintiff.[5] When called as defendants, tenants rise to show they are present and, if a tenant has requested our counsel, our attorney presents themselves on the record. The judge informs all tenants they will have an opportunity to negotiate with their landlord or landlord agent the same day; most tenants want to negotiate.

After roll call, tenants file back into the Crane Room and wait. There are many more tenants than landlord lawyers and agents and most have multiple cases, sometimes a dozen. Tenants who sign up to work with TED have to queue with other tenants who signed up, waiting for our attorney to be available to speak with the tenant and then the landlord’s representative to negotiate. It looks somewhat like a DMV, with people waiting anxiously, needing to get back to their jobs, kids, expiring parking meters. Unlike at the DMV, the stakes are high – tenants we speak to consistently say that they arrived at court scared and hopeless.

One tenant client, “Mary,” met us while crying softly in the courtroom and setting a trial date for her eviction case. She’d lived in her apartment for 14 years, was over 50, and primary caretaker for her sister, 67 years old, who lives with her. Mary did not know where she or her sister would go. They are their only family around and friends did not have space. Now that Mary’s sister is on disability and Mary’s back to working part-time, they could pay the rent but not catch up on the months they fell behind. A rental assistance agency had committed funds to Mary’s housing back in May 2023 but by October 2023 they had not been received. With our help, Mary connected with a different rental assistance agency, the landlord promptly sent the required information, Mary’s back rent was paid and her eviction case dismissed.

During negotiations, a landlord lawyer or agent will typically tell unrepresented tenants, based on the negotiating authority their landlord clients, who are not present, allow, that unless they can pay everything owed in a short amount of time, their choices are to move out or be evicted. For most tenants, paying in full in short order is not possible. Yet, for most tenants, avoiding an eviction and staying housed might both be possible thanks in large part to recent legislation.

Oregon’s HB 2001 (2023)[6] did a lot for low-income tenants evicted for nonpayment, allowing them up until the time of trial to pay the rent due listed on their eviction notice to require the case be dismissed. Multnomah County’s primary rental assistance agency, Bienestar, is also onsite in the Crane Room, accepting referrals and answering questions about individual cases for tenants and their lawyers.

With a modicum of legal advice, options widen for parents trying to keep their kids housed after an illness, injury, or job loss puts them behind on rent. They can set a trial date, which gives them at least two weeks to work with rental assistance and to earn, raise, and otherwise find the back rent they owe. A tenant might need help negotiating a move out, repairs, a behavioral agreement, or other terms with the landlord.

Most importantly, those who receive legal advice know how to avoid having an eviction on their record, a shared goal among TED’s clients. Disruptive displacement—having to move under unfavorable terms—leads to homelessness,[7] negative health outcomes,[8] interference in children’s education,[9] instability in communities,[10] negative impacts on credit scores, and makes it harder to rent again.[11]

Tenant eviction defense prevents disruptive displacement. In a randomized trial in New York City, “Tenants who were represented by attorneys were more than four times more likely to retain possession of their apartments than similar tenants who were not represented.”[12] Representation has drastically reduced disruptive displacement in San Francisco, Seattle, Philadelphia and many other cities.[13] Washington State passed a right to counsel program for tenants in 2021[14] and already 50% of tenants served through the program, whose outcomes are known, remain housed.[15]

Preventing evictions presents huge cost savings for shelters and other social support systems. A cost benefit analysis commissioned by New York City predicted that a program to represent tenants could recoup $3 to $6 for every dollar spent.[16] In fact, it is cheaper, period, to keep people housed than allow them to become homeless.[17]

Eviction also discriminates. In many cities across the U.S., Black tenants, particularly women as heads of Black households, are 2X as likely, or more, to be evicted.[18] In California, Latinx tenants saw similarly disproportionate eviction rates.[19] Recent scholarship argues that summary eviction proceedings are racialized and “one of the most violent acts resulting from a judgment of our civil courts.”[20]

Over six months of 2023, The Commons Law Center’s in-court Tenant Eviction Defense program served 516 tenants over 78 clinics. On clinic days, TED’s attorneys gave brief legal advice and helped negotiate nearly 20% of the matters on the docket. Of the tenants we served, 84% avoided having an eviction on their record, including 56% who kept their housing and 28% who agreed to move out.

