Effective January 15, 2017, Seattle residential landlords must comply with a host of new rules relating to the move-in fees they charge to tenants.

This is the latest of several measures implemented under the recommendation of the Seattle Housing Affordability and Livability Agenda (“HALA”) Advisory Committee to make housing more affordable and inclusive.

New rules include:

• Landlords are prohibited from charging tenants any one-time fees at the beginning of the tenancy, except for the following: security deposits, nonrefundable move-in fees, pet damage deposits, and last month’s rent.
• The total amount of a security deposit and nonrefundable move-in fee may not exceed the amount of the first month’s rent. The total amount of any nonrefundable move-in fee may not exceed 10% of the first month’s rent. With limited exception, screening costs count toward the nonrefundable move-in fee cap.
• A pet damage deposit cannot exceed 25% of the first month’s rent.
• Tenants are allowed to pay security deposits, nonrefundable move-in fees, pet damage deposit, and last month’s rent in installments. If the lease is for a term six months or longer, the tenant may elect to pay such fees in six equal monthly installments that begin at the inception of the tenancy. For a term less than six months, the ordinance sets forth an alternative installment schedule.  Payment by installments is not available to tenants if the security deposit and nonrefundable move-in fees amount to less than 25% of the first month’s rent.
• Rental agreements must describe the terms and conditions of the payment schedule.
• The informational summary required to be provided by Seattle landlords to all tenants and prospective tenants is being updated by the City to include these new rules.  It is presently unknown when the updated informational summary will be available.
• Landlords who violate these new rules are liable to tenants for damages and attorney fees, and the City may impose civil and criminal penalties.

Recognizing that these changes are “significant and have come quickly,” the City says it will “follow [its] usual approach of offering assistance and information to rental property owners, working with property owners to voluntarily correct the situation if the rules are not followed, and only taking enforcement action when voluntary corrections are not made.”  This assurance may not bring much in the way of solace to landlords already working to comply with Seattle’s new “First-in-Time” applicant policy, which requires landlords to screen rental applications in chronological order and award the lease to the first eligible applicant.

Time will tell whether these measures will achieve the intended goal of greater affordability for Seattle renters, or whether, as Mayor Murray fears, restrictions on security deposits encourage landlords to raise the rent.  For the time being, however, Seattle landlords should carefully review their leasing practices and forms.

If you have any questions regarding this ordinance, please contact Nate Somers or any of the experienced real estate attorneys at MPBA.