Background. Hickey v. Scott was an eviction action. Under the lease at issue, the tenants were to pay a $1,500 security deposit and $850 in monthly rent. Upon move-in their landlord received the $1,500 as a subsidy from a not-for-profit institution, but only $525 in “rent” from the tenants. Two months later the landlord issued the tenants a notice of nonpayment saying that they must pay $1,700 (two month’s rent at $850/month) to cure or face eviction. The tenants did not pay, and the eviction was filed.
The trial court sided with the Landlord on the eviction but ultimately determined that the tenants only owed $1,175 (i.e., the remaining $325 of the first month’s rent ($850 - $525), plus the full $850 for the second month). The tenants appealed contending that, because the Landlord asked for an overstated amount, the 72-hour notice was defective, and the case must be dismissed.
The Court of Appeals agreed with the Landlord, upholding the trial court’s eviction. The tenants appealed to the Oregon Supreme Court, who disagreed with the Court of Appeals and trial court. It held that the eviction notice was faulty since the notice sought an overstated amount of rent due and therefore automatic dismissal was required.
Supreme Court’s Reasoning. The Court’s written opinion engaged in both statutory interpretation and an expanded look at the nature of the landlord-tenant relationship.
- Statutory Interpretation. The Court reasoned that an FED proceeding requires two events: (a) That the tenant violated the rental agreement in some manner, and (b) That the landlord delivered a valid notice of termination.
While it wasn’t disputed that the tenants had violated their rental agreement by failing to pay their rent, the landlord had not provided a valid notice of termination because the 72-houe notice had overstated the amount of money required to cure.
In short, the Court’s interpretation of ORS 90.394(3) was that there be a specific sum due and a date and time within which the tenant had cure. This led to the inescapable conclusion that the rent demand must be accurate. Overstating the demand, even innocently, renders the notice invalid and requires a dismissal of the case. Understating it is OK.[2]
- Landlord-Tenant Relationship. The Court also acknowledged that there is an imbalance of power in the landlord-tenant relationship. Because of their business, landlords are in the best position to accurately determine the amount they will accept to cure the tenant’s default. If the landlord’s notice is wrong, the case is dismissed, but the eviction can be refiled seeking the proper amount.
Where Does This Leave Oregon Landlords? The Court recognized that the ruling appears to be overly harsh to landlords, since there is no requirement that a landlord act in bad faith. An innocent mistake over the amount due will merit a dismissal just as quickly as an intentional act.
Landlords have two options if their claim is dismissed for an invalid notice.
- Option #1. If an FED is dismissed because the Landlord overstated the amount due in the termination notice, the landlord may re-issue a notice with the correct amount and immediately re-file the eviction. It is the summary nature of FEDs, i.e., the speed with which a landlord may have the case decided, that requires absolute accuracy.
- Option #2. In Hickey, the Court was only concerned with landlords overstating the amount of rent due. The Court, however, had no problem with a landlord stating an amount of rent necessary to cure that is less than the full amount of rent due. They make a distinction between the amount that will be accepted to “cure” versus the amount “owed.”[3]
MHCO Form Changes. MHCO Form 82A, the ten-day notice of nonpayment of rent has been modified (a) to encourage tenants to notify management if they dispute the “Total Rent Due,” and (b) to encourage landlords to (i) make sure the “Total Rent Due” is accurate, (ii) if the amount is disputed, to verify the figures, and (iii) if there are questions, to check with legal counsel before proceeding.
Conclusion. Landlords should use caution to accurately determine the amount of outstanding rent due before issuing the notice of nonpayment. The risk for having an overstated figure is automatic dismissal of the eviction.
If an accurate amount is difficult to arrive at, or there is disagreement over the amount, landlords should consult with their legal counsel. One consideration may be that rather than risking an overstated disputed amount, is to accept a lesser amount to cure. An inaccurate, but lower, estimate of the outstanding rent will not trigger an automatic dismissal, and if that sum is not paid, the eviction will still be legal.
[1] Note, the facts of this case arose in 2019, before the Oregon Legislature changed the 72-hour notice of nonpayment to a 10-day period. However, the Hickey ruling would apply regardless of the applicable cure period. ORS 90.394 (Termination of tenancy for failure to pay rent)(3) provides: “The notice described in this section must also specify the amount of rent that must be paid and the date and time by which the tenant must pay the rent to cure the nonpayment of rent.”
[2] "Based on our reading of ORS 90.394(3), the operation of the ORLTA, and the processes laid out in the FED statutes, nothing precludes a landlord from issuing a valid termination notice that states an amount of rent necessary to cure that is less than the amount of rent that is presently due." See page 114, Opinion.
[3] Note, however, ORLTA allows a landlord to refuse a tenant’s tender of rent for less than the full amount due. See ORS 90.417 for a discussion about rent tenders and partial rent agreements.
