"With a heavy-handed new law that is the first of its kind in the nation, Seattle has set its regulatory crosshairs on landlords, attempting to police their inner thoughts and eliminate the possibility that their decisions could be motivated by "implicit" or unintended bias.
Known as the "first in time" rule, the mandate forces landlords to rent to the first qualified applicant, rather than choosing the best fit from among prospective tenants.
Sponsors contended that this unprecedented restriction is needed because traditional anti-discrimination laws do not protect against unconscious prejudices. Landlords, it was alleged, can't be trusted to make decisions based on their "gut instincts," because there's no way to know whether those instincts are "pure." The only solution is to take away their right to make discretionary decisions altogether – including decisions based on rational, nondiscriminatory considerations."
Residential Real Estate Broker · Cartersville, GA · Member since 2015 · 575 posts · 581 votes
9y
@Thomas Mattausch Newsflash; it's 2017 not 1959. What racial discrimination exists in Seattle housing laws today? List them out specifically please.
@Patrick M. so how do handle 2 equally qualified applicants but one that is more advantageous to the owner? For instance one has pets one does not. Owner allows pets but doesn't prefer them. Or one wants to move in within 3 days and one wants to move in within 4 days but both are qualified?
@Troy Fisher The city is not forcing you to raise your standards they are forcing their beliefs, biases and prejudices on you and your business, restricting your free trade and imposing arbitrary limits.
What needs to happen is for landlords to band together and file suit against the city to prevent this over reach. Sadly, most of the sheeple will just take it and continue to allow the slow erosion of their rights.
@Natalie Kolodij Seems like you might need to time stamp applications. I just shake my head in disbelief at the overreach of inept government trying to control others businesses.
Lakewood, OH · Member since 2013 · 193 posts · 60 votes
9y
No doubt this will embolden lawsuit attorney's to run ads like, "do you feel your rental application wasn't approved because you were discriminated against?"....
Investor · Seattle, WA · Member since 2015 · 77 posts · 46 votes
9y
As a third generation Seattle landlord, I'm conflicted on this law. There's no denying there is a history of racist housing laws in Seattle.
Required reading for every Seattle landlord: the story of a would-be cash homebuyer, Robert L Jones:
"The attempt by Robert L. Jones, in April of 1959, to buy a house outside of the Central District helped focus a spotlight on racial discrimination and housing issues in Seattle. The Washington State legislature passed the Omnibus Civil Rights Act in 1957, outlawing housing discrimination in home sales while loans from a federal or state agency remained unpaid or while there was commitment for such loans. In 1959, John O'Meara put his house up for sale. O'Meara financed his home through a private loan insured by the Federal Housing Authority (FHA). He did not use a real estate broker but, rather, listed the house himself. Robert L. Jones and his wife visited the home on April 19 and on the 21st had their attorney leave a down payment of $1,000 and a signed earnest money receipt with an offering of all cash to seller on closing. The check on the earnest money receipt were returned to the Jones' attorney. The Jones family filed a complaint with the Washington State Board Against Discrimination. The Board upheld the complaint that the O'Mearas had refused to sell their home to the Jones family because of their color.
In January 1960, the King County Superior Court ruled that state law unconstitutional, and upheld the O'Mearas' decision not to sell their house to the Jones family. In September 1961, the case went to the Supreme Court of Washington (O'Meara v. Washington State Board Against Discrimination). The Supreme Court ruled on a 5 to 4 vote in favor of the O'Mearas, judging that the state law did not apply because an FHA loan was not considered "publicly assisted housing.""
The man got enough cash together to buy a house, went to court to prove his right to buy outside of the segregated CD, and lost.
However, I do doubt the impartiality of studies by the Seattle Office of Civil Rights that claim to show discrimination by property managers. They have to find discrimination to justify their existence.
Further, I feel this law is very unfortunate and really a lose-lose for everyone, because the loss of (especially small scale) property managers' ability to use discretion in accepting applications will absolutely result in application criteria being raised across the board!
All the people I took a chance on through the years who made a good impression but had bad credit, too many kids, don't make quite enough money - they are now out of luck.
However, my fellow Seattle landlords should know that enforcement is being delayed until July 1.
Rental Property Investor · Red Bank, NJ · Member since 2017 · 1k+ posts · 1k+ votes
9y
I gotta say, I really only have one HUGE problem with this ordinance and it is not what others are complaining about. What I see in this ordinance is exactly what I have read and been taught: Have a written set of criteria that you require for a tenancy and document how each applicant makes or misses the mark and document, document, document.
