Forms Tip of the Week

The Form 2.18 Attorney Review Addendum is part of the Oregon REALTORS® Forms Library. It is an add-on to a contract, neither required nor referenced within the purchase and sale agreements. A Buyer or Seller can add this form to the transaction (if you are responding to an offer, the counteroffer would state “Add Form 2.18 Attorney Review Addendum as attached”), which modifies the offer by creating an additional termination timeframe.

The Buyer or Seller [check the box for which one, or both] will be given a period of time to have an attorney review the documents. If the Attorney disapproves of the transaction, the reviewing party can simply terminate the transaction and Buyer gets the earnest money back. 

The form can be used as a way to sweeten the deal (e.g. “The offer expires in 1 day, but if you agree to it, you get 10 days to have your attorney look at it and tell you what a good deal it is.”), or a way to manage risk (e.g. “There are a lot of addendums and some of them are irregular ones that look like they were custom drafted.  I want to accept the offer, but I want to have a chance to have a professional review the unique addendums.”)

If no action is taken by the end of the Attorney Review Period, the termination right is released and the parties proceed as normal.

Parties will occasionally choose to avoid conventional loan programs and have the Seller carry the risk of the loan. In a Seller-carried transaction, the Seller lends the Buyer all the money needed to purchase the Property, and the Buyer promises to pay the Seller back over time, much like a mortgage. These transactions are accomplished in one of two ways: (1) Promissory Note and Deed of Trust [Forms 8.2 and 8.3]; and (2) Land Sale Contract [Form 8.4].

(1) Promissory Note and Deed of Trust
These types of transaction involve a bit of a two-step dance between the parties.  At closing, the Seller “lends” the Buyer all the money needed to buy, the Seller signs a deed transferring the property to the Buyer, the Buyer then simultaneously signs a promissory note promising to pay the Seller back over a certain period of time, and Buyer signs a deed of trust that transfers the property to a trusted, neutral third-party (“Trustee”).  The Buyer retains their general ownership and usage rights in the property and the Trustee is only permitted to act when the deed of trust lets them act, generally this means the Trustee only gets involved when the Buyer fails to pay on the promissory note or finishes paying on the promissory note.

The promissory note is just what it sounds like, a note where the Buyer promises to pay the Seller back at a certain rate of interest [interest cannot be over 9% because of ORS 82.010; the minimum interest rate will be determined by the IRS’s applicable federal rate, usually somewhere between 2-3%].  The promissory note will outline the payment terms and what the parties are to do when Buyer fails to repay the note.  The promissory note is not recorded or attached to the property, it’s a contract between Buyer and Seller.

The parties then collateralize the promissory note using the Deed of Trust.  The Buyer essentially says, “I promise to pay you back on the note, otherwise you can sell the house and get your money out of the sale.”  The deed of trust is recorded, so it does attach to the property.  The Trustee is a neutral third-party, appointed by the Seller, and can usually be replaced at Seller’s discretion. The note gives the Trustee the power of sale for the property and will state the exact times when the Trustee can foreclose the property, though the most common scenario is “Buyer failed to pay on the promissory note.”  If there is a foreclosure, the money from the sale goes (1) to pay off Trustee for their services, (2) to pay off the Seller’s note, (3) to pay off junior liens [if any], and then (4) remaining money goes to the Buyer. Usually this means that Buyer can accrue some level of equity in the property over the course of their ownership. If the Buyer has accrued enough equity, they can oftentimes just purchase the property outright by leveraging the equity into a mortgage (functionally, they “refinance”). The Buyer will have a statutory right of redemption (timeframe where the Buyer can pay off the lien and purchase the property) for up to 180 days after the foreclosure auction.

If the Buyer pays off the entire promissory note or redeems the property, the Trustee will complete a “Deed of Reconveyance” that gives all of the Trustee’s interest in the property back to the Buyer.  At that point, the Buyer fully owns the property.

