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As the COVID-19 pandemic hurts the health and economic welfare of citizens throughout the world, Washington state passed a new bill that offers renters more flexibility in paying overdue housing costs.
Called Engrossed House Bill 1694, the new legislation allows renters to pay move-in costs and last month’s rent in installments to their landlord. The bill was passed in March and went into effect on June 11, 2020.
Here’s what the new renter payment plan covers, who’s eligible, and how it will impact the Washington rental market.
1. What Does Washington’s Renter Payment Plan Cover?
Under the new law, when a rental unit is leased under a contract for a period of three months or longer, renters can choose to pay any deposits, nonrefundable fees, and the last month’s rent in three equal and consecutive payments. Renters must submit a written request to their landlord at the start of the rental agreement to participate in a payment plan.
In all other cases, the bill decrees, the renter may elect to pay any deposits, nonrefundable fees, and last month’s rent in consecutive and equal monthly installments, also at the start of the rental agreement.
Under the bill, security deposits cannot exceed 25% of the first month’s rent.
2. What Kind of Renters Are Eligible?
Landlords do not have to accept requests for payment plans from every renter. Landlords can deny requests from renters who have a total of deposits and fees less than 25% of the first full month’s rent and if payment of the last month’s rent isn’t required at the start of the rental contract.
According to the law, “A landlord is not required to permit a tenant to pay in installments if the total amount of the deposits and nonrefundable fees do not exceed twenty-five percent of the first full month’s rent and payment of the last month’s rent is not required at the inception of the tenancy.”
3. Will Interest or Late Fees Be Charged When Renters Pay Installments?
No, landlords cannot charge any late fees or interest to any payment plan installments. In fact, the bill’s language explicitly forbids it: “A landlord may not impose any fee, charge any interest, or otherwise impose a cost on a tenant because a tenant elects to pay in installments. Installment payments are due at the same time as rent is due.”
Additionally, the law dictates that all installment schedules must be in writing and signed by both the landlord and renter.
4. How Will These Plans Impact Evictions After the COVID-19 Pandemic?
The bill does not state anything regarding evictions, COVID-19-related or otherwise, and will likely have no effect on the overall eviction process.
“I don’t think it circumvents anything in the landlord-tenant law around evictions, but it does provide some additional options for folks,” said Pam Tietz, executive director of Spokane Housing Authority.
The Spokane Housing Authority itself allows incremental payment plans for people who utilize the authority’s housing.
“If they’re behind on their rent, we’ll offer them repayment increments,” said Tietz. “This isn’t going to change a lot for us.”
The permittance of incremental payment plans is also already something of a standard practice among Washington housing authorities throughout the state.
“I would say most of us do that; there may be a few that don’t, but most of us do that,” said Tietz regarding housing authorities offering payment plans. “We’re in the business of housing people, not making them homeless.”
For renters who aren’t utilizing a housing authority, however, the new plan offers some additional relief in the face of high unemployment, and in some cases, a backlog of unpaid rent.
5. Will the New Bill Help to Prevent Evictions?
It’s too early to say.
“I would hope that it does,” said Tietz. “Let’s look back in six months and see what’s happening.”
While many people seek housing authority assistance after being evicted for the inability to pay rent, the bill contains no concrete protections against eviction — but the ability to use these plans may help those at risk of eviction by spreading out payments.
Those at risk of eviction can also use the Coordinated Entry System, a process mandated by the U.S. Department of Housing and Urban Development and required in every jurisdiction that connects people experiencing homelessness to available housing and resources.
Tietz said the Spokane Housing Authority sends people in need of immediate assistance to Coordinated Entry because the Spokane Housing Authority doesn’t have any immediate programs.
“Most of what we do are rentals that we own or long-term rental assistance,” said Tietz of their services. “There’s waiting lists for everything that we do — years’ worth of waiting lists.”
6. What Does It Mean for Washington’s Rental Market?
When it comes to the rental market in Washington, Tietz believes that Engrossed House Bill 1694 will probably affect small mom-and-pop landlords most.
“They don’t necessarily have as many rentals or as many resources that a larger landlord has,” said Tietz. “The mom-and-pops might struggle because they may not be able to make their mortgage payment. That’s a hardship for those folks.”
Seattle is the most populated city in Washington, while Spokane ranks second. For this reason, both cities have extremely competitive rental markets. According to Tietz, rent in Spokane has risen 25% in the last four years and the city’s vacancy rate is around 1%.
“People are having trouble finding a place to live at all, let alone an affordable place to live,” said Tietz.
As landlords and renters continue to navigate a rental landscape changed by the COVID-19 pandemic, keep up to date with news and legislation through our rental market news and education and stay informed about your state’s policies with state-specific landlord-tenant law resources.
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Whether you’re a new landlord set on leasing apartments to Hollywood hopefuls or a renter looking for a place with views of the redwood forest, don’t let confusion over California’s landlord-tenant laws complicate your plans.
The process of signing rental agreements can be intimidating, but knowing your rights as a renter and as a landlord will protect you from less-than-ideal situations and make the Golden State even more golden.
Here are the answers to seven common questions about California’s security deposit rules, evictions and background checks.
1. When Do Security Deposits Have to Be Returned in California?
Security deposits are non-rent payments made to landlords. Landlords use them to protect themselves in the event of violations, damage, or breaking of rental agreements.
Under California rental law, landlords have 21 days after a tenant moves out to return the security deposit by mail or personally deliver a letter explaining why the landlord is keeping part or all of the security deposit. If the landlord keeps part or all of the deposit, they are required to give an itemized list of each deduction, any remaining refund of the security deposit and copies of receipts for the deductions or charges. All of this must be completed within the 21-day timeframe. Landlords do not have to include receipts for repairs that cost less than $126. Renters also can waive the right to have receipts included.