The last thing I want as a landlord is to be sued for discrimination and walk into court and tell a jury "Y'all see, what we have he-ah is a failure to communicate... Eye's just goin' with ma gut, ya'll see." No thank you very much.
Some one meets the criteria and passes the background- Then yes, I will offer them the apartment. I am not going to bypass them because of my gut or other biases/prejudices.
Now the HUGE problem I have after reading the legislation is the time frames... In my opinion these are far more onerous to a landlord. 48 hours to accept the offer of a tenancy- Outrageous. 72 hours for supplemental information requested by the landlord! Yikes. There lies the hardship.
If I was a landlord in Seattle I would ensure that I had a documented screening criteria, and if I had any concerns or I wanted to incorporate as much of my own "personal" criteria I would spend a couple hundred buck and sit down with an attorney.
The only real winners I see here are property management companies. They have gotta be licking their chops- because I see a lot of smaller landlords throwing up their hands and hiring them.
Specialist · Kirkland, WA · Member since 2013 · 1k+ posts · 817 votes
9y
So, most big property management companies are doing this to avoid discrimination lawsuits, it's part of the Standards of Operation. This is old news here, and I haven't met many landlords that are worried about it, as business owners, they just realize it's part of the flow of business, and aids them because now the city is forcing them to raise their standards, rents, and property values.
@Patrick M. - I'm not sure if I understand what you are saying about the hardships of the timeframe:
If a landlord receives 2 applications on day 1 lets say Morning App and Afternoon App.
Morning App is just the application, and does not also include a copy of the last two pay-stubs, Drivers License, or Landlord references.
Afternoon App has everything.
The Both screenings come back approved. Morning App has upto 72 hrs to provide the missing documents to be the tenant. If they fail to supply the information their status as the First In Tenant is no longer protected. Once offered Tenancy, they are given an opportunity to accept the lease for 48 hours.
In Effect, all this has done, is landlords now require 60 days notice of termination of a lease, and they start advertising the property sooner. Creating a hardship on current tenants as landlords now post 2 Day Notices to enter to do appointments and all those other annoying things.
The TRUE concern for Seattle Landlords is this. The capping of security deposits, and the "Payment Plan" of the security deposit.
Payment Plans Required –Landlords must allow an installment plan to pay a security deposit, a pet deposit, move-in fees, and last month’s rent. The payment plan must be structured as follows, unless otherwise agreed to by the landlord and tenant
For rental agreements of 6 months or longer—6 consecutive and equal payments
For agreements between 30 days and 6 months—4 consecutive and equal payments
For month-to-month agreements—2 equal installments; except for pet deposits, which can be paid in 3 equal monthly installments.
Rental Property Investor · Red Bank, NJ · Member since 2017 · 1k+ posts · 1k+ votes
9y
@Troy Fisher- As a smaller landlord who has to eat my costs, offering the apartment to the qualified tenant and being told I will get back to you in 2 days is not acceptable. On any given day I may not have a problem with it- but to mandate it risks me losing other potential tenants. Also your hypo assumes you have another in the hopper.
So lets look at this hypo. I have one tenant that qualifies, he needs to provide me with more documentation. After I inform him of this another prospect calls up- "Wow, I am really interested in the property- I submitted my (very qualified) application electronically... Is it still available?"
"Well yes, but I have a potential tenant... I'll let you know in 3 days."
"Click" or "3 DAYS! Oh- well I am going to look at other properties" or "uh, OK, I guess"
3rd day comes you get your documentation- you offer, he'll get back to you in 2 days.
Second guy calls back- "Hey, I waited- so what's the deal?"
"Umm, I"ll let you know in 2 days..."
"WHAT! You said 3- now it is 5?"
Then first guy calls you back in 2 days, "no thanks"
You call second guy, he says "Wow- you sure sound desperate, howbout you knock $50 off the rent..." Or more likely, second guy got an apartment because he is such good quality... now I have to start digging deeper into the pile of applications...
What if you decided to be nice and give the guy 4 days accept and he was white and the guy waiting was black, are you protected?
@Troy Fisher- As a smaller landlord who has to eat my costs, offering the apartment to the qualified tenant and being told I will get back to you in 2 days is not acceptable. On any given day I may not have a problem with it- but to mandate it risks me losing other potential tenants. Also your hypo assumes you have another in the hopper.
So lets look at this hypo. I have one tenant that qualifies, he needs to provide me with more documentation. After I inform him of this another prospect calls up- "Wow, I am really interested in the property- I submitted my (very qualified) application electronically... Is it still available?"
