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Phil Querin Q&A: What access to documents and office do I have to provide to Oregon Housing and Community Services?

Phil Querin

Answer: Normally, I don't like to equivocate, but here, I'm going to have to do so. I suspect this answer might be quoted to the OHCS as a reason for declining to cooperate, so want to be careful how I answer. So rather than give a definitive "Yes" or "No" I'm going to give you some things to think about, before turning over documents to anyone other than a bona fide applicant who wants to rent a space. 1. Ask yourself: "How am I benefited by turning over my documents and forms?" From where I sit, I see no benefit. OHCS is not applying for tenancy. If they can explain to you what good comes to your park by turning over forms that you or MHCO paid to have developed, I might change my mind. 2. Ask yourself: "What can they do if I decline?" OHCS describes its services and functions as follows: "Oregon Housing and Community Services is Oregon's housing finance agency, providing financial and program support to create and preserve opportunities for quality, affordable housing for Oregonians of lower and moderate income. The current agency was created in 1991, when the legislature merged the Oregon Housing Agency with State Community Services. The coordination between housing and services creates a continuum of programs that can assist and empower lower-income individuals and families in their efforts to become self-reliant. OHCS administers federal and state antipoverty, homeless and energy assistance, and community service programs. OHCS also assists in the financing of single-family homes, the new construction or rehabilitation of multifamily affordable housing developments, as well as grants and tax credits to promote affordable housing." These are all worthwhile and laudable goals. But I don't see anything on their website [here] suggesting that they are an enforcement or regulatory agency. So, it appears that a polite refusal to share the forms and other documents you use to operate your community will not be met by any sanction. If they can explain to you what they will do if your refuse to cooperate, and it appears they could visit upon you and your community a parade of unpleasant horribles, I might change my mind. 3. Ask yourself: "Well, if they are not a regulatory or enforcement agency, can there be any harm in cooperating?" In looking at their website, it is clear that part of their mission is to: '_create and preserve opportunities for quality, affordable housing for Oregonians of lower and moderate income." Oregon law protects against discrimination in the sale, leasing or renting of housing, bases upon "source of income." [See, ORS 459A.421.] Today, there is a case pending before the United States Supreme Court, which will address whether discrimination arising from "disparate impact" is a violation of the Fair Housing laws. What is "disparate impact?" It means that you, as a landlord or manager, can be held to have discriminated against a member of a protected class - not because of any intent to do so - but merely because your rules, policies, or procedures in the application process, affect them more harshly than other people not in the class. It is clear from their website and stated mission, that fair housing is an important issue with the folks at OHCS. That's a good thing. But my mission is to protect - through education - MHCO's members with good risk management procedures. My experience has been that most alleged violations of fair housing laws are inadvertent, sometimes through the use of testers. That being the case, my concern in voluntarily turning over forms and documents used in managing your community, someone at OHCS might see a policy, rule, or screening criteria, that they interpret as a per se' violation of state, federal, county or city housing laws. [To put a fine point on this, go to the Fair Housing Council of Oregon's chart here, identifying the plethora of laws you are already expected to comply with, depending on the location of your community.] While I do not see that OHCS could do anything to you if they saw a potential violation, I certainly could see the documents, or information gleaned from them, being turned over to private or public entities that could do something, either through civil action or regulatory action. So, if OHCS can explain to you (a) why they need the information; (b) what they would do if they did see something they didn'tlike; and (c) what assurances they can give you that they will not turn the documents or information over to a third party for some sort of enforcement action. It they can provide you with such assurances, I might change my mind. As I have said above, OHCS's aspirational goals are laudable, and we should have no issue with them. If you want to assist in those goals, you should financially contribute to their cause. But you must also be prudent in your management decisions, balancing the risks versus the benefits, of cooperation. I see no benefits, but I do see great risks.