If any repairs can’t be finished within 21 days, landlords can give cost estimates. In those cases, tenants will eventually receive the actual receipts; landlords have to give the receipts to them within 14 days of repair completion.
2. What Can Be Deducted From a Security Deposit in California?
If a tenant or a tenant’s guest damages the property, the landlord can deduct the cost of repairs from the security deposit. Landlords can’t deduct for ordinary wear and tear.
When tenants move out, landlords can deduct from the security deposit to cover the costs of cleaning the apartment. There is a caveat to this one: Landlords can only deduct to make the apartment as clean as it was when the previous tenant moved in. This is one of the reasons it’s a good idea for both the landlord and tenant to conduct a move-in and move-out inspection to detail the condition of the unit at the beginning and end of a lease.
Landlords can also deduct any unpaid rent.
3. Is There a Limit on California’s Security Deposit Amount?
Yes, but only for residential rentals. California law dictates that security deposits for unfurnished apartments cannot exceed two times the amount of monthly rent. For furnished apartments, the security deposit may equal up to three months’ rent.
The 2019 passage of California Senate Bill No. 644 prohibits landlords from charging active duty military security deposits exceeding the amount of one month’s rent for an unfurnished apartment and two months’ rent for furnished apartments.
The state of California does not restrict security deposit amounts for commercial property rentals.
Need to keep up with changing rental laws? Join the Avail Community Forum to get access to the latest real estate news, stay on top of changing laws, or get your questions answered by a community of landlords.
4. How Much Can Landlords in California Raise Rent?
California landlord-tenant law prohibits landlords from arbitrarily raising rent year to year. California Gov. Gavin Newsom signed a bill in 2019 mandating statewide rent control, and from now until Jan. 1, 2030, California law limits increases of rent to 5% each year plus inflation.
The statewide rent control does not supersede the rent control laws already imposed in Los Angeles, San Francisco, and other California cities. It also doesn’t apply to housing built within the last 15 years.
5. What Is the Maximum Late Fee for Rent in California?
California law states that a late rent fee should be “reasonable,” though it does not set any restrictions when it comes to a maximum late fee for rent. Generally, a reasonable late rent fee in the state is considered 5% to 10% of the cost of rent, with most California landlords charging 5% for any late rent payments.
The law does set maximums for how much a landlord can charge for a bounced rent check. For the first bounced check, they can charge a tenant $25, and $35 for each subsequent bounced check.
6. What Is the Rent Grace Period in California?
California law does not have a set rent grace period, either, though there is a law surrounding when a landlord can serve their tenant with a “pay or quit” notice, which requires the tenant to either pay rent or begin eviction proceedings. That being said, landlords can and should include a rent grace period in their lease, which is typically anywhere from three to five days after the rent due date.
The earliest a California landlord can serve this letter is on the second day of unpaid rent. Their tenant then has up to three days after the letter is served to either pay rent or start the eviction process.
7. Under California Laws, When Can a Landlord Evict a Tenant?
The state’s new rent control legislation also provides protection from unjust, no-fault evictions for tenants who have lived in apartments for at least a year.
However, California law still allows for the eviction of problem tenants, should the tenants fail to pay rent on time or refuse to comply with the lease agreement. An example of refusing to comply would be having a dog or cat when the lease agreement has a clause forbidding pets. If the tenant kept the animal in the apartment, the landlord has just cause to evict.
Landlords can evict renters who become serious nuisances to other tenants, disturbing them even after they’ve been asked to stop. They can also evict tenants who inflict major damage to the property or use it to do anything illegal.
Tenants cannot be evicted for making a complaint against the landlord or for anything discriminatory. Under the Fair Housing Act, it’s illegal for landlords to discriminate against a prospective tenant based on sex, race, color, national origin, religion, familial status, or disability.
8. Do Landlords in California Conduct Criminal Background Checks?
Landlords in California do have the right to run background checks on prospective tenants. According to the Federal Trade Commission, they have the right to check your credit score, criminal history, and rental history without your permission.
However, Oakland and Berkeley have banned criminal background checks on tenants. Landlords in these cities are prohibited from rejecting tenant candidates on the basis of prior criminal convictions. San Francisco and Richmond also have similar laws against such checks, but only for affordable housing options.
If you’re a landlord conducting a tenant background check in California, Avail helps you navigate the process. Landlords can select the reports they need based on their city, and tenants authorize those reports. Both parties get access to the results of each report in their account to help ensure transparency.
Learn more about what landlords look for when screening rental applications or find out how to access your own rental history so you can see what you look like as a prospective renter.
9. When Can a Tenant Withhold Rent in California?
Tenants have the right to withhold rent when landlords fail to perform necessary and mandatory maintenance of the rented units. Such necessary and mandatory maintenance includes keeping the units safe and within the state and local codes. In these instances, the tenant may move out without any notice.
If the building owner or landlord fails to conduct the legally required maintenance, legal action may be taken against them for violating the rental agreement or for any injuries the lack of maintenance may have caused the tenant.
Landlord-tenant laws aim to protect both the tenant and the landlord, so if the laws are followed by both parties, the rental process usually goes smoothly. These additional resources can help tenants and landlords navigate California’s rental laws:
California’s Landlord-Tenant Law
Judicial Branch of California – Eviction Facts
HUD: Tenant Rights, Laws and Protections in California
American Apartment Owners Association: California Tenant Screening
California Apartment Association: Oakland’s Criminal Background Laws
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