"Well yes, but I have a potential tenant... I'll let you know in 3 days."
"Click" or "3 DAYS! Oh- well I am going to look at other properties" or "uh, OK, I guess"
3rd day comes you get your documentation- you offer, he'll get back to you in 2 days.
Second guy calls back- "Hey, I waited- so what's the deal?"
"Umm, I"ll let you know in 2 days..."
"WHAT! You said 3- now it is 5?"
Then first guy calls you back in 2 days, "no thanks"
You call second guy, he says "Wow- you sure sound desperate, howbout you knock $50 off the rent..." Or more likely, second guy got an apartment because he is such good quality... now I have to start digging deeper into the pile of applications...
What if you decided to be nice and give the guy 4 days accept and he was white and the guy waiting was black, are you protected?
When Rent per sqft is $2+, average house cost $600k and physical vacancy is sub 3% (city-wide!), the situation is a little different. I noticed that the average advertising is 6wks out for occupancy. For instance I just evaluated a triplex this morning which each 2bed/1bath rents for $2150, 3x the rent, and a 700 credit score, with no pets, employed in the same industry for 24 months, limits your pool to people who you probably aren't going to have these problems for. While I don't personally don't like where the market is going here (as we barrel towards Rent Control, or something like rent control). There is something that I tell wholesalers, I now have to start telling Landlords, the people who are willing to work harder, smarter, and a little differently than what all the guru's are teaching are the people who are going to succeed. 3% annual rent increases, 3% appreciation, and a labor market that is on fire, give high confidence in the area.
Now buying a cash-flowing property, is the hard part. Of the last 10 small multis (4 or less) in SEATTLE proper, they are not positive on equity/cashflow for 5 years. (Purchase for 1.25M, rent's of 2k /unit)
Rental Property Investor · Red Bank, NJ · Member since 2017 · 1k+ posts · 1k+ votes
9y
@Troy Fisher your points are well taken but as many learned the hard way in 2007, everything doesn't keep going up.
We have just shook lose of rent control (phased out on vacancy). It was tied to 90% of CPI. This was a formula widely promulgated out east here and it was instituted in the 70's when CPI was 7-10%.
Legislation stays around long after markets decline, tying a landlord up for a possible week per tenant is horrible.
Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
9y
This doesn't really seem like that big of a deal to me....how many people are turning away multiple qualified candidates? I already take the first applicant who passes my screening.
Seattle, WA · Member since 2017 · 19 posts · 12 votes
9y
Unfortunately I am not only a Seattle landlord, but a fairly new one at that. This legislation is particularly challenging for small landlords, those who own a very small number of properties/units, since their risk on bad tenants can not be spread out over multiple units. I own a house that I intend to move back into in a few years, and want to rent in the meantime, as well as an ADU in my current home. Fortunately the ADU is exempt from both of these new regulations, so at least I'm good there. However, since I plan to re-occupy the larger house at some point, I am particularly motivated to prevent or minimize damage to it. It is also a larger house (with a large mortgage), so also more vulnerable to bad tenants who don't pay the rent. It has been a big learning experience this year for me in the ebb and flow of the rental market through the seasons, even in Seattle with such low overall vacancy. While as some have suggested, I could simply raise my rental criteria to credit score of 700 and 3x monthly rent, at times this could make it challenging for me to find a tenant, even at a break-even level with my mortgage payment. I am really unclear if this legislation allows me to state my criteria in advance (as above), but then make an exception for, say, a 650 credit score if I don't have a candidate who fully fits the criteria. Would the person with the 400 credit score potentially win a judgment against me because I accepted the higher (but not fully qualifying) score if the 400 applied first? Extrapolate the simple credit score example to other circumstances. I have never gotten a clear answer on this one, so I hope the lawsuit against the city is acceptable.
Residential Real Estate Broker · Cartersville, GA · Member since 2015 · 575 posts · 581 votes
9y
@Thomas Mattausch Newsflash; it's 2017 not 1959. What racial discrimination exists in Seattle housing laws today? List them out specifically please.
@Patrick M. so how do handle 2 equally qualified applicants but one that is more advantageous to the owner? For instance one has pets one does not. Owner allows pets but doesn't prefer them. Or one wants to move in within 3 days and one wants to move in within 4 days but both are qualified?
@Troy Fisher The city is not forcing you to raise your standards they are forcing their beliefs, biases and prejudices on you and your business, restricting your free trade and imposing arbitrary limits.