(2) Land Sale Contract
A land sale contract is more like a “rent-to-buy” arrangement. The Buyer technically borrows money from Seller and says, “I’ll pay it back to you over time.”  During the term of the Land Sale Contract, Buyer has an “equitable interest” in the property, and can live there and utilize the property as their own, with some limitations. The parties record a memorandum of the land sale (or the entire land sale contract itself) to let the world know that the contract exists [Oregon Realtors® has a Memorandum of Land Sale in our Forms Library: Form 8.5].  The Buyer then starts paying on the land sale contract.  In a land sale contract, Buyer accrues no equity in the property; they continue to pay until the entire sum is paid off.  Once the sum is paid off, Seller is contractually obligated to execute a deed transfer and Buyer becomes the full owner of the property.
If Buyer misses a payment, Seller can auction the property off without giving Buyer the 180 day right of redemption period.  Alternately, the Seller can pursue what is known as “strict foreclosure” where the Seller just terminates the Buyer’s interest [almost like terminating a lease], and Buyer simply has to move out.  Lastly, Seller can pursue forfeiture, a process where Seller sends a notice to the Buyer explaining the debt owed and the forfeiture date. If Buyer doesn’t pay off all debt they owe by the forfeiture date, Buyer’s entire interest in the property is eliminated.

Form 9.8 is the “Notice of Real Estate Compensation.”  The form is largely drawn from ORS 696.582, where the legislature has created the template for a written notice of compensation for brokers to give escrow. If the Notice of Compensation is given to escrow more than 10 days before closing, the Broker who provided the Notice of Real Estate Compensation must also delivery a copy to the principal in the notice [the client]. If the Notice of Compensation was given to escrow within 10 days of the closing, escrow will give the client a copy of the notice at closing.

Under ORS 696.582, escrow is supposed to hold a certain amount of money back from a transaction if (1) a written notice of compensation is given [signed by the broker] and (2) the written closing instructions from the principals [clients] do not honor the terms of the notice of compensation. In effect, money is kept back until the parties figure out the conflict or confusion. Sometimes the error is a simple one, like forgetting to add a zero [$1,000 becomes $10,000], other times the commission payment error can be a little more nefarious. This can be particularly important if the parties decide to simply not pay the agent; the sale closes, both Buyer and Seller refuse to pay a commission to the agent, and the client instructions to escrow didn’t show any payment to a broker. 

Without a Notice of Real Estate Compensation, the Seller receives the money from escrow and Broker’s recourse is to bring a dispute or lawsuit against the client for the payment; this gets particularly difficult when the Seller has already packed up and moved out of state or out of country. 

When a Notice of Real Estate Compensation is used, escrow will note the discrepancies and either get the issue solved before closing. Otherwise, the commission sum in the Notice of Real Estate Compensation will be set aside and held locally until the commission dispute is solved.

Form 7.2 in the Oregon REALTORS® Library is the Tenant Estoppel Certificate. Estoppel under Oregon law is something that stops an individual from claiming contrary or different information. An Estoppel Certificate is a binding statement by a party stating the current status or conditions of a lease. When a tenant signs an estoppel certificate, they are creating a legally binding statement about the terms of the lease that the tenant cannot dispute. If the tenant brings a lawsuit claiming the lease terms are inaccurate, the new landlord merely needs to pull out the estoppel certificate and say, “Didn’t you say the terms were ____?” and the dispute is effectively over.

This allows a landlord to commit an oral lease to paper and it allows a tenant to lock in the terms and oral arrangements from the occupancy.  For Buyers who are inheriting tenants and oral leases, tenant estoppel certificates are necessary.  The Buyer wants to have some sort of document in place that outlines the terms of the lease before a dispute with the tenant arises.

Tenant Estoppel Certificates can be used as a Buyer’s tool by guaranteeing terms and allowing Buyer to defend the estoppel terms (e.g. “You stated on your estoppel certificate that the lease was $800/month, but now you’re claiming it’s $500/month?”); Buyer can use the certificate as support when questioning the Seller/Landlord (e.g. “Tenant said you would pay for curtains, but you’re saying you won’t? We need to figure this out before I buy.”); Buyer can use the estoppel certificate to learn about pending expenses and credits that Buyer would inherit.
Tenants can use the certificate to guarantee terms of the lease as the tenant understood them (e.g. “Back in June we agreed it was $500/month and that’s what the certificate said, but now you’re claiming the Landlord said $800/month?); Tenant can use the estoppel certificate to ensure the Buyer/new Landlord knows about unique conditions or entitlements (e.g. service animals, reasonable accommodations, rent credits for yard work, etc.); and Tenant can use the certificate to ensure new landlord knows about and receives the full security deposit and prepayments (e.g. old Landlord ran off with $500 in prepaid rent, new landlord never knew about it and refuses to honor the prepayment).