Typically, with a team of just 1 lawyer and 1 paralegal or clerk, TED has been able to obtain majority favorable outcomes for about a fifth of Multnomah tenants on the eviction docket. The downstream effects of this simple intervention cannot be overstated.

No tenant should be disruptively displaced because they are unaware of their rights and opportunities, struggling to navigate the legal system under stress, or unable to negotiate on a level playing field with landlord lawyers. Policymakers have an opportunity to positively impact multiple overloaded systems by investing in legal advice for tenants facing eviction.

The National Coalition for a Civil Right to Counsel maintains a list of jurisdictions that have adopted some kind of right to legal counsel for tenants facing eviction.[21] In Oregon, local and state governments are responding. Oregon Housing and Community Services commissioned a report from the Oregon State Bar to explore the landscape of tenant representation, and is working with Oregon State Bar’s Modest Means Program and others to fund legal services for tenants facing eviction. Multnomah County and the City of Portland Housing Bureau have made significant investments.

As a result, Oregon Law Center’s Eviction Defense Project has doubled the number of lawyers practicing tenant law since 2020; Portland Community College’s CLEAR Clinic and Multnomah Public Defender’s Community Law Project have effective, ongoing and growing programs to serve tenants; and Portland State University’s Evicted in Oregon serves as a data clearinghouse. The Commons Law Center is proud to be among this group of committed justice advocates and looks forward to expanding our work to help more families stay housed.

By: Auden Friedman & Amanda Caffall

[1] Evicted in Oregon, By County: Latest Eviction Data. Updated on: November 15, 2023, https://www.evictedinoregon.com/by-county-latest-eviction-data (last visited on December 4, 2023).
[2]  Evicted in Oregon, By County: Latest Eviction Data. Updated on: November 15, 2023, https://www.evictedinoregon.com/by-county-latest-eviction-data (last visited on December 4, 2023).
[3] Sharon Meieran, 50 is the New 70: The rising epidemic of aging and homelessness 5 (2021).
[4] Andrew Scherer, The Case Against Summary Eviction Proceedings: Process as Racism and Oppression, 53 Seton Hall Law Review 18 (2022).
[5] By County: Latest Eviction Data. Updated on: November 15, 2023, https://www.evictedinoregon.com/by-county-latest-eviction-data (last visited on December 4, 2023).
[6] H.B. 2001. § 2021.
[7] Stout Risius Ross, LLC, The Estimated Cost of an Eviction Right to Counsel Outside of New York City 30 (2022).
[8] Ibid., 43.
[9] Ibid., 50.
[10]Ibid., 54.
[11]Ibid., 40.
[12] Stout Risius Ross, LLC, The Estimated Economic Impact of an Eviction Right to Counsel in Detroit 98 (2022).
[13]  Ibid., 97-101.
[14] ​​RCW 59.18.640
[15] Jim Bamberger et al., Report to the Legislature on Implementation of the Appointed Counsel Program for Indigent Tenants in Unlawful Detainer Cases 8 (2022)
[16] Stout Risius Ross, LLC, The Estimated Economic Impact of an Eviction Right to Counsel in Detroit 11,12 (2022).
[17] Ly A, Latimer E, Housing First Impact on Costs and Associated Cost Offsets: A Review of the Literature. 60 Can J Psychiatry 475-87 (Nov. 2015).
[18]Stout Risius Ross, LLC, The Estimated Cost of an Eviction Right to Counsel Outside of New York City 27 (2022).
[19] Stout Risius Ross, LLC, The Estimated Economic Impact of an Eviction Right to Counsel in Detroit 66 (2022).
[20] Andrew Scherer, The Case Against Summary Eviction Proceedings: Process as Racism and Oppression, 53 Seton Hall Law Review 2 (2022).
[21] National Coalition for a Civil Right to Counsel, Current Tally of Tenant Right to Counsel Jurisdictions (2022) http://civilrighttocounsel.org/highlighted_work/organizing_around_right_to_counsel (last visited December 4, 2023)

