Seller's Disclosures in Oregon
In residential real estate transactions in Oregon, virtually every buyer and seller use standard forms created and maintained by Oregon Real Estate Forms, LLC (“OREF”). OREF forms have been voluntarily adopted by real estate practitioners and their use is widespread. OREF forms include purchase and sale agreements, addenda, advisories, disclosures, and notices. These forms are standardized, and used frequently by buyers, sellers, real estate brokers, title officers, escrow officers, attorneys, and others involved in the life cycle of a residential real estate transaction.
From time to time, disputes arise after a residential real estate transaction is concluded regarding whether or not a seller properly disclosed issues. The OREF form entitled “Seller’s Property Disclosure Statement” is a detailed property disclosure form which a seller fills out as they prepare to list their property. As part of the process of making an offer, a buyer will receive the Seller’s Property Disclosure Form. Unless otherwise negotiated, a buyer has five business days after receiving the Seller’s Property Disclosure Form to revoke or extend their timeline for review and inquiry related to disclosure issues.
The basis for the OREF Seller’s Property Disclosure Form is found in Oregon statutes, ORS 105.462 – 105.490, which is a statutory scheme enacted by the Oregon legislature in 1993. These statutory sections set forth mandatory disclosure questions and minimum standards which apply to virtually every Oregon residential estate transaction. These statutory sections require a seller to disclose their knowledge of issues related to title, water, sewer system, dwelling insulation, dwelling structure, dwelling systems and fixtures, common interests (i.e., whether there is a homeowners’ association or similar entity), seismic, and general. Additionally, this law provides the buyer with the right to revoke (cancel) the transaction if done so in a timely manner.
Most of the mandatory disclosure questions are framed to be answered by a seller as “yes,” “no,” or “unknown.” Sellers are prompted to provide a further explanation if they answer “yes,” and buyers may request additional information and documentation from sellers based on the Seller’s Property Disclosure Form. When listing a property, a seller should carefully consult with their realtor on how best to fill out the property disclosure form, including whether and to what extent to disclose issues of concern. Depending on the issues involved, a seller may want to consult with an attorney to advise them on how best to answer disclosure questions.
Conversely, review of a property disclosure form is an important part of a buyer’s due diligence. Every buyer should carefully review the property disclosure form filled out by the seller, and carefully consult with their realtor on any issues of concern. Together with a careful inspection of the residential property and a home inspection, the property disclosure form can be a key tool which helps protect a buyer from surprises after the transaction is concluded. Personal inspection of the property, a home inspector’s guidance and report, and the property disclosure form can each provide insight and direction for a buyer and their realtor to investigate any issues of interest.
The OREF Seller’s Property Disclosure Form balances the obligations of sellers and buyers in Oregon residential property transactions. On the one hand, the standard to which sellers are held is that they are to fill out the property disclosure form based on their “actual knowledge of the property at the time of disclosure.” ORS 105.464. On the other hand, buyers are “advised to obtain and pay for the services of a qualified specialist to inspect the property on buyer’s behalf,” and have the “duty to pay diligent attention to any material defects that are known to [the buyer] or can be known by [the buyer] by utilizing diligent attention and observation.” ORS 105.464. Thus, whereas the seller’s responsibility to anchored in their actual knowledge of the property, the buyer’s responsibility is more broadly anchored in their actual knowledge and the knowledge they could obtain by their exercise of due diligence.
On the north coast of Oregon, certain property disclosure issues tend to arise with more frequency than other parts of the state. First, moisture and mold issues are common in the Pacific Northwest, and so buyers should carefully review the property disclosure form, personally inspect the property for signs of moisture and/or mold, and consult with a home inspector. A home inspector can use tools such as a moisture meter to locate potential problem areas. Poorly designed homes may worsen moisture issues, and the home itself as well as the property generally should be inspected for moisture issues.
Second, property development issues may present a challenge, depending on the property and the community in which it is located. A buyer would be well advised to spend some time and energy contacting the planning staff with authority to regulate development of their property, and inquiring about any past code enforcement issues as well as efforts to develop the property; additionally, a buyer should investigate any restrictions which might limit or prevent future development.
Third, landslides and other issues related to movement of the ground, earth, or soil may be an issue affecting a property. A property’s foundation should be carefully examined for indications of any issues, and the drainage system of a property may reveal issues, as well. The State of Oregon Department of Geology and Mineral Industries (“DOGAMI”) has a number of useful tools which can facilitate a basic level of research about a property. E.g., DOGAMI maintains a searchable Statewide Landslide Information Database (“SLIDO”), which is publicly available to consumers.
If you have questions about ownership of real estate in Oregon, please contact Coast Land Law for a consultation about how you can best protect your property rights. We have worked with clients who are party of a real estate transaction where there is a dispute about seller’s disclosures. Our property disclosure cases include real estate transactions which from entry level properties to those which exceed $5,000,000. We work with clients who have real estate interests in Clatsop and Tillamook Counties, as well as in the Portland area (Washington County, Multnomah County, and Clackamas County).