What needs to happen is for landlords to band together and file suit against the city to prevent this over reach. Sadly, most of the sheeple will just take it and continue to allow the slow erosion of their rights.
Rental Property Investor · Red Bank, NJ · Member since 2017 · 1k+ posts · 1k+ votes
9y
@Robert Gilstrap That is easy. I don't prefer pets at all, so I have a no pets policy. If you don't like them make it part of your criteria. As anyone with a no pets policy will tell you, it is not going to stop people with pets from applying- trust me. If the 1st qualifying person has a pet and you have a no pets policy then they aren't your 1st qualifying person.
As to the 2nd hypo, I don't run a rooming house. I advertise my available date. If the 1st qualifying tenant can't move in on that date then they are not my 1st qualifying tenant.
In each of these cases I can change my criteria to accept both of these tenants if there are no other qualifying tenants, if I am desperate...
Again- I find the "time requirements" (and also security deposit) to be the bigger infringement.
While as some have suggested, I could simply raise my rental criteria to credit score of 700 and 3x monthly rent, at times this could make it challenging for me to find a tenant, even at a break-even level with my mortgage payment. I am really unclear if this legislation allows me to state my criteria in advance (as above), but then make an exception for, say, a 650 credit score if I don't have a candidate who fully fits the criteria. Would the person with the 400 credit score potentially win a judgment against me because I accepted the higher (but not fully qualifying) score if the 400 applied first? Extrapolate the simple credit score example to other circumstances. I have never gotten a clear answer on this one, so I hope the lawsuit against the city is acceptable.
First I'd ask what part of the city you are in that it's hard to find a candidate that doesn't fit a 3x Income, and a 700 Credit Score, and looking at ways to create your criteria so that you are filtering to the right person.
Second, from what I have understood you can make exceptions if no one passes the criteria. Let see what the peanut gallery has to say: @Enrique Jevons, @Melissa Melia?
Specialist · Kirkland, WA · Member since 2013 · 1k+ posts · 817 votes
9y
Originally posted by @Account Closed:
@Troy Fisher Credit scores don't mean anything, and a landlord should look at the overall credit report and when you used Trans Union, you will miss a lot of data.
It's a starting filter, and you can be as detailed as you chose to be. I use Property Management because I just don't have time or bother to work that hard.
Property Manager and Investor · Seattle, WA · Member since 2015 · 55 posts · 23 votes
9y
Hi @Troy Fisher! It's been a while, my friend. Oh... my new favorite piece of legislation. We've always used standard screening criteria and processed applications in the order received, but as @Patrick M. says above, it's the wait time forcing the wheels to turn slower that are killing us, and it's equally unfair to renters. 72 hours for additional information (like adding a co-signer/guarantor if we discover someone has no credit - like a college student), and 48 hours for them to accept an approval. This serves that first applicant well, but we have:
Multiple applicants for each vacancy, who can be left waiting a week or longer to learn if their applications will even be processed
Applicants applying for multiple properties, and tying up units they may have little intention of inhabiting as backups, now that they have this time buffer
Landlords with increasing vacancy costs. Dragging the vacancy out means rent income lost, and frankly, units that could be used to house people sitting empty.
I'm on the receiving end of a lot of frustrated people just wanting a place to live, and small landlords who operate on slim margins and are eyeing record-high sales prices as an out. If you're in Seattle, contact your Seattle City Councilmember responsible for this terrible piece of legislation which somehow manages to work against both renters and landlords.
To answer your specific question, Troy, we have screening criteria that sets the bar high, but is not exclusive based on a credit score number. For some properties we do accept co-signers or slightly lower credit scores. We exclude things like "consistent patterns of delinquency," instead of "credit scores below 700." Just a note that in light of this newest legislation, we've also added the screening criteria "applicant must be willing to take possession within 2 weeks of approval" because the SMC is so poorly written that the first applicant could want possession 3 months from now, and what's stopping them.
Hi @Troy Fisher! It's been a while, my friend. Oh... my new favorite piece of legislation. We've always used standard screening criteria and processed applications in the order received, but as @Patrick M. says above, it's the wait time forcing the wheels to turn slower that are killing us, and it's equally unfair to renters. 72 hours for additional information (like adding a co-signer/guarantor if we discover someone has no credit - like a college student), and 48 hours for them to accept an approval. This serves that first applicant well, but we have:
Multiple applicants for each vacancy, who can be left waiting a week or longer to learn if their applications will even be processed
Applicants applying for multiple properties, and tying up units they may have little intention of inhabiting as backups, now that they have this time buffer
Landlords with increasing vacancy costs. Dragging the vacancy out means rent income lost, and frankly, units that could be used to house people sitting empty.