Phil Querin Q&A: Resident Growing Marijuana Plants

Phil Querin

Answer: This is a very complicated issue on several levels. For example, marijuana is a controlled substance under Federal Law. Under Oregon law, use and cultivation in limited amounts pursuant to a lawful Medical Marijuana Card are legal. The Oregon laws are linked here. The statutes cover such things as grow-site registration; medical uses for marijuana; issuance of an identification card; and limitations on a cardholder's immunity from criminal laws involving marijuana. For those interested, these statutes should be consulted. You have a responsibility to make sure that laws are not being violated in the community. You also have a responsibility to the rest of the other residents. Compliance with all laws is a condition of occupancy under the park's rental agreement, its rules, and the Oregon Residential Landlord-Tenant Act. I know of no way you can honor your obligations except to ask to see the card and verify that it is current and held in the name of the resident. The main issue here is Fair Housing Laws. If the resident has a valid card, then arguably he have some medical condition that has authorized its issuance. Does he have a legal right to demand that under the Fair Housing Laws, you make a "reasonable accommodation" for his medical condition, and permit him to continue in his grow operation? Not necessarily. In January 20, 2011, the U.S. Department of Housing and Urban Development ("HUD") issued a Memorandum, the subject of which was "Medical Use of Marijuana and Reasonable Accommodation in Federal Public and Assisted Housing." While the Memo was limited to federal public and assisted housing, it can be regarded as a helpful - though perhaps not a "final" resource - on the issue. It is very complete and helpful for all park managers and owners. It can be downloaded at: https://www.google.com/search?q=hud%20medical%20marijuana. Here is what the Memo directs: Public housing agencies '_in states that have enacted laws legalizing the use of medical marijuana must therefore establish a standard and adopt written policy regarding whether or not to allow continued occupancy or assistance for residents who are medical marijuana users. The decision of whether or not to allow continued occupancy or assistance to medical marijuana users is the responsibility of PHAs, not of the Department." Thus, HUD seems to be skirting the issue, leaving it up to the agency in the state that permits the use of medical marijuana. Between the lines, it appears that HUD will not enforce a fair housing reasonable accommodation claim against park ownership or management if the community has an anti-marijuana policy in place. Without such a policy, my inclination is that enforcement would be potentially riskier, since the card-holder was not aware of the limitation at the inception of the tenancy. In answer to your specific questions: - Clearly, the card has to be valid and current in Oregon. A California card, for example would not suffice. (See, State v. Berrenger, 2010). - If there is no card, or no current valid card, the growing (not use) of marijuana could be is a violation of state law. You may not be able to issue a 24-hour notice under ORS 90.396, since possession of certain amounts of marijuana pursuant to a valid card, is protected. However, you may consider issuances of a curable 30-day notice under ORS 90.630; - If others are complaining about the odor, you have an issue between enforcing the use and enjoyment provisions of your rules or ORS 90.740(4)(i) versus permitting the activity if the resident has a lawfully issued Oregon card and is not growing over the proscribed amount. In any event, I would recommend that your community institute a medical marijuana use policy as a part of your rules and regulations. See, ORS 90.610 for the law regarding rule changes. Note that the right to implement a rule change - even if it results and a material change to the tenant's bargain with the park - is expressly permitted. In other words, you may want to proscribe ALL such activity, even if it pre-existed the new rule. Alternatively, you could grandfather in current card-holders.

Phil Querin Q&A: Resident Growing Marijuana Plants - Follow Up and Additional Resources

Phil Querin

Readers of my article will note that my focus was primarily on the federal laws. This was because during my research, I was directed by the Oregon Health Authority (here) to the federal HUD website. However, as John points out, '_Oregon fair housing law is "substantially equivalent" to federal fair housing law." So, generally speaking, on the issue of medical marijuana, as goes the federal law, so goes Oregon law. John directed me to the 2010 Oregon case of Emerald Steel Fabricators, Inc. v. Bureau of Labor and Industries, which addressed many unanswered questions on the use of medical marijuana in this state. The answers contained in that case represent the most current state of medical marijuana law in Oregon both from an employment and housing perspective. John, as a board member of Fair Housing Council of Oregon ("FHCO"), also directed me to the following FHCO article [authored after the Emerald Steel Fabricators case], which serves as a good resource on the issue of medical marijuana use in Oregon. The FHCO article can be found here. Keep in mind that the law is still developing, so you should consult your own legal counsel on these issues. These MHCO articles should not be relied upon as legal advice. So, to incorporate these resources into my prior answer, here are some "take-away" points for park owners and managers on the issue of usage and cultivation of medical marijuana in Oregon manufactured housing communities: - If the resident insists that you make a reasonable accommodation for them because their use is due to a disability, you may say "N0." Note, however, park residents still have the right to ask for a reasonable accommodation. - Owners and managers may not deny an applicant housing availability simply because they have, or intend to obtain, a medical marijuana card [any more than management may deny tenancy to a person who says he or she has a disability]. - To reiterate what I said in last week's article, it is my opinion that park management should institute a medical marijuana policy in the rules, dealing both with the use and cultivation of the substance inside the community. It is not a fair housing violation to prohibit it in the rules. However, if legal use or cultivation [i.e. according to Oregon state law] occurs in a community, and there are no express prohibitions against doing so, it may be difficult to bring an eviction action for the activity, unless it violates some other rule or provision in the rental agreement.

