Phil Querin Article: March 1, 2022 - End of the Grace Period in Oregon

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Background

 

Emergency Period. The Covid-19 pandemic hit Oregon in Spring, 2020; Governor Brown declared a State of Emergency and a temporary ban on evictions (FEDs) in March, 2020. The Oregon legislature then extended the eviction moratorium by enacting a series of bills, beginning with HB 4213 in June 2020 and ending with SB 282 in May of 2021.[1]

 

Collectively, the legislative bills created an “Emergency Period” where landlords were prohibited from terminating tenancies or evicting tenants for non-payment of rents, charges, and fees. The Emergency Period lasted from April 1, 2020 to June 30, 2021. All unpaid rents charges and fees from the Emergency Period are known as “nonpayment debt.” All tenants were required to pay their current rent beginning July 1, 2021.

 

Grace Period: Along with the Emergency Period, the Oregon Legislature also defined a “Grace Period,“ which was a time during which Landlords were prohibited from terminating or evicting a tenant based on the outstanding non-payment debt remaining from the Emergency Period. Tenants had from June 30, 2021 to February 28, 2022 to pay off their nonpayment debt.

 

Safe Harbor Period. In June and December 2021, the legislature passed SB 278 and SB 891. Together the bills provided for what is called a “Safe Harbor” for tenants who were still having difficulty paying their rent. The bill prevents Landlords from terminating tenancies or evicting tenants who are seeking rental assistance. The rental assistance programs established by Oregon can provide up to 12-month of back-rent and three months of prospective rent to tenants who qualify. The Oregon rental assistance program will close to applications on March 14, 2022. Landlords are prohibited from terminating or evicting for non-payment until they either receive notice that the tenant’s application has been denied, or June 30, 2022, whichever comes first.[2]

 

What Now?

 

Continuing Safe Harbor. While there are a number of actions that a landlord may now take to address nonpayment debt owed by tenants, they are still protected from eviction if they have applied for rental assistance

  • If a landlord receives written proof of application for rental assistance, they may not:
    • Issue a termination notice for nonpayment; or 
    • Initiate/continue an FED action based on nonpayment. This prohibition lasts until the landlord receives notice that the application is no longer pending.
  • The last day a landlord may receive notice of an application for rental assistance is June 30, 2022. 
  • All Safe Harbor protections expire on October 1, 2022. 
  • The Oregon Emergency Rental Assistance Program will close on March 14, 2022 at 11:59 pm. [It is uncertain if there will be additional funds offered after this date.]

 

Nonpayment of Rent Terminations. Termination notices for nonpayment of rents, charges, and fees accrued during the Emergency Period (April 1, 2020 to June 30, 2022) are now permitted. Landlords must still use the 10-day or 13-day nonpayment notice until October 1, 2022.[3] If the rental unit is a park-owned home, the landlord may also use a 30-day for-cause termination notice under ORS 90.392.

 

Termination notices no longer need to include language stating: “eviction for nonpayment of rent, charges and fees that accrued on and after April 1, 2020, and before June 30, 2021, is not allowed before February 28, 2022;” and “Information regarding tenant resources is available at www.211info.org.”

 

Note: Landlords must still send the Notice of Protection Against Eviction for Nonpayment form with any notice requiring payment of money to the landlord (e.g.,. notice of termination for nonpayment, and summons for a nonpayment eviction complaint). (See, MHCO Form 111)

 

Notices to Tenant – Balance Due. Notices to tenants regarding outstanding debt due are no longer required to state that “eviction for nonpayment of rent, charges and fees accrued from April 1, 2020 to June 30, 2021, is not allowed before February 28, 2022.”

 

Collection of Nonpayment DebtsLandlords may now file a civil action in court to recover the nonpayment balance accrued during the Emergency Period (April 1, 2020 to June 30, 2022). Debts may also be sent to collection agencies. [Note: Landlords are prohibited from reporting any Emergency Period debt (April 1, 2020 to July 1, 2021) to a consumer credit reporting agency.]

 

Application of Payments. The eviction moratorium bills temporarily changed the order in which landlords apply tenant payments. As of March 1, 2022 payments must be applied as outlined in ORS 90.220(9), unless otherwise altered by the rental agreement. The order of payments is: 

 

  • First – outstanding rent from prior periods;
  • Second – current rents; 
  • Third – utility/service charges; 
  • Fourth – late fees; and
  • Fifth – all other fees/charges owed under the rental agreement.

Nontenant Guests. Landlords may once again enforce restrictions on nontenant guests, including assessing fees or terminating a tenancy for violations. [Note: removal of any nontenant guests who had entered into a Temporary Occupancy Agreement with the landlord is subject to the terms and expiration of that agreement.]

