What You Need to Know About the "First-in-Time" Ordinance

 

The Seattle City Council recently enacted a number of ordinances affecting landlords. One of those ordinances, commonly referred to as the First-in-Time Ordinance, is noteworthy for its complexity. This article analyzes Ordinance 125114 and suggests some steps landlords should take now that the “First in time” requirements are in effect.​ The Ordinance affects five areas by creating new obligations for landlords when dealing with potential or current tenants. Landlords are well-advised to become familiar with the entire Ordinance and update their policies to comply.

 

Here is a brief summary of the Ordinances:

 

1.  When screening tenant eligibility, if a prospective tenant receives a rent subsidy then the landlord may only consider the tenant’s portion of the rent in any income-based eligibility criteria. SMC 14.08.040(F)(1). Thus, if the rent is $1,200 a month and the tenant receives a rent subsidy of $700 from Section 8, the monthly rent is considered to be $500. This is most important for landlords who include the ratio of a tenant's income to the rent as a criterion for screening potential tenants. This does not prohibit landlords from requiring a certain ratio of income to rent. A rent subsidy is not considered "income," but a reduction in the monthly rent. A landlord must also consider all sources of income, including any "alternative source of income" as part of the tenant's total income. SMC 14.080.040(F)(2).
An “alternative source of income” is verifiable from any source other than employment, including social security benefits, child support, unemployment benefits, and other retirement income.

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2.  It is unfair to advertise or maintain a preferred employer program. SMC 14.08040(I). Existing programs that pre-date the effective date of the new ordinance may continue for the duration of the lease. A landlord would violate this law by offering, for example, “If you work for Microsoft I will offer you a free month’s rent as an incentive to move in.” It is unclear if offering a similar inducement to a member of the U.S. Military—employed by the U.S. Government—would also be considered a violation.

 

3.  For both potential and current tenants, the landlord must cooperate with the tenant to complete or submit information and documentation applying for rental assistance from Section 8 or another rental subsidy. SMC 14.08.040(H)(1).

 

4.  For current tenants, a landlord must accept a pledge from a subsidy or a charity to pay a tenant’s housing or legal costs when the pledge meets certain requirements. SMC 14.08.040(H)(2). All of the following conditions must be met:

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(a) The pledge and other payments will get the tenant current on all housing costs (not including utilities) including court costs and attorney's fees already incurred; AND

(b) The pledge is in writing and received before the waiting period under the notice to pay or vacate expires; AND

(c) There are no conditions on the owner to not evict the tenant for a reason other than what the pledge will address or alter the terms of the lease; AND

(d) The pledge must commit to payment within five business days of issuing the pledge.

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If a subsidy program pledges to pay all the unpaid rent, late fees and attorney’s fees for giving a notice within the compliance period of a notice to pay rent or vacate, the landlord must accept it even though the money may not be paid until up to five days after the three-day notice expires. However, a landlord may refuse the pledge if the subsidy does not pay attorney’s fees, if the pledge is received after the three-day notice expires, or if the pledge requires the landlord to effectively change the lease.

 

5.  Beginning in January, landlords must follow new, first-in-time requirements when screening tenant eligibility. SMC 14.08.050. At its most basic, this section requires landlords to (1) screen tenants in the order that they receive complete applications and (2) offer the unit to the first applicant who meets the minimum criteria. The Ordinance heavily regulates how that process works and exceptions to that general rule.

 

The Ordinance places burdens on what information landlords must provide to prospective tenants. Landlords must comply with RCW 59.18.257(1). That state statute requires landlords to notify all prospective tenants in writing what information the landlord requires to screen the tenant, what criteria may result in denial of the application, how to contact a credit reporting agency if an application

is denied, and whether the landlord will accept a comprehensive reusable tenant screen report. In particular, the notification must state the information the landlord requires for a complete application and the minimum threshold for each screening criterion. In particular, the criteria should discuss what is considered when assessing an applicant’s criminal history. SMC 14.08.050(A)(1)(a).

 

The Ordinance states that an application is considered complete when the prospective tenant provides all the information requested in the written criteria. The landlord is responsible to provide information explaining how to request additional time to complete an application for those who need help communicating in English or those who require a reasonable accommodation. SMC 14.08.050(A)(1)(b) and (c).

 

Landlords are required to the record the date and time of when the owner receives each completed rental application. SMC 14.08.050(A)(2). Landlords must screen the completed applications in the order they are received. If the screening requires the landlord to request more information that was not requested in the published criteria, the owner is required to notify the prospective tenant of what information is needed and give the tenant a minimum of 72 hours to provide the information. If

the requested information is provided during this timeframe, the application is still considered complete as of the original submitted time. If the information is not provided on time the application may be rejected or considered incomplete. The effect of an application being incomplete is that it loses its chronological priority over complete applications. SMC 14.08.050(A)(3).

 

Landlords must offer tenancy to the first prospective occupant meeting all the published screening criteria. If a party is offered tenancy he or she has 48 hours to accept. The landlord may then consider the next completed application. SMC 14.08.050(A)(4).

 

There are exceptions and provisions to give applicants additional time to complete an application. If an applicant requests additional time to get language assistance, or due to a disability, the landlord must document the time and date of the request and grant reasonable requests. SMC 14.08.050(B). The landlord may request that the applicant requesting additional time for language assistance provide documentation of the need for such services with the complete application. SMC

14.08.050(C). The same is not necessarily true for disabled applicants, where the usual rules regarding reasonable accommodations apply.

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To comply with these new requirements, the first step all Seattle landlords should take is to create a tenant application packet to give to all potential tenants. The packet should contain the following:

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1. An invitation to apply, a statement that the landlord complies with all Fair Housing laws and does not discriminate against any protected class.

2. A clear statement what the application fee is and how the funds will be applied if the application is accepted or not accepted.

3. What types of information the landlord will be accessed by the landlord or a tenant-screening company to conduct the tenant screening.

4. What are the criteria the landlord will consider and the minimum criteria for an application to be accepted. Preparing the rental criteria will require some care but may contain requirements about income, credit, criminal history, rental history, references and other factors. If criminal history is considered, include in the rental criteria a request for information about the nature, severity and length of time since each incident of criminal activity.

5. The contact information of the consumer reporting agency if one is used, and the prospective tenant’s right to obtain a free copy of the consumer rent in the event the application is denied.

6. Whether the landlord will accept a comprehensive reusable tenant screening report.

7. A statement that the applicant may request more time to complete the application either due to requiring language assistance or as a reasonable accommodation.

8. Information on whether the unit is exempt from the first-in-time ordinance.

 

Providing this information at the beginning of the interaction between the prospective landlord and tenant is important. It is considered illegal discrimination to pre-screen the tenant before giving this information.

 

If you need assistance with a tenant dispute, an eviction, a lease or other landlord-tenant situation, please call 206.628.6600 today to speak with one of our experienced attorneys.

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Important: This information is provided as a courtesy without any claim as to its effectiveness or legality. Use of this information does not in any way create an attorney-client relationship.