Phil Querin Q&A: Tenant Sub-Leases - Refuses Background Check

Phil Querin

Answer: There are several issues here. One, you've accepted rent from the occupant for the last several months. For all intents and purposes, you have accepted him as a tenant - even though he is not there on a written rental agreement and even though you have no criminal background check on him. Even if your rules prohibit subleasing, that too, has been waived. In other words, all of the breaches you could have enforced against him and/or the tenants who subleased, have been waived and are now unenforceable. Here are the rules on waiver that apply in this situation [ORS 90.412]. While they are of no help in this situation, they may be helpful in the future. A landlord waives the right to terminate a rental agreement for a particular violation of the rental agreement or of law if the landlord: - During three or more separate rental periods, accepts rent with knowledge of the violation by the tenant; or - Accepts performance by a tenant that varies from the terms of the rental agreement. - A landlord has not accepted rent for purposes of subsection (2) of this section if: _ Within 10 days after receipt of the rent payment, the landlord refunds the rent; or _ The rent payment is made in the form of a check that is dishonored. - A landlord does not waive the right to terminate a rental agreement for a violation under any of the following circumstances: _ The landlord and tenant agree otherwise after the violation has occurred. _ The violation concerns the tenant's conduct and, following the violation but prior to acceptance of rent for three rental periods or performance, the landlord gives a written warning notice to the tenant regarding the violation that: - Describes specifically the conduct that constitutes the violation, either as a separate and distinct violation, a series or group of violations or a continuous or ongoing violation; - States that the tenant is required to discontinue the conduct or correct the violation; and - States that a reoccurrence of the conduct that constitutes a violation may result in a termination of the tenancy pursuant to ORS 90.392, 90.398, 90.405 or 90.630. _ The tenancy consists of rented space for a manufactured dwelling or floating home, and the violation concerns: - Disrepair or deterioration of the manufactured dwelling or floating home; - A failure to maintain the rented space; - The termination is under ORS 90.396 [24-hour notices]. _ The landlord accepts: - A last month's rent deposit collected at the beginning of the tenancy, regardless of whether the deposit covers a period beyond a termination date; - Rent distributed pursuant to a court order releasing money paid into court; or - Rent paid for a rent obligation not yet due and paid more than one rental period in advance. - For a continuous or ongoing violation, the landlord's written warning notice remains effective for 12 months and may be renewed with a new warning notice before the end of the 12 months. - A landlord that must refund rent shall make the refund to the tenant or other payer by personal delivery or first class mail. The refund may be in the form of the tenant's or other payer's check or in any other form of check or money. The most important thing you should do at this point is to try to determine if this occupant is a sexual predator. Oregon laws were revised a few years ago to provide that if an occupant is determined to be a predatory sex offender under ORS 181.585 to 181.587, you may unilaterally issue him a 30-day notice to vacate. [See, ORS 90.630(1)(c)]

Phil Querin Q&A: Selling a home in your park acquired through abandonment without having to hire a mortgage broker. Can you explain the new law?