What Happens When You Finance a Vehicle at a Dealership

When consumers go in to an Oregon dealer to make a financed purchase of a vehicle, they usually walk out with completed documents believing they have finalized their purchase and financing. Nothing is farther from the truth. In fact, when a consumer enters into a financing agreement at a car dealer, very rarely is the contract final.

What Actually Happens at the Dealership?

If you have ever purchased a car from a dealer before, you are very familiar with the process. After you decide on a car you like, the salesperson asks, “how much can you do a month?” You tell them the number and they take it back to their manager to get the approval. They usually come back and say something like, “we can’t get you $400 per month but we can get $425.” After some back and forth, you both agree on a monthly payment amount that you can afford, and you go to the back room to sign the documents. You review the terms (the APR, the monthly payment amount, number of terms, etc.) and you and the dealer both sign. You shake hands, they hand you the keys, tell you “congratulations”, and you drive home with your new car. Everything is done, right? Well, not quite. There are some surprising things they likely did not tell you about.

  1. Financing was not final when you signed the financing agreement.

Yes, you read that right. The financing agreement (often called, Retail Installment Contract) that you and the dealer both signed is not final. At the time of signing, the dealer might have told you that they “got you financed at 4.9% interest and $410 per month with Oregon Community Credit Union.” What likely happened was they did not even submit an application to a lender, let alone receive an approval. What they actually did was they estimated that they can probably get you financed at 4.9% interest and $410 per month with Oregon Community Credit Union. The retail installment contract that you signed was an agreement where the dealer is giving you the loan for $410 per month with the option to sell that loan to a lender at that rate.

  1. They can change the lender without your approval.

After you sign the retail installment contract with the dealer, it then has 14 days to find a lender who is willing to purchase the loan at that rate. Even if the retail installment contract specifically states that the lender is Oregon Community Credit Union, the dealer can unilaterally choose to sell the loan to whatever finance company they want, as long as the loan terms remain the same. So don’t be surprised if you get a welcome letter from United Finance Company telling you to make your payments to them.

  1. You may have to return your newly purchased car.

Oftentimes, life isn’t that neat in the auto finance world. Sometimes, the dealer cannot find financing at the rate that they promised you in the retail installment contract that you and the dealer signed. Luckily for them there’s a built-in condition subsequent in the contract that allows them to either finance the loan in-house or cancel the loan, if they can’t find financing within 14 days of signing the contract. What does this really mean in practice? If they don’t like the contract you signed, they can back out of the deal, but if you don’t like the contract you signed, you cannot. If this does not sound fair to you, this is where the law steps in to make it slightly more even.

If the dealer calls you to sign new paperwork because they were not able to find financing for you at the rate you both agreed on, the law allows you to unwind the deal and get all of your money back. The dealer may attempt to keep your down payment, but that is illegal under ORS 646A.090.

  1. They can cancel the deal if they want to.

If you’re thinking all of this doesn’t sound right, you’re not alone. Dealers often present the terms in the finance office as if that is a final and binding contract, and they rarely say there’s an option to unwind the deal if the financing fails. If the consumer wants to unwind the deal the next day because they find out they cannot afford the payments, dealers never allow the consumer to unwind the deal. But if the dealer can’t fund the deal, they can get out of the contract, risk free. This is clearly not a fair situation for consumers.

  1. We need a change in the statute.

That is why in 2023, lawmakers proposed a bill (HB 2801) to prevent dealers from creating an option to cancel the contract. What this means is if the dealer and the consumer sign a contract, that contract is final at the time of signing. Although HB 2801 seems like a no-brainer, it did not pass out of committee. The bill was sent to a workgroup, and it will be discussed outside of committee with the hope of coming back to life in the next session. With any luck and lots of hard work, HB 2801 will pass, and the statute will finally reflect what the average Oregonians believe is happening when they sign a contract to purchase a car.

