Three States, Three new laws to track in 2025
Three New Laws That May Impact You As a Real Estate Investor
Washington Residential (HB 1217) - Rent Control
Oregon Commercial and Residential (SB 426-A) - Property Owners Obligations to Contractors Regarding Sub Contractor Wages
California Commercial (SB 1103) - Commercial Leasing Changes Focused on Short-Term Leases
Washington - Residential
7 May 2025
The rent stabilization ( Rent control) law 2025 HB 1217 passed through the Legislature on the last weekend of the session and was signed into law by the Governor on the 7th of May 2025.
This bill caps annual rent increases at 7% plus inflation, or 10%, whichever is less. The new rentcap on manufactured homes is even lower, at 5%.
Newly constructed buildings( i.e. apartments) are exempted from the law for 12 years from the completion of construction.
New construction will be exempted from the law for 12 years, and affordable housing managed by nonprofit organizations and public housing authorities is exempted altogether but is often regulated by Federal rules.
These changes reflect a tightening of the rental increase rules and makes them more similar to those passed in the State of Oregon a few years ago. Owners of multifamily rental properties are facing rent control legislation throughout the United States, especially in states with liberal legislatures.
https://komonews.com/news/local/washington-lawmakers-pass-rent-control-bill-limits-on-rent-increases-to-7-percent-ways-to-reduce- homelessness-stabilize-prices
Oregon - Commercial and Residential
SB 426-A is intended to solve wage theft by contractors in the construction industry. Makes the property owner and a direct contractor jointly and severally liable in a civil action for any unpaid wages owed to the unrepresented employees of the direct contractor and subcontractors.
The law as drafted and passed out of the senate committee, provides that a property owner may bring an action against a direct contractor to recover damages for amounts paid by the owner to pay off workers on a project.
Clarifies that the owner or direct contractor may withhold payment in an amount and to the extent that the owner or direct contractor paid, on behalf of the subcontractor, wages owed to the subcontractor’s employees. The law also provides that an owner can review payroll records of a contractor/subcontractor to make sure workers have been paid.
This bill is challenging for property owners/property managers/developers because:
It makes them liable for unpaid wages of a construction contractor’s or subcontractor’s employees, even when the owner/tenant has fully paid all obligations to the contractor.
Establishes a two-year window for filing such a wage theft claim against owners and contractors, meaning it’s likely that the original contractor or subcontractor has gone out of business and/or left the state, making it all but impossible to recoup the funds from them.
It is tricky when commercial tenants complete their own tenant improvements/renovations and makes the property owners responsible for making sure workers’ wages have been paid.
It seems that many wage theft cases stem from unscrupulous labor brokers who act as intermediaries between contractors and workers. To prevent this one could modify the current laws to:
Transfer oversight of construction labor brokers from BOLI to the Construction Contractors Board (CCB), which has greater industry-specific enforcement authority.
Increase bond requirements to ensure funds are available to compensate workers when labor brokers and contractors fail to pay wages.
Remove bad actors from the system by making it financially unfeasible for dishonest brokers to operate.
If this law passes property owners and managers will need to change their systems. This means rewriting existing contracts for construction work and remodeling, rewriting leases and training staff in how to implement this law. Understanding the two year window as an open liability which might affect the sale of buildings and Title Insurance.
Construction Law attorneys will need to be consulted to help develop anti-fraud systems and reset documents and systems that can help monitor pay for subcontractors and workers. This is a huge bureaucratic nightmare. Owners, property managers and developers should be paying close attention to this bill and decide how this may impact them. This bill is currently pending in the Oregon House 5/8/2025.
This section of the article was developed from materials developed by the Commercial Association of Brokers in Portland, Oregon.
California – Commercial
Why did we include California in this article? Because what happens in California, eventually spreads up to Oregon and Washington and we wanted our investors to be able to plan ahead as they purchase and manage their properties.
Effective 1 Jan 2025, California changed their laws relating to commercial tenancies with a focus on protecting small tenants who may not speak English. These new clauses seem to be influenced by residential tenant clauses because they are very friendly.
The new clauses, which are four key provisions of 23/24 SB 1103, look like this:
The first clause imposes new notice requirements on owners seeking to raise rent for month-to-month tenancies for rent increases of 10% or less the owners must provide these tenants at least 30 days’ notice or more. For increases of more than 10% owners must provide at least 90 days’ notice in advance
Month to month tenancies will automatically renew potentially for longer than a month unless the owner provides notice of termination at least 60 days prior to the proposed termination where a month-to-month tenant has occupied the property for at least a year. If the tenant has a shorter tenancy term than a year, then a 30-day notice will suffice.
Lease agreements with smaller tenants who speak primarily Spanish, Chinese, Tagalong, Vietnamese, or Korean must be translated into such language and the translation must be delivered to the tenant.
Owners may collect building operating costs from tenants only if they allocate such fees proportionately to each tenant and to provide detailed and itemized supporting documentation there-of. Additionally, if an owner brings a claim against one of these small tenants for failure to pay such a fee, the tenant may assert an affirmative defense, for the owner’s violation of the provision.
Clearly those Owners that rent to small tenants on shorter term rental agreements will be faced with learning and implementing this law.
https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202320240SB1103
Clifford A. Hockley, CPM, CCIM, MBA
Cliff is a Certified Property Manager® (CPM) and a Certified Commercial Investment Member (CCIM). Cliff joined Bluestone and Hockley Real Estate Services in 1986 and successfully grow the company from 10 to almost 100 employees, with over Two Billion dollars of real estate under management. He then merged with Criteria Properties in 2021 to establish Bluestone Real Estate Services, where he still serves as an associate broker.
In 2023, Cliff formed a real estate consulting practice, Cliff Hockley Consulting, LLC. designed to help real estate business owners, managers and investors improve their bottom line.
Cliff holds an MBA from Willamette University and a BS in Political Science from Claremont McKenna College. He is a frequent contributor to industry newsletters and served as adjunct professor at Portland State University, where he taught real estate related topics.
Cliff is the author of two books 21 Fables and Successful Real Estate Investing: Invest Wisely Avoid Costly Mistakes and Make Money, books that helps investors navigate the rough shoals of real estate ownership. He can be reached at 503-267-1909, Cliffhockley@Outlook.com.