Phil Querin

Answer: I assume you are referring to a sale where you carry back the security obligation (as opposed to the buyer paying cash or securing third party financing). In this respect, you are correct, subject to several limitations. MHCO worked extensively with the Oregon Department of Finance and Corporate Securities ("DFCS") and others to develop an exemption to the Oregon law that would permit park owners to engage in the sale of formerly abandoned homes to purchasers for the purpose of a primary residence without having to use a broker (referred to as a "Mortgage Loan Originator" or "MLO" under the new law). Here is a summary of the new exemption law which will be found in ORS 86A.203. - Here are the rules for those licensed as a manufactured structure dealer under ORS 446.691. _ They may offer or negotiate the terms of the loan three or fewer times in a 12 month period; _ They must use a written sale agreement that complies with certain requirements, or with DFCS rules . _ The dealer may not hold more than eight residential mortgage loans without securing a MLO license under ORS 86A.203(1). [Presumably, this means "at one time."] - Here are the rules for those licensed as a limited manufactured structure dealer under ORS 446.706. _ They may offer or negotiate terms of the loan five or fewer times in a 12 month period: _ They must have an ownership interest in a manufactured dwelling park; _ They must use a written sale agreement that complies with certain requirements, or with DFCS rules. _ They may not hold more than twelve residential mortgage loans without securing a MLO license under ORS 86A.203(1). [Presumably, this means "at one time."] But here's the rest of the story: Just because you are exempted from the MLO licensing requirements for a limited number of sales, does not mean that you are free from the tentacles of the Dodd-Frank Act. No, indeed. In fact, there are two new rules that still will apply. 1. Ability-to-Repay ("ATR") Rules. A creditor is prohibited from making a residential loan (this includes your sale of the formerly abandoned home) unless it first makes '_a reasonable, good faith determination of a consumer's ability to repay any consumer credit transaction secured by a dwelling (excluding an open-end credit plan, timeshare plan, reverse mortgage, or temporary loan) and establishes certain protections from liability under this requirement for "qualified mortgages." [See CFPB Summary, here.] In complying with the ATR rules, you must consider and verify the following borrower information: a) Current or reasonably expected income or assets [other than the value of the home that secures the loan]; b) Current employment status; c) Monthly payment on the mortgage loan; d) Monthly payment on any simultaneous mortgage loan that the creditor knows or has reason to know will be made; e) Monthly payment for mortgage-related obligations [e.g., insurance, taxes, assessments]; f) Current debt obligations; g) Monthly debt-to-income ratio, or residual income; and h) Credit history. In making the loan you will be required to calculate the mortgage loan payment based on: - The fully indexed rate or any introductory interest rate (whichever is greater); and - Substantially equal monthly installment that will fully amortize the loan amount over the loan term. At first blush, perhaps these requirements don't seem so burdensome, since one would think any smart lender would follow these protocols anyway. But remember, back in the easy money days, lenders were not keeping most of their loans on their own books; instead, the loans were "securitized", i.e. bundled and sold as securities to investors all over the world. This meant that circa 2004 - 2008, the originating banks that funded these residential loans were quickly repaid by investors and were never going to have to deal with them if and when they failed. Hence, bank underwriting was virtually nonexistent back then - except, of course, for those loans the banks were going to keep on their own books (sometimes referred to as "portfolio loans"). 2. Qualified Mortgages. The Dodd-Frank Act has established a term, "Qualified Mortgage," or "QM," that provides a safe harbor for lenders. That is, if the loan is a QM, there is a legal presumption that the lender complied with the ATR underwriting rules, and therefore the penalties for non-compliance are either eliminated or substantially reduced, as discussed below. If a presumption is "conclusive," no amount of evidence to the contrary will defeat it. But if a presumption is "rebuttable," the party opposing the presumption has an opportunity to rebut it by introducing evidence to the contrary. For a mortgage to be a "Qualified Mortgage," it must meet the following requirements: - All of the "Non-Traditional" Loan Features Must be Removed - This refers to features that we saw in the past, e.g. negative amortization, interest-only payments, and certain balloon payments.[5] - The loan may not exceed 30 years. - If the loan is for $100,000 or more, it cannot have points or fees greater than 3% of the total loan amount. There are different and stricter limits for smaller loans. Certain "bona fide discount points" for prime loans are not included in these limits. - There is an Income Verification and Monthly Debt-to-Income Ratio Cap; The borrower's total monthly debt-to-income ratio (i.e. all housing and non-housing expenses, such as food, automobile, child care, etc.) can be no greater than 43%. - Monthly payments must be based on the highest payment that will apply during the first five years of the loan. The presumptions afforded to lenders making QM loans gives lender protection as follows: - Safe Harbor QM loans - Conclusive Presumption. These are prime loans that (a) Meet the ATR compliance rules including the underwriting requirements above; (b) Are secured by a first lien on the residence; and (c) Carry an interest rate that is less than 1.5% higher than the average prime rate available.[7] The presumption of ATR compliance is conclusive. It is a complete safe harbor. - Higher-Priced QM Loans - Rebuttable Presumption. Here, the presumption of ATR compliance is rebuttable. These loans include first-position liens with an interest rate of equal to or greater than 1.5% over the available prime rate. Essentially, these loans are "higher priced" because the borrowers' credit is less than prime, i.e. the loan is, in the vernacular, "sub-prime." Noncompliance with the ATR Rules. Violations of the ATR rules are harsh, and likely to stifle any types of loans that hint of non-compliance. If a material violation is established, the borrower would have the ability to recover back all of the finance charges and fees paid, plus actual damages, statutory damages, attorney fees and court costs. The plaintiff's bar and the class action bar must be sharpening their knives. There is a three year statute of limitations from the date the violation occurred. Conclusion. I marvel at the complexity of these laws which have been implemented to "protect" consumers by confusing creditors - especially small creditors, such as park owners selling formerly abandoned homes to fill a space and provide affordable housing. If these small transactions caused the credit and housing crisis of 2008 and the ensuing Great Recession, perhaps I could understand. But they didn'. What we're are seeing is a huge net of bureaucratic regulation that has been cast over even the smallest of transactions under the guise of consumer protection. Going forward into 2014, my suggestion is for park owners to decide if: (a) They want to handle these transactions without the use of a MLO (which will add several hundred dollars to each sale) or (b) Go it alone, with knowledge that they will still be expected to comply with the ATR and QM rules. If the latter, my suggestion is to create the simplest of paper transactions, with a market rate interest, no adjustable rates, and a balloon that is not less than five years.