Section 47 of the Residential Purchase and Sale Agreement states “Except as otherwise agreed by the Parties in writing, Seller shall convey marketable title to the Property by Statutory Warranty Deed, or, if applicable, by personal representative’s deed, or trustee’s deed or similar legal fiduciary’s deed that meets the requirements for conveying interests in real property contained in ORS Chapter 93.”

There are several types of deeds that can be used in real property transactions. The normal set are (1) Statutory Warranty Deed, (2) Special Warranty Deed, (3) Bargain and Sale Deed, (4) Quitclaim Deed, and (5) Fiduciary Deeds. The decision on what deed to use is going to be something for the Buyer and Seller to determine, and they are advised to have an attorney assist in the decision.

1) Statutory Warranty Deed [ORS 93.850]

The Statutory Warranty Deed is the standard absolute conveyance of the property, with five assurances to the Buyer of the land. It passes all of the Seller’s interest in the land unless the deed specifies otherwise (e.g. one half of Seller’s interest in Blackacre). Statutory Warranty Deeds are the default deed for Brokers in Oregon real property transactions. The Buyer can rely on the below five covenants [promises by the Seller to the Buyer]:
(a) Seller is selling their entire interest in the property on conveyance date;
(b) Seller, Seller’s heirs and assigns will not be able to bring lawsuits asserting ownership of or entitlement to the land, and the deed passes any “after-acquired title” [if Seller doesn’t own the property now (it belongs to Seller’s ailing mother), sells it, then later gains ownership through inheritance, the sale is still valid and the Seller’s ‘after-acquired ownership’ automatically transfers to Buyer];
(c) The land is free and clear of encumbrances unless Buyer accepts it with encumbrances as written into the deed [covenant of freedom from encumbrances];
(d) Seller is the rightful owner of the property [covenant of seisin], and Seller has the right to convey the property to Buyer [covenant of marketable title];
(e) Seller will defend Buyer in any title lawsuits regarding the Property, [covenant of warranty] (e.g. someone comes along and claims that they adversely possessed the eastern 20’ of the property during Seller’s ownership, Seller will appear in the lawsuit, pay for Buyer’s lawyer, and assist in combatting these claims).

Covenants (c), (d), and (e) will always be considered a part of the deed, as though they had been written into the deed. Covenants (a) and (b) do not survive the closing and are extinguished [merger doctrine].

2) Special Warranty Deed [ORS 93.855]

Special Warranty Deeds do all of the same things as the Statutory Warranty Deed, except for covenant (c) freedom from encumbrances and covenant (e) are slightly limited. In a Special Warranty Deed, the Seller only guarantees that the land is free from encumbrances “created or suffered by” the Seller. Seller will only defend Buyer in title lawsuits where the complainant claims ownership by, through, or under the acts of the Seller. In other words, the Seller will only guarantee the encumbrances and will only defend the lawsuits that happened while Seller was there.

3) Bargain and Sale Deed [ORS 93.860]

Bargain and Sale Deeds only guarantee covenants (a) and (b).  A bargain and sale deed essentially just says “I am selling the whole property, as described on the deed” and “I can’t claim I own it anymore after I sell the land to you”

4) Quitclaim Deed [ORS 93.865]

Quitclaim Deeds guarantee nothing, and only transfer “whatever title or interest, legal or equitable” that Seller had at the time of conveyance. “[if Seller doesn’t own the property now (it belongs to Seller’s ailing mother), sells it, then later gains ownership through inheritance, Buyer does not own the property, they bought Seller’s nonexistent interest in the land and no after-acquired title rights]  Quitclaim deeds can be written for things Seller doesn’t own. It would be valid to have a Quitclaim Deed reading “I, Seller, convey to you, Buyer, all of my ownership interest in the northern half of the Moon.” Buyer would be buying all of Seller’s rights [which means: no rights at all] in the property.

