Oregon HB 3521: New Holding Deposit Rules for Landlords in 2026

Christian Bryant
Jan 7
4 min read

Mr Portland Landlord video summary of this article

Hey there, fellow Oregon landlords and property managers—it's your friends at the Portland Area Rental Owners Association (PAROA.org) checking in as we kick off 2026. If you're like most of us in the Portland metro area or across the state, you're probably still recovering from the holidays while gearing up for the spring leasing rush. But here's something that just landed on January 1st: House Bill 3521, bringing some fresh rules around holding deposits for rental applications. Don't worry, I'm not here to scare you—think of this as a friendly heads-up from one landlord to another. These changes are manageable, and getting them right actually helps you run a smoother, more professional operation. Who knows, it might even weed out the flaky applicants faster!

Let's break it down conversationally, because nobody wants to read a dry legal textbook. HB 3521 tweaks ORS 90.297, focusing specifically on those holding deposits you collect to reserve a unit after approving an applicant but before signing the lease. It's all about more transparency, quicker refunds in certain cases, and better paperwork to avoid disputes. The goal? Reduce headaches for everyone, including us landlords who just want reliable tenants paying on time.

Key Changes Under Oregon HB 3521 Holding Deposits

First off, the big shift: You can only collect a holding deposit after you've approved the applicant's screening. No more taking money upfront to "hold" the unit while you decide—that's off the table now. Before you accept any deposit, you have to provide a written statement spelling out:

The rent amount, any fees, and required deposits.
The terms for actually signing the rental agreement.
Exactly when and how you'll refund or retain the deposit.

If the rental agreement gets signed, great—apply that deposit toward rent, security, or whatever's due, or refund it right away. Simple enough, right?

But here's where it gets interesting (and where we need to stay sharp).

When Landlords Must Refund Holding Deposits Under the New Rules

HB 3521 puts a tight timeline on refunds: If things fall through because of your failure to follow through on the agreement, or if the applicant backs out due to discovering serious habitability issues (think major stuff like a leaky roof that soaks the carpet, no working heat in January—brr—or unsafe locks), you must return the full deposit within five business days. You can make it available at your office or mail it first class.

Landlord handing back a holding deposit refund check to an applicant under new Oregon laws. — Quick refunds under Oregon HB 3521 holding deposits rules build trust and avoid penalties.

And to keep it fair, if the applicant just ghosts or doesn't comply with the agreement (and there's no habitability issue), you can keep the deposit. But document everything—more on that in a sec.

Fail to refund on time (and it's not due to an "act of God" like a massive storm), and you could owe the applicant the deposit back plus a penalty—the greater of the deposit amount or whatever you agreed to in writing. Ouch. Nobody wants that surprise bill.

For clarity, let's compare the three main types of upfront money we deal with. Here's a quick table to keep it straight:

Type	When Collected	Refundable?	Key HB 3521 Impact
Screening Fee	Before or with application	No, if screening performed (limited to actual costs)	No direct change—still under ORS 90.295
Holding Deposit	Only after approval, before lease	Yes, in specific cases (e.g., habitability issues or landlord breach)	New written requirements, 5-day refund timeline, penalties
Security Deposit	After lease signed	Yes, minus valid deductions (within 31 days post-move-out)	No change from HB 3521

Oregon rental application form illustrating new HB 3521 holding deposit rules and disclosures. — A sample Oregon rental application—now with required HB 3521 disclosures for holding deposits.

Enhanced Documentation Requirements

This is where being organized pays off big time. HB 3521 emphasizes written everything: that pre-deposit statement, clear refund conditions, and solid records of the property's condition upfront (photos, anyone?). At move-in and move-out, keep doing what pros already do—detailed checklists and timestamps.

Why bother? It protects you if an applicant claims a habitability issue later. If you've got before-and-after proof that the unit was shipshape, you're in a stronger position.

Clean and safe rental home interior meeting Oregon habitability standards. — Documenting habitability upfront protects you from automatic refund triggers under HB 3521.

Practical Steps to Update Your Screening Process and Avoid Penalties

Alright, let's get practical—because winter's slower season is the perfect time to tweak your system before things heat up.

Revise your application packet: Add the required written holding deposit disclosure. Make it clear and friendly.
Change your workflow: Screen first (collect screening fee if you charge one), approve, then offer the holding deposit with the written terms.
Document habitability upfront: Do a quick walkthrough video or dated photos before showing seriously interested applicants.
Set up fast refunds: Use ACH for quick returns, and always get proof of mailing or pickup.
Consider low-barrier options: For competitive Portland units, maybe skip holding deposits altogether on some properties to attract more applicants.

Common pitfalls to avoid? Accepting a deposit without that written statement, dragging your feet on refunds, or not documenting the unit's condition. Those can lead to penalties faster than you can say "eviction moratorium flashback."

How These Changes Affect Tenant Attraction and Retention in the Portland Metro Market

In our tight Portland market, transparency wins. Applicants appreciate knowing exactly where they stand, and quick refunds build trust. Serious tenants—the ones with clean screenings and steady jobs—will gravitate toward landlords who run a professional shop. Plus, clear rules help you spot red flags early without liability.

Sure, it might feel like one more hoop to jump through, but pros like us know that solid systems reduce chargebacks, disputes, and even vacancies.

Bottom line: Get your processes updated now, and you'll sleep better knowing you're compliant and protected. If you're a PAROA member, reach out—we've got resources and forms to help. Staying ahead of these changes isn't just about avoiding penalties; it's about being the kind of landlord good tenants stick with long-term.

Happy leasing in 2026!

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