Phil Querin Q&A: Do new Oregon laws on "Section 8" and other sources of income mean that any applicant receiving assistance must be accepted as a resident?

Phil Querin

Answer: HB 2639 will become effective on July 1, 2014. It applies to all housing, whether or not it is manufactured housing inside of a community. The current law provides that a landlord may not refuse to sell, lease or rent any real property to a prospective lessee or tenant based upon the following factors: - Race; - Color; - Religion; - Sex; - Sexual orientation; - National origin; - Marital status; - Familial status (i.e. children under 18 years of age); and - Source of income. Under HB 2639 "source of income" now includes federal rent subsidy payments under Section 8 and any other local, state or federal housing assistance. [However, it does not include income derived from a specific occupation or income derived in an illegal manner.] Your concern is misplaced, but you still must be careful. HB 2639 clarifies that the prohibition against discrimination does not prevent you from refusing to rent or lease real property to a prospective renter/lessee based upon their inability to pay rent. If you have a 33% rule, and consistently apply it, you should be fine. However, what you must do is to include in your 33% calculation, any moneys the applicant is receiving from other state, local, or federal assistance, including Section 8 subsidies (collectively "Government Assistance"). You may not deny an applicant solely because they are receiving Government Assistance, and you must include it in your calculations. Conclusion. It is my opinion that HB 2639 means that going forward, you should include all Government Assistance, as well as other income, when calculating your applicants' ability to pay the space rent. In other words, just because they receive Government Assistance does not mean that you may deny them occupancy. Lastly, even if they qualify under your 33% rule, after including their Government Assistance, if there are other legitimate grounds for denial, such as prior rental history or criminal record, you are still legally entitled to reject them. Please understand that this is not legal advice, and you should verify my interpretation with you own attorney.

Phil Querin Q&A: Selling Park-owned Carports to Residents

Phil Querin

Answer: There is no specific law regarding this issue. However, you clearly understand the ramifications i.e. if a service or amenity is withdrawn, the inference usually is that the landlord has received some financial benefit. In this case, the "benefit" is that the landlord is no longer responsible for maintenance, and the resident is. My position generally is that this type of arrangement should net out to zero in cost/benefit to both sides. That is, here, if the cost of maintenance is shifted from the landlord to the resident, then there must be some offsetting benefit to the resident. If you believe you can allocate the estimated cost that has been shifted to the resident, e.g. $5.00 per month [I am using the figure as an example - I have no idea what the actual figure might be. - PCQ] then there would be a commensurate $5.00/month reduction in rent. The more difficult issue is whether you may "require" this. I doubt it. The residents never signed on to ownership of a park amenity when they commenced their lease or rental. In fact, a cynic would say that you're only doing this because of the condition or age of the carports. I'm not, but I'm suspecting this as a response from some if you attempted to "require" that all residents assume ownership of them. There is also the issue of the condition of the carports. Are you going to warrant to each resident that they are in good condition? Or, is this going to be an AS-IS sale? If the latter you most certainly cannot require they agree to take over ownership of carports when you decline to stand behind their quality. If the idea is that once bought, a resident could "upgrade" them, you need to think the idea all the way through. For example, any such construction must first be approved by Management. Are you going to require that all work must be performed by bonded contractors who have liability insurance and are licensed with the Construction Contractors Board? You will need to post a Notice of Nonresponsibility for construction liens. [I have seen liens imposed on park owned property for a resident's construction project that was (foolishly) approved by Management.] Are you going to permit residents to do the construction work themselves? If so, you must make clear that the work must be performed in accordance with all applicable laws and ordinances, especially the applicable building codes. Who is going to then monitor construction to make sure what was approved is what was built? Is the manager qualified to do this, and does he/she have time? Are you going to require the residents undertaking construction [either themselves or through a contractor] first sign an agreement to assume all liability and release the park and Management from damages? If a third party does the work, besides licensing, you have to make sure they have workers comp insurance (i.e. SAIF). You cannot assume all contractors have this insurance. The smaller the contractor, e.g. solos, the greater the chance they may have neglected to obtain workers comp. If there were an accident resulting in personal injuries, e.g. falling off the roof of the new garage, without SAIF, the injured worker could look to you. Lastly, what are you going to do upon sale of the home? I assume the resident will be selling title to the garage. Since the garage is affixed to the land, would assume a regular "deed" be given, as opposed to a bill of sale [as is common for personal property, such as a manufactured home]. So how is this going to work? Certainly, you don't want residents delivering deeds to the garage, since they actually don't own the underlying land. Yet once affixed to the land, the garage becomes a part of the land. You will certainly have to cover this issue if/when you undertake this program. It's possible that you would just give a revocable "license" or "permit" to the resident, allowing the use and construction, but not pure ownership. And be careful of a resident claiming that you owe them for the value of the improvement, since upon resale of the home, you might increase the space rent because of the "enclosed garage." In light of all the issues, it seems that if you decide to plow ahead with this idea, it seems to me that it should be voluntary, with adequate disclosures and releases per above, so that the resident can never say they had no choice in the matter. There is little question in my mind, that if you made this program mandatory, a court of law would not enforce it, no matter how ironclad.