5) Fiduciary Deeds [ORS 93.870, permitting other forms of deeds]

Fiduciary Deeds are typically just Bargain and Sale Deeds or Quitclaim Deeds for personal representatives, trustees, and conservators who hold and administer property for another person. Oftentimes, the fiduciary will use a special form of deed to give notice that they are a fiduciary, not the actual owner, that they have no knowledge whatsoever about the condition of the deed or title and that they were not transferring the property fraudulently. 
In the case of Personal Representatives, ORS 116.223 explains that a Personal Representative’s Bargain and Sale Deed does not put the Personal Representative in the chain of title unless they are also an heir or successor [e.g. John Doe dies, home put into estate; John Doe’s child is the Personal Representative who would inherit the house; John Doe’s child sells the house; chain of title will show “John Doe -> John Doe’s Child -> Buyer,” rather than “John Doe -> Buyer”]
Note: a “Trustee’s Deed” is separate from a “Deed of Trust/Trust Deed”. A Trustee’s Deed is a deed from a Trustee of a Trust, transferring property to a third-party. A Deed of Trust is a deed from a Buyer to a third-party in a seller-carried transaction, setting the third party up as a “trustee” who will hold the Buyer’s Property and foreclose it if the Buyer fails to pay off their promissory note with Seller.

If the property has a wood stove, the sale agreement should include the Form 2.13 Wood Stove Addendum. The Clean Air Act requires the Environmental Protection Agency to create “New Source Performance Standards” for all stationary sources of air pollution, and these standards get updated periodically. The EPA has been certifying residential wood heaters since 1988; and in 1991 Oregon passed laws designed around reducing and preventing air pollution caused by “solid fuel burning devices,” partly by ensuring all of Oregon’s solid fuel burning devices meet the EPA emission standards (or any more stringent standards put into place by the EPA or the Oregon Department of Environmental Quality).

ORS 468A.465 describes “solid fuel burning devices” as devices that burn coal, wood, or other non-gas or nonliquid fuels for aesthetic, heating, or water heating purposes in a private Residential Structure or commercial establishment.” This however, expressly does not include cookstoves, antique stoves (woodstoves built before 1940 with ornate construction and higher than normal value), pellet stoves, masonry heaters or fireplaces, and central wood-fired furnaces. Fireplace inserts can be considered “solid fuel burning devices.”

Under ORS 468A.505, in connection with a residential property sale, the wood stove must be removed and destroyed unless the stove was certified by the EPA under 40 C.F.R. part 60, subpart AAA or by DEQ. Typically, the certification will be a small metal tag attached to the stove; however if your stove has no tag, it may still be certified. EPA and DEQ certifications are done for the designs of the stove, not for individual stoves, so if someone clipped the tag off a certified stove, it is still certified. You can consult the manufacturer about certifications or look for the design on www.epa.gov/burnwise.

If there is no tag or if the manufacturer refuses to respond and you can’t find anything on the EPA’s website; Seller must remove the stove and destroy it before closing. Alternatively, the seller and buyer can agree in writing that it is the buyer’s responsibility, in which case the buyer must remove and destroy it within 30 days after closing DEQ guidance requires that the destruction of the stove has to be so complete that “it cannot be restored or reused as a heating device,” so just unhooking it and throwing the stove into the garage is not sufficient. If you have a professional disposal or scrap dealer work the stove over, you need a disposal receipt to give to DEQ proving that you decommissioned the stove. Noncompliance won’t end the sale transaction, but could invalidate homeowners insurance, delay loans, or result in up to $750 in fines.

One of the standard Seller representations is that Seller has no “actual knowledge of any liens or assessments to be levied against the Property, of any boundary disputes or encroachments related to the Property, of any violation of law related to the Property, or of any material defects related to the Property not otherwise described in this Agreement or in any addenda thereto or in a Seller’s Property Disclosure Statement (if provided to Buyer).” (lines 270-273 of Form 1.1).

