HB 1236 and impact on WA real estate

Washington Real Estate Q&A Discussion Forum
5yFollow

HB 1236 and impact on WA real estate

Jayman Dalal
Member since 2021 · 3 posts · 4 votes

HB 1236 is being discussed in Senate soon. Here is a post on SeattleTimes summarizing the bill. Here are my thoughts on it. I wonder what other perspectives folks have? Does it make it harder to rent now?

Pros

  • - Puts more focus on landlords to look for high quality tenants.
  • - Keep first lease to under 1 year so that you can invoke the "no cause" termination.
  • - Be vigilant to look out for warning signs before the first lease ends and give a 60 days termination notice to tenant.
  • - Only renew to tenant that pays on time, nuisance free and hassle free. 

Cons/Open Issues:

  • - Unclear on how the renewals will be past 1st lease expiration. Does it become month-to-month always or can we still renew to a term? 
  • - Going from 20 to 60 days is a very long period of notice, putting more onus on landlords to make early call.
  • - Landlords renting out in lower end communities might be motivated more to sell those properties, leading to more homelessness. 

Thoughts?

4Reply
12 views

Most Popular Reply

Bjorn AhlbladPro Member
Investor · Shelton, WA · Member since 2017 · 6k+ posts · 6k+ votes
5y

@Jayman Dalal Welcome to BP! Excellent first post! I have raised my base requirements and screen harder. We have been doing strictly MTM for the past 6 years-works great!

3Reply
See this reply in the discussion

9 Replies

Jump to latestLatest
  • Bjorn AhlbladPro Member
    Investor · Shelton, WA · Member since 2017 · 6k+ posts · 6k+ votes
    5y

    @Jayman Dalal Welcome to BP! Excellent first post! I have raised my base requirements and screen harder. We have been doing strictly MTM for the past 6 years-works great!

    3Reply
  • Sharon Rosendahl
    Investor · Quilcene, WA · Member since 2017 · 230 posts · 169 votes
    5y

    Since I feel we are losing control of our business with so many restrictions we are considering selling two of our properties in a lower quality tenant area. While we have a couple that are in a good area and we have been able to choose our tenants we have actually discussed selling them despite good cash flow because we may no longer be able to eliminate bad tenants. We will take our investments to areas with more typical laws for landlords. I'm not sure how this is a win for WA tenants as we provide reasonable priced, well maintained housing but I guess WA doesn't want us anymore.

    2Reply
  • Jayman Dalal
    OP
    Member since 2021 · 3 posts · 4 votes
    5y

    Thanks @Bjorn Ahlblad for the response. Slightly digressing from the topic. Couple questions: 

    1. How does MTM work for you? Isn't it a lot of overhead to have to sign every month across all tenants or do you use some app?
    2. Do you get a full lease signed every month or just an MTM extension?
    3. This would mean bit uncertaininty for the tenants to be on MTM. What is their motivation for keeping MTM with you?
    4. If you dont mind me asking, where in WA do you have properties where you use this strategy?

    Perhaps we can connect on PM to discuss this, if that works for you.

    0Reply
  • Jeffery Wilen
    Rental Property Investor · Vancouver, WA · Member since 2017 · 181 posts · 115 votes
    5y

    @Jayman Dalal

    MTM leases are not signed every month. They automatically renew each month unless notice is given by one of the parties. 
    The benefit is it gives either party the option to terminate, typically with 30 day notice. However different jurisdictions may have longer notification periods, some even as long as 90 days. 

    2Reply
  • Jayman Dalal
    OP
    Member since 2021 · 3 posts · 4 votes
    5y

    @Sharon Rosendahl, Thanks for the inputs. Seems like you are suggesting that the laws are already bad here in WA evict tenants. I know Seattle is averse to landlords. Would you mind sharing which city you are experiencing this situation? 