Phil Querin Q&A: Submetering and Common Areas

Phil Querin

Answer: The submetering statutes, ORS 90.531 - 90.539 are complex and confusing. As most owners and managers know who have explored converting to submeters, the concept is relatively simple. But the devil is in the details, i.e. the statutes. The basic concept is that for communities with utilities [e.g. water and sewer] that are buried in the base rent, they may extract those charges from base rent, and pass them through to the residents directly for payment. The "quid pro quo" for this is that the residents' base rent is reduced in a commensurate amount, so in theory, there is no initial net difference to landlord or tenant. But when utilities are increased, it becomes the residents' immediate responsibility to pay the increased charge - the landlord no longer has to raise the rent via a 90-day notice to recover the increase. Your question specifically pertains to one of the "devilish details' of this conversion process, i.e. passing through the utility cost for common areas. Specifically, you are referring to subsection (5) of ORS 90.537 ("Conversion of billing method for utility or service charges"). That statute provides that a landlord who has previously included utilities and services in their base rent [called "the rent billing method"] and converts to the "submeter billing method" may unilaterally, and at the same time as the conversion to submetering, begin billing for common areas to a "pro rata billing method" [i.e. where the residents' cost of the utility is charged and paid separately from the rent in an amount determined by apportioning on a pro rata basis the provider's charge to the landlord as measured by a master meter]. This common area charge must be included in the 180-day notice to residents that precedes the submeter conversion process. This means that the landlord would charge each resident a prorata portion of the master meter readings attributable to common area costs. Obviously, master meter readings do not distinguish between utility services provided to residents, versus those provided to common areas. For purposes of determining the amount of the offset the landlord should check with the utility provider to find out the cost of its service to the common areas. If the provider cannot provide the landlord with an accurate cost for service to the common areas, the landlord "shall assume the cost of serving the common areas to be 20 percent of the total cost billed." Note: Only if the landlord continues use the rent billing method for the cost of utilities to the common areas may the landlord may obtain an offset against the total rent reduction given to residents. This is because if the common area utility cost is still buried inside the base rent. It would be unfair to the landlord to require a dollar-for-dollar rent reduction for all utilities, since those attributed to the common areas are not passed directly through to the tenants for separate payment. In other words, the right of offset '_is not available if the landlord chooses to bill for the common areas using the pro rata method." If the cost of the utility service to the common area is apportioned on a prorate basis and passed through to the residents, there will be no need for offset against the rent reduction as a part of the conversion to submeters. In those cases, the landlord may only apportion the common area utility cost on a prorata basis. For purposes of determining the pro rata charge per resident, ORS 90.534 ("Allocated charges for utility or service provided directly to space or common area") clarifies the protocol to be followed: - A utility charge that is assessed to residents on a pro rata basis must be allocated among them '_by a method that reasonably apportions the cost among the affected tenants and that is described in the rental agreement." - Methods that reasonably apportion the cost among the residents include, but are not limited to, methods that divide the cost based on: _ The number of occupied spaces in the facility; _ The number of residents or occupants in the home compared with the number of residents or occupants in the facility, if there is a correlation with consumption of the utility or service; or _ The square footage in each home compared with the total square footage of occupied homes in the facility, if there is a correlation with consumption of the utility or service. - A utility or service charge to be assessed to a resident for a common area must be described in the written rental agreement separately and distinctly from the utility or service charge for the tenant's space. - A landlord may not: _ Bill or collect more money from residents for utilities or services than the provider charges the landlord; _ Increase the utility or service charge to a resident by adding any costs of the landlord, such as handling or administrative charges. See, I said the devil was in the details! ~PCQ