Questions arise on occasion as to what a “material defect related to the property” may be. Any condition related to the property that would affect a reasonable buyer’s conduct in reference to the transaction, including a reasonable buyer’s willingness to purchase the property and/or the price and terms under which they would be willing to purchase the property, should be presumed to be a “material defect.” See Millikin v. Green, 283 Or. 283, 583 P.2d 548 (Or. 1978). Things like presence of Radon or electromagnetic fields or closeness to toxic facilities (the classic example is a cement factory upwind from the house) can be considered material issues and if the Seller knows about these issues, the Seller must disclose them.

ORS 93.275 establishes a few facts about property that are “not material” by law. Specifically, the following are legally defined as non-material facts and would not require disclosure under the Sale Agreements:

• The fact or suspicion that the real property or a neighboring property was the site of a death by violent crime, by suicide, or by any other manner;
• Note – This is just the property being the site of a death. For example, if there are rumors that the property’s previous owner died there, that fact is immaterial and does not need disclosure.
• By contrast, if there is a body buried on the property, that’s material. A Buyer finding a femur while planting tulips in their new garden will create very real issues for that Buyer. These issues can occasionally result in a lawsuit against the Seller if the Seller chose not to disclose that they had privately buried a family member in the back yard.
• Death is immaterial, but the physical location of the burial is quite material.
• The fact or suspicion that the real property or neighboring property was the site of a crime, political activity, or religious activity or any other act or occurrence that does not adversely affect the physical condition of or title to real property;
• Note – Things like doors being bashed in during a robbery are immaterial as long as the door has been replaced or repaired. If, on the other hand, a crime was committed that leaves lasting impacts [e.g. Meth was cooked on the property and the chemicals are present in dangerous quantities in the walls], the fact of that crime should be disclosed and is material.
• The fact or suspicion that an owner or occupant of the real property has or had a blood-born infection;
• Note – ORS 93.275(2) states that the legislature found no risk of transmission of HIV or AIDS by casual contact, so a previous inhabitant having HIV or AIDS would not be a material fact.
• The fact or suspicion that a sex offender resides in the area; and
• The fact that a notice has been received that a neighboring property has been determined to be not fit for use under ORS 453.876 [generally referring to illegal drug manufacturing sites].

The Seller is under no obligation to disclose the above facts, but may disclose them if the Seller chooses to do so. As a broker, you should not disclose the above facts unless you have discussed the disclosure with your client and received their permission first.

Counteroffers are a bundled concept at law. According to the Restatement Second of Contracts § 39, “A counteroffer is an offer made by an offeree to his or her offeror relating to the same matter as the original offer and proposing a substituted bargain differing from that proposed by the original offer. An offeree’s power of acceptance is terminated by his or her making of a counteroffer, unless the offeror has manifested a contrary intention or unless the counteroffer manifests a contrary intention of the offeree.”

What this means is: when Seller makes a normal counteroffer, Seller has done two things: (1) Seller rejected the previous Buyer offer/counteroffer, and (2) Seller made a fresh new offer for the Buyer to accept or reject. It’s easiest to illustrate with an example.

• Step 1. Buyer makes an offer to Seller.
• Step 2. Seller sends a counteroffer to Buyer [simultaneously making an offer and rejecting the Buyer’s offer].
• Step 3. Buyer rejects Seller’s counteroffer.
• Step 4. Seller cannot now go back and accept the Buyer’s Step 1 offer.

Oregon REALTORS® contracts state, “The Parties accept all of the terms and conditions contained in the [previous] Offer or Counteroffer with the following changes:” This means that a counteroffer “incorporates” all of the language from the previous offer or counteroffer. If there is any overlap between previous offer or counteroffer terms, the most recent counteroffer’s language will be the official terms of the agreement.

If an offer said, “$100,000 and no inspection,” a counteroffer will use those same terms unless stated otherwise. If the counteroffer said, “Purchase price to be $150,000 and yes to inspections,” the terms would be “$150,000 and yes to inspections.” 