    Personally, we have been lucky to get good tenants and did not have to deal with eviction or termination of lease. So, I am not sure I can fully empathize. As per the lease we have put in place and my understanding of the current RE laws here in WA, I think we can give notice to the tenant for refusal to play or violation of any clause (causing nuisance, crime, drugs, CCR, etc) and they will be required to vacate. If they cannot then we would have to take the route of eviction, which can be bit costly for landlords. Is that not something that is working for you? Or is this a naive assumption?

    Hopefully, the lawmakers realize that this new law will make it even tougher situation for tenants that they are trying to protect. 

    0Reply
  • Bjorn AhlbladPro Member
    Investor · Shelton, WA · Member since 2017 · 6k+ posts · 6k+ votes
    5y

    @Jayman Dalal Like others have said there is just one lease signing and it auto renews.

    I have properties in Tumwater, Shelton and Aberdeen.

    MTM does make the tenants more respectful.

    Make sure you screen thoroughly and don't compromise; an empty unit is way better than one with a bad tenant!

    Landlording is a little riskier today than it was in the past; keep raising rents and doing regular inspections!

    2Reply
  • Sharon Rosendahl
    Investor · Quilcene, WA · Member since 2017 · 230 posts · 169 votes
    5y

    @Jayman Dalal

    I screen tenants very carefully so have not had to evict since I acquired a property with a non-paying tenant. And even then, they vacated once I started the process. The problem is, we are now at 14 day pay or quit instead of 3. We are subject to a judge determining that the tenant has a good reason for not paying. The trend is becoming more landlord unfriendly. Bills like the ones that have been being proposed during the last few years along with some of the laws that are also being proposed or passed in neighboring Oregon indicate that we will continue to lose power in determining our own business direction.

    I have properties in central WA and the Oly Peninsula. Good screening is critical and I also would rather have an empty unit than a badly filled one. It does happen though, I had a tenant fall off the wagon after years of being clean. That was a costly issue.

    My point really is, all these restrictive laws may protect a small handful of tenants from abusive landlords but it will chase away many of the good landlords thus leaving less options for the tenants. It is hard enough to make money, who needs more laws to prevent it? I can invest my money in other investments or in different markets.

    2Reply
  • Brian Hughes
    Seattle, WA · Member since 2017 · 275 posts · 223 votes
    5y

    to answer the original question,   I think both annual renewal and MtM agreements would still be allowed,   it would just be the case that regardless of which agreement type,  the LL would have to show 'just cause' if not renewing,   and by extension if the tenant chose to fight it,   prove it in court.  

    Just cause can be very difficult to prove for some of the supposed just causes like waste/nuisance activity.   Say the tenant smokes in their bathroom.   They can make all kinds of excuses - the unit already smelled like smoke ;  the neighbor smokes not me ; the wind blows it in from next door ; I didn't see the cigarette burns during the move in inspection ; I only did it once ; somebody else left those cigarette butts outside my door, etc.   A judge hearing all of this would be left with deciding based on their own biases likely more than anything else.  

    This is a substantial shift from now where (mostly) a LL can opt to terminate the tenancy at end of lease or with sufficient notice for MtM (except seattle) without stating a reason.    In this circumstance of course the tenant can still hold over,    but it is/was a guaranteed  judgement for the landlord assuming they served all their notices right.

    this WILL increase the cost and risk to property owners,   and have a negative effect on housing availability and quality especially in "lower income" areas unfortunately;   through fewer small operators,   and higher screening criteria,   higher deposits and rent.

    Since one of the major benefits of the renewal lease is (especially in seattle) the option to terminate without cause, I anticipate use of this type of lease will decline substantially. I use them now but probably that would end with statewide just cause in favor of an initial 12 month lease changing to MtM.

    2Reply
  • Sherief Elbassuoni
    Realtor · Bellevue, WA · Member since 2019 · 882 posts · 1k+ votes
    5y

    @Jayman Dalal, After the moratorium, I switched all my properties to Month-to-Month. No more annual leases. I also screen my tenants thoroughly. In the past, I was accepting a low 600s credit score. Not any more.

    To answer your question, you do not renew the M-T-M lease every month. It auto renews till one of the two parties gives a termination notice.

    2Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free