 

Statute of Limitations. Section 7 of Oregon House Bill 4212 enacted certain Covid-related tolling (i.e., “suspension”) provisions for nonpayment of rent claims under ORS 12.125 (Actions arising under rental agreement). March 1, 2022 marked the end of the tolling period. Landlords now have one year (i.e., to March 1, 2023) to recover outstanding nonpayment debt accruing during the Emergency Period.[4]

 

The tolling of the statute of limitations under the Eviction Moratorium bills only applies to debt generated duringthe Emergency Period. The language of the legislations specifically designates that it applies to “claims by a landlord based on a tenant’s nonpayment or nonpayment balance.” 

 

“Nonpayment” is a defined term in the legislation and specifically means “nonpayment of a payment that becomes due during the emergency period” and “nonpayment balance” refers to “all or a part of the net total amount of all items of nonpayment by a tenant during the emergency period.” (Italics added.)

 

Rents, charges or fees arising before April 1, 2020 and after July 1, 2021 do not appear to be protected by the tolling of the statute of limitations in the Eviction Moratorium Bills. However, landlords should check with their own  attorneys to verify whether the statute of limitations provisions enacted by HB 4212 may apply to actions accruing before or after the Emergency Period. 

 

Oregon’s State of Emergency is set to expire April 1, 2022, after which time there should be a 90-day window in which certain claims may be brought.[5]

 

Ongoing Tenant Screening Prohibitions. When screening prospective tenants, landlords are prohibited from considering FED actions and unpaid rents, charges and fees – including nonpayment of judgment debt and debt referred to a collection agency – that arose between April 1, 2020 and March 1, 2022

 

Tenants may also apply to have their FED judgments set aside and sealed for eviction actions arising between April 1, 2020 and March 1, 2022. These screening prohibitions and moratorium-related judgment set-asides will expire in 2028.

 

Landlords Receiving Federal Funding. If a landlord is receiving federal funds (affordable housing, federally backed mortgage, HUD) they must assure that they are complying with any rules set down by the proper federal agency, or other covid-related federal programs like the CARES Act. Commonly these rules require a 30-day nonpayment notice and additional federally-mandated disclosures. Check with your attorney to assure you’re in compliance with federal tenant protections, if applicable.

 

Partial Payments and Waivers. Acceptance of partial payments of rent during the Grace Period did not constitute waiver under the Eviction Moratorium legislation. However, that provision expired on March 1, 2022. While Oregon landlord-tenant law does address waiver (ORS 90.412 to 414) and the effect of partial acceptance of rent (ORS 90.417) it does not directly address situations created by the Covid pandemic. 

 

The current statutes are clear that acceptance of partial rent may, under certain circumstances, constitute a waiver of the right to terminate for nonpayment of rent. ORS 90.417(4) may provide some guidance. There are two ways to avoid acceptance as a waiver: 

 

  • The landlord accepts partial payment before issuing a notice of termination for nonpayment because the tenant agreed to pay the balance by a set date. The tenant must then fail to pay the balance. If so, then the landlord’s notice of termination is served no earlier than if no rent had been accepted, AND the notice must provide that the tenant can cure by paying the balance by a time set by statute or by agreement of the parties; or

 

  • The landlord accepts partial payment after issuing a notice of termination but enters into a written agreement with the tenant that acceptance does not constitute waiver. The agreement may also provide that the landlord may terminate and evict without further notice if the tenant does not pay the balance by the agreed-upon date.

 

Since the statutes do not specifically address situation created under the Eviction Moratorium, it is currently unclear how the courts will address the waiver issue. If the landlord is inclined to accept partial payment or create a payment plan, it is suggested that an express non-waiver provision be included. Landlords may also consider terminating for-cause. Landlords should consult with their own legal counsel before accepting past-due rent arising after the end of the Grace Period.

 

[1] The bills were as follows: HB 4213 (June 2020), HB 4401 (December 2020), SB 282 (May 2021).

[2] June 30, 2022 is the last day a tenant can provide proof of application for assistance. Protection under the Safe Harbor itself ends on September 30, 2022. 

[3] The 10 or 13-day notice will revert to a 72 or 144-hour notice on October 1, 2022 (SB 891, Section 8, (3))

[4] For a more detailed discussion of the effect of HB 4212’s tolling provisions, see: https://www.osbplf.org/blog/inpractice/covid-19-state-of-emergency-extended-through-december-31-2021/

[5] Section 7(1) of HB 4212 states: “If the expiration of the time to commence an action or give notice of a claim falls within the time in which any declaration of a state of emergency issued by the Governor related to COVID-19, and any extension of the declaration, is in effect, or within 90 days after the declaration and any extension is no longer in effect, the expiration of the time to commence the action or give notice of the claim is extended to a date 90 days after the declaration and any extension is no longer in effect.” (Emphasis added.) 

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