By Young Walgenkim

Carter-Jones Collection Service, Inc. v. Ingersoll, Klamath County Case No. 20CV13195

Medford attorney Matthew Sutton recently defended consumer Jay Ingersoll at a three-day jury trial in Klamath County Circuit Court against medical debt collection agency Carter Jones.  Ingersoll had a low income and was eligible for financial assistance when health problems forced him into Sky Lakes Medical Center in 2019 to 2021.  Sky Lakes is a non-profit hospital that receives state and federal funds.  Nonetheless, Sky Lakes made $10,000,000 to $20,000,000 dollars in profit each of those years.  Sky Lakes’ witnesses admitted at trial that it was required to use those profits to provide a public benefit, specifically including providing financial assistance to eligible patients.  But Mr. Ingersoll fell through several glaring cracks in Sky Lakes’ financial assistance programs and ended up in collections over $14,000 in charges.

Mr. Ingersoll was uninsured, which Sky Lakes calls “self-pay.”  Given that everyone else pays far below the hospital’s list prices—Sky Lakes’ financial services director testified that nobody pays them—it offers an “automatic” 25% discount to self-pay patients.  The discount was only automatic, however, if the self-pay patient called and requested it.  But Sky Lakes did not tell patients about the 25% self-pay discount so, like Ingersoll, they didn’t know to call and ask for it.  By the time of trial, Sky Lakes purported to have corrected this policy and now applies the 25% discount as soon as it learns a patient is uninsured.  Carter Jones nonetheless tried to collect the full list price amounts.

Sky Lakes also mislead Ingersoll and other eligible patients with unclear, false, and inconsistent statements about its financial assistance policy.  He applied for and received financial assistance in mid-2019, reducing some of his medical expenses by 90%.  Sky Lakes witnesses variously testified that such financial assistance approvals covered either the previous 12 months, the whole calendar year, or the 12 months following approval.  In contrast, Sky Lakes documents variously stated that patients must apply for financial assistance separately every time they receive services and, as to Ingersoll, stated that his financial assistance would only apply for a few months.  It did not even honor that date.

Each time Mr. Ingersoll went in for services, he would tell Sky Lakes that he did not have health insurance “but it’s OK, I’m on financial assistance.”  No one at Sky Lakes told him that was not the case, let alone treated his statements as new financial assistance applications, even though it tells patients they can seek financial assistance in person and at any time.

For this and other reasons, Ingersoll fell behind on his payments and Sky Lakes sent him to Carter Jones for collections.  His parents were elderly and ill.  Caring for them increasingly required all of his time and energy after work.  They passed away a couple years apart before and after the Covid pandemic, at which point he was laid off from his job.  Neither Sky Lakes nor Carter Jones told him that he could still apply for financial assistance even though he was in collections, or that they would have to apply such an application to all the bills he had received during the 288 days before the application.  Ingersoll asked Carter Jones that he be permitted to make $100 monthly payments, probably more than he could afford, but Carter Jones just laughed at him.  It filed suit in March 2020.

Months before the trial, the judge granted summary judgment for Mr. Ingersoll on the Account Stated claims and for Carter Jones on its Goods Had and Received and Quantum Meruit claims, awarding all the damages Carter Jones sought.  According to its attorney, Carter Jones nonetheless went to trial on the only remaining claims, for Action on an Account, because it wanted to make Ingersoll pay its attorney fees.

Attorney Matt Kirkpatrick, with support from Oregon Consumer Justice and Robert Le’s paralegal, Lucia Becchetti, joined Matthew Sutton as co-counsel for the trial in Klamath Falls on July 12 to 14, 2023.  Voir dire included around 80 prospective jurors who came from up to two hours away.  Many jurors were stricken because Carter Jones had also pursued collections against them or their family members.