I'm on the receiving end of a lot of frustrated people just wanting a place to live, and small landlords who operate on slim margins and are eyeing record-high sales prices as an out. If you're in Seattle, contact your Seattle City Councilmember responsible for this terrible piece of legislation which somehow manages to work against both renters and landlords.
To answer your specific question, Troy, we have screening criteria that sets the bar high, but is not exclusive based on a credit score number. For some properties we do accept co-signers or slightly lower credit scores. We exclude things like "consistent patterns of delinquency," instead of "credit scores below 700." Just a note that in light of this newest legislation, we've also added the screening criteria "applicant must be willing to take possession within 2 weeks of approval" because the SMC is so poorly written that the first applicant could want possession 3 months from now, and what's stopping them.
Why don't you do a 60 day notice of move out, and then start advertising the property at 59 days so that you maintain lower vacancy? I appreciate the "Take Possession w/in 2 Weeks" addendum. I think my main question and what I've heard is okay, is to make exceptions to the criteria if no-one meets them?
Property Manager and Investor · Seattle, WA · Member since 2015 · 55 posts · 23 votes
9y
@Troy Fisher - if you make exceptions to criteria - how would you do it? Update screening criteria within the listing (it's now required to be listed or linked there), and re-contact everyone who's inquired to give them equal opportunity to meet the new criteria? Or just bend he rules or notice of Adverse Action to the applicant and make them pay an additional deposit for the added risk? I think a much better approach (and sorry for being vague in my first reply) is to have screening criteria that doesn't put you in this position in the first place. If you're willing to accept a lower threshold of tenant, that should be your minimum requirement stated in screening criteria.
Property Manager and Investor · Seattle, WA · Member since 2015 · 55 posts · 23 votes
9y
Oh! And @Troy Fisher we don't typically advertise ahead of vacancies for two big reasons -
1) Most of the time, an occupied unit doesn't show as well and we get less for it, with the current tenant's belongings in it (unless it looks like a Crate & Barrel catalogue). Our investor clients need the strongest rent roll possible because many of them are using it to leverage other projects. They'd rather take a week or two of vacancy to get an extra $100 - $200 month/rent on paper.
2) Sometimes there are surprises when tenants move their stuff out, and we don't necessarily want a new tenant moving in the next day. That closet full of stuff could be concealing a roof or plumbing leak, for instance, and we want to handle that in an empty unit. Some units just need cleaning and paint touch-ups at turnover, some need more, and we want to make sure we're handing a quality unit over to the next tenant.
Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
9y
It's as if they think we are rigid and/or too stupid to adjust and bob & weave with new laws or 'guidance'.
First minimally qualified applicant, no additional deposits for service/comfort/emotional support animals, felons are a protective class, etc. They just keep coming.
Some LLs may start posting ads with no contact info or address - just anonymous e-mail and cross-streets. The ad may ask questions, several of them, to pre-pre-qualify before the applicant gets a response. They may pre-screen again and again before showing the rental.
They may double security deposit requirements (as allowed by law) for everyone, reducing if no animals are involved. They may, they may.... all to avoid even receiving an application that may not be stellar.
All possibilities if we feel so painted into a corner once we receive an application that we are afraid the first one won't be the best or are afraid to deny anyone...
Real Estate Agent · Seattle, WA · Member since 2016 · 34 posts · 5 votes
9y
What the city is trying to do is prevent landlords from starting bidding wars, just like in house sales. People with more $ will offer to pay more or give a non-refundable deposit to get the place. This makes it harder for the average person to find a place. The law doesn't help a single mother who makes a decent wage and has an ok credit score because she works and has a kid to take care of the likelihood that she can be the 1st person to view a property is slim. If your a couple then you may have more income and one of you may have a flexible work schedule, these are the people who will typically get the places they want with the new law. There is not rent cap so one of the first criteria will be to charge more, which is not going to help the people that the city council says they are trying to help.
Originally the mayor talked about a program that would reward landlords who kept there rents at a reasonable rate, I don't know if it would be a cut on property taxes or what since we don't have state taxes but I would have been fine with that but it never came to fruition?!
I have a duplex and I am friends with my tenants, if any of them decide to move I will get referrals from them or other friends and colleagues, the law is only for advertised rentals.