By contrast, if the offer said “$100,000 and no inspection” and the counteroffer only said “also no appraisal!” the terms would be “$100,000, no inspection and no appraisal!” 

A trust or a business entity (LLC, Corporation, Partnership, etc.) can own and hold property. These entities are able to buy and sell property, but the entity does not sign on the sale agreements. The Revocable Living Trust, LLC, and Corporation are all abstract entities; they only exist on paper and do not exist in the real world. Nonetheless, these abstract legal entities frequently interact with the real world and generally authorize a real, live human-being to handle the physical elements of the entity’s existence.

When a Trust is selling property, the Trust does not sign the documents; rather, the Trust oftentimes has a “Trustee” who is the person charged with administering the acts of the trust. The Trustee is the “legal owner” of the trust’s assets [they “hold the assets in trust”], and the Trustee will only act as directed in the Trust documents. If the Trustee determines that selling real property held in the Trust, and determines that the trust documents permit the sale, it is the Trustee who actually sells the property and signs the paperwork, not the Trust.

When signing on the “Seller Signature Line” the Trustee should write “John Doe, Trustee of the Doe Family Revocable Living Trust.” They should not sign the document as simply “Doe Family Living Trust.” If the Trustee is signing as a Trustee, they need to make it clear that they are not signing as themselves individually [e.g. signing as “John Doe” without any reference to his title], but rather are signing the sale documents in their capacity as Trustee. 

The same is true for businesses. The signature should not be “ABC, LLC” it should be “John Doe, Manager of ABC, LLC,” thereby indicating that it is the person signing is a manager with signatory authority (being a “signatory authority” means you are authorized to sign documents for the business). If the LLC is member-managed, the person would sign as “John Doe, Member of ABC, LLC,” or in a similar way identifying the person’s signatory authority within the business.

The Buyer and Seller Advisory are Forms 10.1 and 10.2 in the Oregon REALTORS® Forms Library. These advisories cover a wide array of topics and provide your client with information to shield themselves from unscrupulous parties. By reading the advisories, clients can learn how to protect themselves from pitfalls such as wire fraud and Visual Artist Rights Act lawsuits. They also protect principal brokers and brokers should a dispute arise between client and agent.

For example, a Buyer wants to purchase a property, among other reasons, because the listing says “2,400 square feet.” The client does not look into the square footage and merely assumes that the listing was accurate. After closing, the Buyer measures the property and finds that it is, in fact, 2,200 square feet. In a fit of buyer’s remorse, the Buyer sues everyone they can sue, including their agent. The Buyer’s argument against their agent is, “You should have told me that the square footage in listings are just estimates; I really wanted that extra 200 feet and it’s your fault I don’t have it.” In the dispute, the broker can point to page 4 of the advisory, showing that the client was, in fact, told that square footage on listings are just estimates and are not to be relied upon.

To help manage risk for both clients and agents, Oregon REALTORS® has implemented two approaches to ensure that clients do in fact read the advisories. First, our residential purchase and sale agreement on lines 5-6 states in bold type “Buyer and Seller acknowledge that they have read and understand the Oregon REALTORS® Buyer and Seller Advisories, respectively.” Second, Forms 10.1 and 10.2 have a space for initials on every page of the document.

If you don’t want your client to go through the risk-management process of initialing every page of the advisory, Oregon REALTORS® has version of the advisory available with smaller font and no space for client initials. These smaller versions are available here. These shortened versions still require the client to sign on the last page, and the client will still be required in the purchase and sale agreement to acknowledge that they have read and understand the advisory, but the documents have no place for the client indicate on each page that they have reviewed that particular page. Your brokerage should decide which variant of the advisory you wish to use for your clients after weighing the pros and cons of each. Regardless of which variant of the advisories you use, we recommend building the advisories into your initial client consultation process.

Agency documents, certain advisory documents and the Seller Property Disclosure Statement are exceptions.  