On the morning of the last day of trial, the judge rejected Ingersoll’s proposed Action on Account jury instruction and prohibited any evidence about the reasonableness of Sky Lakes’ charges, saying she had already ruled, on summary judgment, that the charges were reasonable as a matter of law.  The jury nonetheless ruled for Ingersoll on two of the six Action on Account claims.  It also ruled that Sky Lakes did not charge Ingersoll interest, did not assign interest to Carter Jones, and waived any claim for pre-judgment interest.

Mr. Ingersoll is expected to appeal the summary judgment rulings and the four claims the jury decided in Carter Jones’s favor.  He will also argue, in his related federal lawsuit, that Carter Jones is bound by the jury’s determinations about prejudgment interest and therefore violated the Fair Debt Collection Practices Act by attempting to collect more than $5,000 in interest to which it was not entitled.

Matthew Kirkpatrick

Navigating the Consumer Legal Landscape as a Young Lawyer

As a young lawyer, setting out on your legal journey, you’re likely exploring the myriad of specialties within the legal field. One area that deserves your attention is consumer law. In an increasingly complex marketplace, the role of a consumer law attorney has never been more crucial.

So, what does it mean to be a consumer law attorney?

Championing Consumer Rights

At its core, consumer law revolves around safeguarding the rights and interests of individuals in their interactions with businesses, products, and services. Consumer law attorneys act as champions for ordinary people, working diligently to ensure that their clients are treated fairly and justly. This can involve cases ranging from deceptive advertising and faulty products to debt collection abuses and unfair business practices.

Expertise in Regulatory Frameworks

A significant aspect of consumer law involves understanding and navigating the intricate web of state and federal regulations that govern consumer transactions. Consumer law attorneys must be well-versed in statutes like the Consumer Protection Act, Fair Debt Collection Practices Act, Truth in Lending Act, and others. Mastery of these regulations enables attorneys to guide clients through complex legal proceedings, offering them protection against unscrupulous practices.

Diverse Case Portfolio

Consumer law encompasses a diverse range of cases, making it an exciting field for young lawyers seeking variety in their work. One day, you might be helping a client resolve identity theft issues, while the next, you could be litigating a class-action lawsuit against a multinational corporation. This diversity keeps attorneys on their toes and requires adaptability and creative problem-solving skills.

Educating and Empowering Clients

An essential role of a consumer law attorney is to educate clients about their rights and options. Often, consumers are unaware of the protections available to them or are intimidated by powerful entities. Consumer law attorneys bridge this gap, providing clients with the information they need to make informed decisions and assert their rights confidently.

Advocacy and Impact

Being a consumer law attorney means more than just legal practice—it means advocating for change. By representing individuals who have been wronged by unfair business practices, attorneys contribute to the evolution of consumer protection laws. Their work can drive positive changes in industries, hold corporations accountable, and set precedents that impact countless individuals.

Conclusion

Consumer law is a dynamic and impactful legal specialty that offers young lawyers the chance to make a real difference in the lives of everyday people. It requires a deep understanding of regulatory frameworks, a passion for justice, and a commitment to fighting for the rights of consumers. If you’re driven by a desire to level the playing field between individuals and corporations, a career as a consumer law attorney could be your path to a fulfilling legal practice.

Emily Templeton, Attorney                                                                                                                   LinkedIn                                                                                                                                           Underdog Law Office

Additional landlord tenant updates from the 2023 legislative session

The 2023 legislative session was a stormy one, but now that it’s over and the dust has settled a bit, there are two significant changes to Oregon landlord tenant law, in addition to the major restructuring accomplished by HB 2001. The two additional changes in the 2023 session involve an updated cap on rent increases (SB 611), and changes to service methods for notices in residential tenancies (SB 1069).

SB 611, passed on the final day of the session, amends the cap on rent increases in residential tenancies to limit price hikes during high-inflation periods. Previously, Oregon law capped rent increases at 7% plus the annual consumer price index (CPI). Because the CPI in 2022-23 was so high, annual rent increases of up to 14.6% were permitted.