Phil Querin Q&A: More Questions on Water Sub-Metering

Phil Querin

Answer: ORS 90.532 (3) provides as follows: Except as allowed by subsection (2) of this section for rental agreements entered into on or after January 1, 2010, a landlord and tenant may not amend a rental agreement to convert water or sewer utility and service billing from a method described in subsection (1)(b)(C)(i) [i.e. where the charge is included in the base rent] *** to a method described in subsection (1)(b)(C)(ii) [i.e. where the charge is billed separately from base rent and apportioned among the tenants on a pro rata basis as measured by a master meter]. The exception covered in subsection ORS 90.532(2) provides as follows: A landlord may not use a separately charged pro rata apportionment billing method: (a) For water service, if the rental agreement for the dwelling unit was entered into on or after January 1, 2010, unless the landlord was using a separately charged pro rata apportionment billing method for all tenants in the facility immediately before January 1, 2010. (b) For sewer service, if it is measured by consumption of water and the rental agreement was entered into on or after January 1, 2010, unless the landlord was using a separately charged pro rata apportionment billing method for all tenants in the facility immediately before January 1, 2010. Translating this to plain English, here is my take: - For rental agreements entered into on or after January 1, 2010 you may not convert water or sewer charges from an in-rent method to a pro rata billing method except as follows: _ Water service: If the rental agreement was entered into on or after January 1, 2010, unless you were using a separately charged pro rata apportionment billing method for all 180 spaces immediately before January 1, 2010. _ Sewer Service: If sewer service is measured by consumption of water and the rental agreement was entered into on or after January 1, 2010, you may not convert from an in-rent method to a pro rata method, unless you were already using a separately charged pro rata apportionment billing method for all 180 spaces immediately before January 1, 2010. - Garbage service: You may not convert from an in-rent method to a pro rata billing method unless the pro rata apportionment is based upon the number and size of the garbage receptacles used by the tenant. There does not appear to be any time frame limitation on this rule Pursuant to ORS 90.534 [Allocated charges for utility or service provided directly to space or common area], if a written rental agreement so provides, you may use a pro rata billing method with a master meter and require tenants to pay you a utility or service charges (e.g. electrical and natural gas) that has been billed to you or provided directly to the tenant's space or to a common area. However, you may not unilaterally amend an existing rental agreement to convert utility and service billing from an in-rent billing method to a pro rata billing method. It appears you could use the pro rata billing method (other than sewer and water) per above rules, only on a going forward basis with new residents. Conclusion. This is the best I can tell you. It is not legal advice, and based only upon my interpretation of the statutes which are quite complex. It appears that yours is a difficult situation in which water/sewer submetering will not actually help. With the exception of garbage service, there is no easy answer. However, upon closer evaluation by your attorney, perhaps you may be able to figure out a work-around solution. Good luck!

