Phil Querin Q&A: Lingering Moratorium Issues - Rent Due - How to Apply Payments

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Note:  Sample Rent Ledger is attached above.

Question 1: Tenant's balance goes back to the beginning of April 2020. Do we have to follow the rent schedule that is laid out by rental assistance agency?  Example: Oregon Emergency Rental Assistance Program gives you a statement on how to apply the rent  and it usually is  the most recent delinquent rent.  They will only cover 12 months plus 3 future months.  

In my opinion, yes, the landlord should apply the funds in the way that the Assistance Program dictates. There is a Landlord Hotline 844-378-2931 (operative during regular business hours) to discuss issues and questions. While I agree that it does make sense to apply it to the oldest debt first, I'm not comfortable making a blanket statement that you can ignore the dictates of the Program. I don't know whether acceptance of the funds creates a contract. Landlords should check with the hotline or their attorney for further guidance. So, I'd say payment should be applied as follows: (a) as dictated by the Program, (b) if the Program does not address the application of funds, then in accordance with the terms the lease, and (c) finally, if the lease is also silent, then in accordance with ORS 90.220(9).

Presuming that you apply the back rent to the most recent delinquent rent, that should put all the outstanding back rent within the Emergency Period, therefore subject to the tolling of the Statute of Limitations under the Eviction Moratorium. Basically, applying it to the most recent back rent gives the landlord more time to pursue the deb because they (landlord) have until next February to do so.  See the attached ledger to explain what I mean.

Question 2: What if tenant can only pay partial rent from the past due emergency period? Do we take it or will it result in a waiver? Does it preclude the landlord from sending out further 10-day notices of nonpayment?

ORS 90.417(4) is clear that acceptance of partial rent may, under certain circumstances, constitute a waiver of the right to terminate for nonpayment of rent. 

There are two ways to avoid acceptance as a waiver: 

  • If Landlord accepts partial payment pursuant to a written agreement with tenant before issuing a Notice of Termination for nonpayment and tenant fails to pay the balance by the agreed-upon date. If so, the landlord’s Notice of Termination is served no earlier than if no rent had been accepted, AND the Notice provides that the tenant can cure by paying the balance by a time set by statute or by agreement of the parties; or

 

  • 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.

As with everything else, Covid has plowed new ground. I would not advise a landlord to accept rent from a tenant without getting a legally drafted agreement containing a non-waiver. If the tenant fails to pay under the written agreement then there is a basis for termination. 

Question 3: Now that the Oregon Emergency Fund is closed can we start issuing 10-day Notices on the back balances?

If the tenant has not provided their landlord with proof of their application to a Rental Assistance Program then they are not protected by the “Safe Harbor” protection it affords.[1] A landlord may pursue normal remedies against them unless/until they are notified that an application is pending. If you begin proceedings against a tenant and they then provide proof of application the proceedings must stop.

If a tenant has already provided proof of application to a Rental Assistance Program and the landlord is not receiving payment while the Safe Harbor is in place, the Landlord may apply to the Landlord Guarantee Program. See,  https://www.oregonlgp.org.  The Program is designed to get funds to landlords who are not receiving funds during the Safe Harbor period. The earliest funds may be requested was July 1, 2021 and the latest will be June 30, 2022 - but there may be special provision if a tenant's application is still pending when the law sunsets on October 1, 2022. 

Question 4: What about the one-year statute of limitations for claims by a landlord based on the tenant’s nonpayment of rent. Are rents owed from the pre-April 2020 – June 30, 2021 period affected under the one-year statute of limitations for past due rents?

 

No, the eviction moratorium only suspended the statute of limitations for debts arising during the Emergency Period April 1, 2020 to June 30, 2021. Per SB 282 the Statute began to run again on March 1, 2022 which was the end of the grace period (i.e., the period to pay off unpaid rent debt from the emergency period). The clock is running on debts prior to April 1, 2020 and after July 1, 2021.

 

However, note there was a tolling of some statutes of limitations by other Covid bills (see, HB 4212). It is unclear when that ended, i.e. whether it was when the bill expired (Dec 31) or when the State of Emergency was lifted in April. Landlords should check with their own attorneys regarding any claims outside of the Emergency Period. It is unclear how the courts will deal with these frequently changing dates.

 

 

[1] I am using the term “Safe Harbor” to refer to the time a tenant is protected from eviction after notifying landlord that they have made application under the Rental Assistance Program.

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