To prevent similar unpredictable increases in future, SB 611 amends ORS 90.323, 90.324, and 90.600 to limit rent increases to the lesser of 7% plus CPI (the current cap) or 10%. In other words, in high-inflation years, the maximum rent increase for residential tenancies is 10%. In years with lower inflation, the maximum increase would be lower. This change adds predictability for landlords and tenants, who now know what the maximum annual rent increase can be and can budget accordingly. SB 611 also limits rent increases to once in any 12-month period.

SB 611 does not change existing provisions exempting from the rent-increase cap residential landlords who rent units that have certificates of occupancy less than 15 years old, or units that are subsidized and the increase either does not increase the tenant’s portion of the rent or is required by the terms of the subsidy program.

SB 611 applies to all notices of rent increase issued on or after the bill’s effective date.

SB 1069, which does not take effect until January 1, 2024, amends ORS 90.155 and related statutes to permit residential landlords and tenants to serve notices by email, if the parties agree to do so by separate written addendum to the rental agreement. SB 1069 also allows landlords to return funds to tenants, including security deposits and rent refunds, by electronic means, if the parties have agreed to such electronic delivery in a written agreement. Significantly, however, notices terminating a tenancy, if served by email, must also be served by first class mail.

By Emily Rena-Dozier

2023 Updates in Tenant Law

Governor Kotek recently signed into law HB 2001 which modifies the rights and obligations of landlords and tenants in Oregon. The bill expands the protections afforded to tenants under the Oregon Residential Landlord Tenant Act (ORLTA).

First, the bill allows for a tenant to pay any past-due rent to a landlord at any time during an eviction case for non-payment of rent in order to dismiss the case. This is basically a redemption right for the tenant. If it is the day before an eviction trial, the tenant can tender past due rent to the landlord and the case will be dismissed. If this happens, the tenant will not be allowed to recover their attorney fees or costs and the landlord can recover its filing fees. Basically, a dismissal after a tenant tenders past-due rent means neither party will be considered the prevailing party for the purpose of attorney fees and costs under ORS 90.225. This gives Oregon tenants extra time, if they fell behind on rent for whatever reason, to get back on track and avoid being saddled with an eviction conviction on their record.

Second, the Bill extends the time periods for the right to cure a past-due rent under ORS 90.394. 90.394 is modified to 10 days or 13 days for the right to cure unpaid rent before an eviction can be filed. Previously, a landlord could issue a 72-hour notice of unpaid rent on the eighth day of the rental period or a 144-hour notice on the fifth day of the rental period. Both are functionally identical in that they require the tenant to cure the unpaid rent by the eleventh day of the rental period. But now, the landlord can give 10 days’ notice on the eighth day of the rental period or 13 days’ notice on the fifth day of the rental period. So, the tenant can cure unpaid rent by the 19th day of the rental period. This gives a tenant who falls behind on rent an additional eight days to pay the rent without the landlord being able to file an eviction case.

Third, the Bill imposes additional inquiry requirements by the court prior to entering a default judgement against a tenant who declined to appear at an eviction hearing first appearance. Previously, if a tenant did not appear at the initial hearing in an eviction case, the landlord was automatically granted a default judgment for possession. No questions asked. But under the new standard, the court is required to make an independent finding that the complaint complies with certain procedural and technical requirements imposed by law. These technical and procedural requirements are frequently some of the most effective defenses a tenant has to eviction, but without a lawyer to identify and explain them, very few tenants would recognize they have such a defense. In addition, the landlord is required to submit an affidavit swearing under oath that the tenant is still in possession of the premises prior to obtaining a default.

Finally, the Bill sets up a system for the court to automatically set aside old eviction convictions. The court is required to annually conduct an internal, independent inquiry as to what eviction judgements have been satisfied and seal those records. Qualifying judgments are those where (1) any money award has expired or been satisfied or discharged, (2) at least five years have passed from the date of judgement or the judgement was by stipulation of the parties and twelve months have passed from the date of judgement. If an eviction is set aside, any prospective tenant when asked the question, “have you ever had an eviction entered against you?” can truthfully and legally answer, “no.” Prior evictions are one of the greatest barriers to low-income tenants procuring secure housing. And most renters are not even aware of the option to expunge an eviction record.

