Municipal Regulation of Residential Tenancies

It’s no secret that rental housing costs in Washington have been rising significantly in recent years. According to the University of Washington Center for Real Estate Research, in spring 2009, the average rent for an apartment in Washington State was $939 and the vacancy rate was 6.3%. By fall 2021, average rent had risen to $1,547 and the vacancy rate had dipped to 3.6%. Increased housing cost is not just a problem in Washington’s largest cities — Kittitas County, for example, has also seen an increase in average rent, from $704 in spring 2009 to $1,161 in fall 2021.

The Washington State Legislature, as well as some cities and counties, have chosen to enact tenant protection measures in response to the booming rental market. This blog will look at the applicable state provisions on this topic and provide examples of local regulatory efforts through a review of cases involving the City of Seattle in which those regulations have been challenged.

State Law Overview

State law limits cities and counties in one significant respect. In 1981, the legislature preempted cities (RCW 35.21.830) and counties (RCW 36.01.130) from adopting and enforcing residential rent control ordinances.

On the other hand, in recent years, the legislature has adopted a number of tenant protection measures, including:

• Just cause eviction: In 2021 the legislature adopted RCW 59.18.650, which requires landlords to specify a reason for refusing to continue a residential tenancy, subject to certain limited exceptions.
• Managing initial deposits and fees: In 2020 the legislature adopted RCW 59.18.610, which provides that a tenant may request to pay deposits, nonrefundable fees, and last month’s rent in installments.
• A 60-day notice of rent increase: In 2019 the legislature amended RCW 59.18.140 to provide 60-day notice of a rent increase, and increases may not take effect until the completion of the term of the current rental agreement.
• A 120-day notice of demolition: In 2019, the legislature amended RCW 59.18.200 to require 120-day notice to tenants of demolition or substantial rehabilitation of premises.
• Prohibition on source of income discrimination: In 2018, the legislature adopted RCW 59.18.255, which prohibits source of income discrimination against a tenant who uses a benefit or subsidy to pay rent.
• COVID-19 measures: In 2021, the legislature adopted RCW 59.18.620 through RCW 59.18.630, which prohibits assessment late fees for nonpayment of rent due between March 1, 2020, and six months following the expiration of the COVID-19 eviction moratorium. Pursuant to RCW 59.18.630, landlords are also required to offer repayment plans to tenants with unpaid rent.

In addition, RCW 59.18.440 authorizes cities and counties to adopt relocation assistance ordinances for low-income tenants.

Regulation of Tenancies at the Local Level

Some cities have adopted tenant protection measures at the local level. In addition to Seattle, Auburn, Burien, and Tacoma have tenant protection regulations. Individual landlords or landlord organizations sometimes challenge tenant protection regulations as unconstitutional regulatory takings and a violation of due process rights, among other things.

In 2019, the Washington Supreme Court clarified the tests for regulatory takings and violations of substantive due process in two cases known as Yim I and Yim II. Both Yim cases involved challenges to tenant protection provisions adopted by the City of Seattle. In 2020 MRSC published a blog about the ruling written by Roger Wynne, who represented the City of Seattle in the Yim cases, on the significant constitutional issues raised by those cases.

First in Time Rule: Yim v. City of Seattle (Yim I)

The City of Seattle’s “first in time” rule (FIT) requires landlords to notify prospective tenants of the criteria used to screen prospective tenants and the minimum threshold for each criterion. A landlord must note the date and time it receives a complete application from a prospective tenant and screen the applications in chronological order. The landlord is required to offer the rental unit to the first prospective tenant who meets the screening criteria. The measure is intended to address potential bias by landlords against prospective tenants based on factors such as gender, race, or disability. It can be found at Seattle Municipal Code 14.08.050, and the Seattle Office for Civil Rights has an FAQ about the rule.

Landlords challenged the FIT rule in Yim I, claiming it violated their constitutional rights. They argued that the FIT rule was invalid on its face and should be struck down. The supreme court upheld the FIT rule, noting that while there is room for substantial debate as to whether it will be successful, it passed “rational basis” review by the court.

Criminal History Checks: Yim v. City of Seattle (Yim II)

The City of Seattle, as part of its response to its “housing affordability crisis,” adopted an ordinance that prohibits landlords and tenant screening services from requiring disclosure or taking adverse action against a prospective tenant based on arrest records or criminal history. Prior to adopting the ordinance, the city considered the fact that criminal history checks disproportionately impact racial minorities and that the criminal history is sometimes used as a pretext for racial discrimination. The ordinance can be found at SMC 14.09.025.

Yim II was a federal court case in which the federal court asked the Washington Supreme Court to clarify the appropriate standard of review for substantive due process claims under Washington law. The Washington Supreme Court clarified that the standard of review was the same as the federal standard. The federal district court subsequently upheld the constitutionality of the ordinance in an unpublished decision. That ruling has been appealed to the federal Ninth Circuit Court of Appeals.

Eviction Bans and More: Rental Housing Association v. City of Seattle

The Rental Housing Association (RHA) case, decided by the Washington Court of Appeals on March 21, 2022, involved a challenge to several Seattle ordinances:

• The winter eviction ban: SMC 22.205.080 provides that it is a defense to certain evictions if the eviction would result in the tenant having to vacate the premises at any time between December 1 and March 1. This provision was adopted in February 2020, prior to the start of the COVID-19 pandemic emergency. The Washington Court of Appeals ruled that a winter eviction ban is not preempted by state law and does not violate the constitutional rights of landlords.
• The COVID-19 eviction ban: In March 2020, Mayor Durkan adopted an eviction order that prohibits evictions for failure to pay rent during the civil emergency declared by Mayor Durkan on March 3, 2020, if the tenant submits a declaration asserting that the tenant has suffered financial hardship as a result of the pandemic. The mayor’s eviction moratorium expired on February 28, 2022, and it was not challenged in the case. However, the Seattle City Council adopted SMC 22.205.090, which extends the eviction ban for an additional six months after termination because the “economic impacts from the COVID-19 emergency are likely to last much longer than the civil emergency itself.” The appeals court ruled that the six-month extension was not preempted by state law. However, the appeals court held that it violated landlord procedural due process rights, because, unlike the mayor’s eviction moratorium, it did not provide landlords an opportunity to challenge a tenant’s self-certification of financial hardship during the civil emergency.
• A payment plan ordinance: The City of Seattle also adopted an uncodified payment plan ordinance in May 2020. This occurred prior to the 2021 adoption of RCW 59.18.630 by the state legislature. The ordinance included a provision that bans the accrual of interest on rent due during or within one year after the emergency declaration. The appeals court stated that RCW 59.18.630 did not preempt Seattle’s payment plan ordinance. It upheld the ordinance generally but struck down a provision that banned the accrual of interest on rent due during or within one year after termination of the civil emergency. RCW 19.52.010 provides that a creditor (such as a landlord) is entitled to interest when the debtor fails to pay the specified amount and the ordinance conflicted with that statute.

Conclusion

The question of whether to adopt tenant protections at the local level is a policy choice. Although rent control is preempted, cities and counties have latitude to adopt other tenant protection measures that provide additional protections and do not directly conflict with state law. Since such measures may implicate landlord constitutional rights, they should be reviewed carefully by legal counsel.