Forms libraries are designed to be internally consistent but not consistent with other forms libraries. An addendum from one library refers to provisions in the base sale agreement and the other addenda from that particular library. Stitching a contact together with multiple forms libraries creates a “Frankencontract” and it may be difficult to ascertain the meaning of the contract or the intent of the parties. Any single transaction should be conducted using a single forms library. The following are exceptions to this rule:   

A) Agency Documents: Listing agreements, buyer representation agreements, disclosed limited agency agreements, and other agreements between client and agent (rather than buyer and seller) should not prevent the buyer-seller transaction from taking place using a different forms library. 

B) Seller Property Disclosure Statement: The Oregon REALTORS® Forms Library is compatible with any Seller Property Disclosure statement (including those from other forms providers) that complies with the Seller Property Disclosure Statute, ORS 105.464. Per OREF Guidance, the same is true for the OREF library. 

C) Certain Advisory Documents:  Advisory documents that advise clients generally about issues that could arise in a real estate transaction (i.e. wire fraud) but that do not reference specific forms or provisions of specific forms can be used regardless of which forms library is used to conduct the transaction.

In addition to the guidance above, always be sure to follow any policies that your brokerage has in place.

Even if a Seller is not required to provide the Seller Property Disclosure Statement (SPDS) or is exempt from providing the SPDS (e.g. Seller is a court appointed Conservator), the Seller will still have disclosure requirements both under law and in the purchase and sale agreement.

Seller Representations [Section 41 of Form 1.1] require the Seller to disclose if they know of any liens, assessments, encroachments, or material defects related to the property otherwise not described in the SPDS. ORS 92.465 prohibits express misrepresentations, and Oregon courts have upheld actions for “reckless misrepresentation.” If the Seller knows that there is a lien/encroachment/defect in the property, or believes that one exists, they are bound by contract and by law to disclose the truth of the matter. 

E.g. Seller knows that the house floods every May due to bad drainage. Seller is a court-appointed Conservator and is exempt from providing an SPDS, the Seller representation section will still require Seller to inform the Buyer that the material defect exists.

Seller should disclose these defects in writing, whether that’s on the SPDS or in a separate email or letter. Even when exempt, the Seller may want to use the SPDS as a checklist to ensure they have met all their disclosure requirements.

The Seller Property Disclosure Statement (SPDS) must be delivered to the Buyer under Oregon law. If a Buyer indicates that they are not using the property as a residence for Buyer or Buyer’s family, Seller does not need to provide a SPDS.  Otherwise, ORS 105.465 requires the SPDS for a few types of properties. Even if the property is the right kind, Sellers can still be exempt. Check ORS 105.470 to see if it applies to your Seller. One exclusion states the Seller doesn’t need to give the SPDS if “Seller is a court appointed: Receiver, Personal Representative, Trustee, Conservator, or Guardian” 

Courts will appoint trustees on occasion if a professional trustee is required, but most trustees are not court appointed. If a Seller is a trustee and was appointed by the grantor of the trust (not by the court), that trustee will still need to fill out the SPDS, even if their answer on most questions will be “unknown.”

The Bill of Sale can be used to transfer personal property alongside your real estate sale. It is meant to be a stand alone contract selling furniture, appliances, and tangible things; not just an extension of the “included personal property” section of the Purchase and Sale Agreement. Items marked as “included personal property” are treated as a part of the real estate sale and are mixed into the sale; if the sale falls apart, the included personal property has not been sold. The Bill of Sale is used to transfer things that are not covered by the lender, and if the sale falls apart, the items in the Bill of Sale do not necessarily return to the Seller.

Use the Form 2.4 Bill of Sale to transfer items the lender refuses to pay for, for example, furniture or furnishings. Make sure there is some amount of money exchanging hands to make it a valid contract with valid consideration.

“Business Day” is defined in Section 36 of the Agreement as “[a]ny day other than Saturday, Sunday, or a legal state holiday under ORS 187.010.” Oregon REALTORS® uses the statutory list of legal Oregon holidays to avoid potential confusion about differences between official legal holidays and other holidays that are merely recognized by the legislature or Congress. When you want to know if a day is a holiday (and therefore not a Business Day), you can always look up the statute directly here. And know that if the legislature ever establishes a new legal holiday, we’ll be the first to tell you!