This new Bill demonstrates a continued movement to expand tenant rights in Oregon and address the obvious and drastic imbalance of power between landlords and tenants. The Bill is only one step towards true housing equality, but at least it is in the right direction.

-Kevin Mehrens

INTRODUCING THE OREGON STUDENT LOAN OMBUDS

Student loan borrowers experience significant burdens beyond their loans’ repayment costs, including servicer misconduct and inefficiency, an oblique collections process, and system complexities. In response to these difficulties, Oregon recently passed legislation creating a student loan ombuds within the Oregon Division of Financial Regulation. The legislation, codified in ORS 725A.500 through 725A.530, also requires federal and private student loan servicers operating in Oregon to obtain licensure with the Division.

The ombuds’ primary responsibilities include receiving and attempting to resolve consumer complaints against servicers, monitoring and recommending changes to the student loan policy landscape, and developing a comprehensive statewide education program for student loan borrowers.

Lane Thompson was hired in June 2022 to serve as Oregon’s first student loan ombuds. Since then, she has contributed to the development of a website for student loan borrowers and an online complaint form for borrowers to submit for consideration. In addition, Thompson has spoken directly with dozens of borrowers and given numerous presentations regarding her role and Oregon’s new student loan legislation. Thompson also ran a communications campaign about the since-expired waiver for expanded borrower eligibility under the Public Service Loan Forgiveness program.

On August 24th, 2022, The Biden/Harris administration announced loan relief of up to $20,000 for eligible borrowers. This relief is blocked by federal appellate court orders, which the administration has appealed.  SCOTUS will hear arguments on the relief program in February 2023.  In response to the delay in implementation, the student loan repayment pause has been extended to June 30, 2023, or 60 days after the courts render a final decision. Once the payment pause expires, borrowers will be responsible for making loan payments, many for the first time. In addition, nearly half of all federal loans have recently been transferred to new servicers. Thompson strongly recommends that borrowers begin planning for the reinstated payments. This includes budgeting and confirming loan details with their current servicer.

Finally, the student loan industry is rife with scams. The Division recent published an alert to notify the public of their prevalence. More information regarding scams can be found on the Division’s student loan website, along with a list of borrower rights, links to resources, and responses to frequently-asked questions. The site also includes Thompson’s direct contact information.

New Court of Appeals Cases in Landlord Tenant Law (2022 Edition)

The Oregon Court of Appeals has decided two cases impacting tenants and the Oregon Residential Landlord Tenant Act (ORLTA) in the first half of 2022; Shepard v. Ormandy, 320 Or App 521 (2022) and Thomas v. Dillon Family Ltd. P’ship II, 319 Or App 429 (2022).

 Shepard v. Ormandy, 320 Or App 521 (2022)

In Shepard, the court addressed the appropriate tenant remedy when a landlord wrongfully charges the tenant for utilities in violation of ORS 90.315(4)(b).

ORS 90.315 is a lengthy, convoluted section of the ORLTA that controls the methods through which a landlord can bill its tenants for utilities.  When a landlord is charged by a utility company and passes those charges on to the tenant, a common scenario in an apartment building without separately metered units, then the tenant’s bill must include either:  (1) a copy of the utility company’s bill or (2) include a disclaimer stating that the tenant has the right to inspect the bill if they want. ORS 90.315(4)(b)(C). “If a landlord fails to comply . . . the tenant may recover from the landlord an amount equal to one month’s periodic rent or twice the amount wrongfully charged to the tenant, whichever is greater.” ORS 90.315(4)(f).

In Shepard, the landlord billed the tenant each month, for twelve straight months, without including the utility provider’s bill or the required disclosure.[1]  At trial, the plaintiff/tenant argued, and the trial court agreed, that they were entitled to 12 months’ rent because the landlord violated the statute 12 separate times by sending 12 bills without the required disclosure.

