Senate committee hears opposing views on bill allowing recurring fee in lieu of security deposit

Senate Committee on Housing and Development members held a public hearing Feb. 19 on Senate Bill 158, introduced by Sen. Mark Meek, which would allow landlords and tenants to voluntarily agree to a recurring fee in lieu of a traditional refundable security deposit and set requirements for that agreement.

Sen. Mark Meek, sponsor of the bill, described the proposal as "a common sense solution to one of the biggest financial barriers that renters face, the high cost of a security deposit." Meek said the recurring-fee option would be voluntary for both parties, could be partially or fully refundable depending on the agreement, and would prohibit landlords from collecting both a deposit and a fee for the same tenancy.

Supporters from the rental industry said the option can improve tenant cash flow and speed access to housing. Jonathan Clay of Multifamily Northwest said the alternative is an optional pathway that "is merely an additional pathway of how to, more quickly get into housing." Some housing providers said the fee could be structured as an insurance product the landlord purchases to cover damages or unpaid rent.

Tenant advocates and housing groups urged the committee to oppose SB 158 as written, citing multiple consumer-protection gaps. Rebecca Markley of the Housing Alliance said the bill lacks safeguards requiring landlords to purchase insurance, caps on fees, or protections to prevent landlords from charging the fee and still pursuing tenants for damages. "SB 158 lacks critical safeguards and consumer protections," Markley said, and noted Washington state has a similar law with stronger protections.

Timothy Morris, executive director of the Springfield Eugene Tenant Association, called the proposal "insidious" because it could allow recurring nonrefundable fees that, over time, cost tenants far more than a refundable deposit and provide limited recourse. "Even if a tenant paid $50 a month," Morris said, "I would have paid well over $5,000 in lieu of a security deposit and also still be responsible for any damages in my unit." Morris and others warned about subrogation and the potential for insurance companies or third-party vendors to sue tenants or pursue claims independent of the landlord.

Questions from committee members focused on mechanics and consumer protections: whether the fee would allow eviction for missed fee payments, whether a monthly cap or refund mechanics would be required, and how the proposal differs from existing options such as deposit installment plans. Meek said existing landlord-tenant statutes limit what a landlord can require and that the bill creates a legal pathway for a fee in lieu of a deposit; he said eviction would still be governed by usual rules and that details such as caps could be included in agreements.

Several members asked staff to produce a side-by-side comparison of Washington’s law and SB 158 so the committee could evaluate consumer-protection language. Opponents offered alternatives — deposit installment plans, low-cost deposit loans, or statutory caps and refund rules — as ways to lower move-in costs without the risks they identified.

The committee took no final action on SB 158 at the hearing; members requested additional information and comparisons and indicated they expect further amendments or follow-up work on consumer protections before a final committee decision.