Phil Querin Q&A: Tree Limb Falls On A Residents House

Phil Querin

Answer. Many manufactured housing communities in Oregon have large trees. While Oregon law has imposed the duty of general tree maintenance on the residents, there is little question but that most do not have the expertise, skill or financial means to provide the type of maintenance that may be required for large older trees. With this in mind, the MHCO encouraged the Landlord-Tenant Coalition to craft a bill that fairly and clearly allocated the responsibility for tree maintenance in a realistic manner. Landlords are in a better position than residents to obtain and afford good liability insurance, since it is a standard cost of doing business. Moreover, there was concern that under the existing law, some park owners might not regard the issue of tree maintenance as their problem. In reality, however, it is. Injury or death resulting from falling limb or tree that should have been trimmed or removed is surely going to result in potential liability to the park owner. Accordingly, the statute allocates the risk in a more realistic and practical manner: Normal maintenance for trees on a resident's space remains with the resident. However, if the tree has certain features that make it a "hazard tree" then responsibility shifts to the landlord - unless the resident planted the tree. This delineation should help both landlords and residents understand their respective responsibilities. Here is a summary of the current law: 1. Definitions. - "DBH" means the diameter at breast height, which is measured as the width of a standing tree at four and one-half feet above the ground on the uphill side. - "Hazard tree" means a tree that: _ Is located on a rented space in a manufactured dwelling park; _ Measures at least eight inches DBH; and _ Is considered, by an arborist licensed as a landscape construction professional pursuant to ORS 671.560 and certified by the International Society of Arboriculture, to pose an unreasonable risk of causing serious physical harm or damage to individuals or property in the near future. 2. Habitability. A rented space is considered uninhabitable if the landlord does not maintain a hazard tree required by the 2013 Act. 3. Resident Duties re Trees Located on Space. A resident shall maintain and water trees, including cleanup and removal of fallen branches and leaves, on the rented space for a manufactured dwelling except for hazard trees. - "Maintaining a tree" means removing or trimming a tree for the purpose of eliminating features of the tree that cause the tree to be hazardous, or that may cause the tree to become hazardous in the near future. - "Removing a tree" includes: _ Felling and removing the tree; and _ Grinding or removing the stump of the tree. 4. Landlord Duties re Hazard Trees. - Landlord shall maintain a hazard tree that was not planted by the current resident if the landlord knows or should know that the tree is a hazard tree; - Landlord may maintain a tree on the rented space to prevent the tree from becoming a hazard tree; _ Must provide residents with reasonable written notice and reasonable opportunity to maintain the tree themselves. - Landlord has discretion to decide whether the appropriate maintenance of a hazard tree is removal or trimming. - Landlord is not responsible for: _ Maintaining a tree that is not a hazard tree; or _ Maintaining any tree for aesthetic purposes. - A landlord must comply with the access provisions of ORS 90.725 before entering a resident's space to inspect or maintain a tree. [Generally, 24-hour notice. - PCQ] - Subject to the preceding, a resident is responsible for maintaining the non-hazard trees on the resident's space at the resident's expense. _ The resident may retain an arborist licensed as a landscape construction professional pursuant to ORS 671.560 and certified by the International Society of Arboriculture to inspect a tree on the resident's space at the resident's expense; _ If the arborist determines that the tree is a hazard, the resident may: - Require the landlord to maintain the tree as a hazard tree; or - Maintain the tree at the resident's expense, after providing the landlord with reasonable written notice of the proposed maintenance and a copy of the arborist's report. 5. Tree Obstructing Removal of Home From Space. If a manufactured home cannot be removed from a space without first removing or trimming a tree on the space, the owner of the home may remove or trim the tree at the owner's expense, after giving reasonable written notice to the landlord, for the purpose of removing the home. 6. Use of Landscape Professional. The landlord or resident that is responsible for maintaining a tree must engage a landscape construction professional with a valid landscape license issued pursuant to ORS 671.560 to maintain any tree with a DBH of eight inches or more. 7. Access to Resident's Space [ORS 90.725]. - An "emergency" includes but is not limited to: _ A repair problem that, unless remedied immediately, is likely to cause serious physical harm or damage to individuals or property; _ The presence of a hazard tree on a rented space in a manufactured dwelling park. - An "unreasonable time" refers to a time of day, day of the week or particular time that conflicts with the resident's reasonable and specific plans to use the space. - "Yard maintenance, equipment servicing or grounds keeping" includes, but is not limited to, servicing individual septic tank systems or water pumps, weeding, mowing grass and pruning trees and shrubs. - A landlord or a landlord's agent may enter onto a rented space to: _ Inspect or maintain trees; _ A landlord or the landlord's agent may enter a rented space solely to inspect a tree despite a denial of consent by the resident if the landlord or the landlord's agent has given at least 24 hours' actual notice of the intent to enter to inspect the tree and the entry occurs at a reasonable time. _ If a landlord has a report from an arborist licensed as a landscape construction professional pursuant to ORS 671.560 and certified by the International Society of Arboriculture that a tree on the rented space is a hazard tree that must be maintained by the landlord under this Act, the landlord is not liable for any damage or injury as a result of the hazard tree if the landlord is unable to gain entry after making a good faith effort to do so. - If the resident refuses to allow lawful access, the landlord may obtain injunctive relief to compel access or may terminate the rental agreement pursuant to ORS 90.630 (1) and take possession in accordance with the Oregon eviction statutes. In addition, the landlord may recover actual damages. 8. Statement of Policy. It shall include the facility policy regarding the planting of trees on the resident's rented space. [See ORS 90.510] Conclusion. It sounds as if your solution was a good one and everyone was satisfied with the outcome. Your question did not specify whether the tree was a "hazard tree." If it was, then my question to you would have been: Did you develop a tree policy for your park? By the fact that you're asking this question, I assume you have none. Even if you did, it would be hard to apply it retroactively. With the recent snow storms of February, perhaps community owners will become more mindful of these issues. The first order of business is to take a survey of the hazard trees, and then develop a program for safety maintenance. Lastly, of course, park owners should always have a good policy of liability insurance for $1,000,000 or more that covers this type of situation. Fortunately, no one was injured in your situation, but if so, the solution might not have been so easy.