The Court of Appeals overturned the trial court and held that the proper measure of damages was either twice the total amount wrongfully charged over the entire twelve-month period or one single months’ rent for all twelve instances of non-compliance.

The Court of Appeals reasoned that the “legislature chose language that does not direct a deciding court to award one month’s periodic rent or twice the amount wrongfully charged the tenant, whichever is greater for each and every separate noncompliant bill sent by a landlord, and the legislature would have included language to that effect had that interpretation been intended.” Shepard, at 531.

As a result, in Shephard, the tenant was required to choose between $1,920 (double the $960 wrongfully charged among over the full 12-month period) or a single months’ rent of approximately $754.  Under the trial court’s reasoning, the tenant would have been entitled to 12-months’ rent totaling $9,050.

This, of course, represents a huge difference in damages for a tenant. And this holding will massively restrict a tenant’s ability to bring a suit against a landlord who fails to comply with the statute. By restricting the possible recovery to only one instance of one-month’s rent, tenant advocate attorneys will be hard pressed to convince their clients that such a lawsuit is worth the tenant’s time. And tenant attorneys need to be aware of this decision in weighing whether such a claim is worth bringing to them or their client.

Thomas v. Dillon Family Ltd. P’ship II, 319 Or App 429 (2022)

In Thomas, the court of appeals determined that a landlord cannot raise a comparative fault defense in a habitability claim brought by a tenant.

The tenant brought a habitability complaint against the landlord based on the landlord’s failure to properly maintain the unit’s refrigerator after slipping on water leaking onto the kitchen floor and sustaining multiple injuries.  The landlord learned of the malfunctioning refrigerator the day before the tenant slipped. The day after the slip and fall, the landlord repaired the refrigerator.

In its answer to the suit, the landlord asserted a comparative-fault defense, essentially arguing that the tenant’s injuries were caused by her own negligence and not the result of a habitability defect of the property. The Court of Appeals held that the landlord cannot claim comparative fault as a defense in the context of a habitability claim by a tenant.

ORS 90.360 states that “Except as provided in this chapter, if there is a material noncompliance by the landlord . . .  with ORS 90.320 (Landlord to maintain premises in habitable condition)” the tenant may recover damages (emphasis added). The Court focused on the except as provided in this chapter language in holding “[w]e understand that plain text to provide that any limitations on the recovery of damages or injunctive relief must be found exclusively in ORS chapter 90—the ORLTA—and not outside of that chapter.” Thomas, at 434.  Since the ORLTA does not provide a landlord with a common-law, comparative fault defense, the landlord cannot claim one in defending a habitability claim brought by a tenant.

The landlord’s duty to maintain the property in a habitable condition is absolute. The ORLTA is a strict liability set of statutes. See e.g., Humbert v. Sellars, 300 Or 113 (1985); Brewer v. Erwin, 287 Or 435 (1979). If a habitability violation exists, the landlord is strictly liable for damages resulting form that violation, unless the ORLTA itself carves out an exception. A tenant need not prove that a landlord was negligent as a part of a habitability claim, only that the habitability condition existed and the landlord either knew or reasonably should have known of its existence. See, Davis v. Campbell, 144 Or App 288, 293 (1996) (holding that the legislature did not incorporate “common-law negligence principles as predicates to recovery of damages under [ORS 90.360]”).

This ruling eliminates an oft-used avenue for landlords to escape or massively limit their liability for habitability defects. No longer will tenant attorneys have to argue at a motion to dismiss or summary judgement that the tenant is at least partially, if not wholly, at fault for damages resulting from a landlord’s habitability violations. This greatly increases the ability of tenants to demand living conditions that conform to basic concepts of habitability and greatly increases tenants’ incentive and ability to demand remuneration for injuries caused by those violating landlords.

[1] Claims would be limited to twelve months’ worth of billing pursuant to the ORLTA one-year statute of limitations. ORS 12.125.