Selling a Home in Oregon: Key Legal Requirements

Disclosures and other legal requirements when selling a house or residential property in Oregon.

If you are selling a home in Oregon, you need to be aware of the relevant legal requirements. Knowing what to expect and following proper procedures will help your sale proceed smoothly. It might also help avoid any potential liability to a disgruntled buyer following the sale.

Agreement to Sell Home Must Be Made in Writing

In Oregon, something called "the statute of frauds" applies to the sale of real property. This a legal doctrine requiring certain contracts to be in writing. So, any agreement to sell your home must be made in writing and be signed by all parties. Even if you negotiate new terms with the buyer, the amendments must also be in writing and signed by all parties in order to be enforceable.

In Oregon, an agreement to sell a home often comes on a form titled "Residential Real Estate Sale Agreement." That said, the sale agreement can take many different forms and have a different title.

The key elements of a home sale agreement are its terms and conditions, including, but not limited to:

  • the purchase price
  • the exact property being transferred, including the location and any personal property (such as appliances) included with the sale
  • the amount of escrow money to be held, who will hold the escrow money, and who gets to keep the escrow money if the sale does not close
  • when the pre-buy inspection must be completed by
  • when and where closing and transfer of title will occur, and
  • how closing costs will be split between the buyer and the seller.

All Oregon Sellers Must Complete a Property Disclosure Statement

If you are selling residential property in Oregon, upon receipt of a written offer from a buyer, you must provide them a "property disclosure statement." The property disclosure statement must be presented to the buyer in the form and using the language set forth by the Oregon legislature.

In the property disclosure statement, you will be required to answer specific questions regarding the condition of your property. The questions relate to:

  • title to the property and existing encumbrances, such as easements and liens
  • domestic water sources and irrigation
  • sewage disposal
  • whether there is insulation in the ceiling, walls, and floor
  • dwelling structure, including whether the roof leaks and whether any unpermitted additions exist
  • dwelling systems and fixtures, such as the electrical and plumbing components of the house
  • common interests, like homeowners' association dues and shared common areas, and
  • any other known material defects not otherwise identified in the form.

Your real estate agent, if you have one, will provide you with a copy of the required disclosure form. Typically, you fill the form out once and your agent then provides a copy to any person who makes an offer on your property.

After receipt of the property disclosure statement, Oregon law (ORS 105.464) gives the buyer five days to review it and decide whether to rescind the pending offer.

Federal Law Requires Disclosure of Lead Paint

For certain older houses, federal law also requires a lead paint disclosure. (42 U.S. Code § 4852d). If your house was built before 1978, you must provide the buyer both a pamphlet titled "Protect Your Family From Lead in Your Home" and a lead paint disclosure.

Additional information and sample forms can be found on the HUD website. You must provide the buyer a ten-day period to conduct a lead paint inspection.

Preliminary Title Reports and Title Insurance

Although no law requires a preliminary title report to be prepared or that the home seller pay for title insurance, if the buyer is financing the purchase of your Oregon home, the mortgage lender will demand that the buyer have title insurance. As a result, you will need to be familiar with the terms "preliminary title report" and "title insurance."

The title company prepares a "preliminary title report" by examining public records to determine whether any defects or encumbrances exist with regard to your property's title. For example, the report should reflect any recorded easements or construction liens. Before closing on the purchase, the buyer might require that you remove a title defect (often by paying off a lien).

"Title insurance" is an agreement to insure against damage or loss arising from a defect in title to real property. In Oregon, it customary for the seller to buy a standard title insurance policy. This is negotiable, especially if the buyer wants extended coverage.

If you are aware of any title defects, such as easements or liens, you might be required to disclose them as part of the "material defect" question in the property disclosure statement, even if it does not show up in the preliminary title report. For instance, if you granted an easement to a neighbor, but did not record the easement with the county clerk, a buyer could find the easement to be a material defect.

If you have questions about what needs to be disclosed, discuss the issue with your real estate attorney.

Conveyance Deed Required to Transfer Property to Buyer

At the closing, you will need to sign a deed that conveys the property to the buyer. The buyer will most likely require that the deed come in a certain form and that it meet minimum requirements so that the county clerk can record it in the public records.

Deeds can come in one of several forms, including statutory warranty deeds or bargain and sale deeds. It is customary in Oregon for the title company that performs the closing to prepare the deed. However, your real estate attorney can also prepare the deed.

Payment of Transfer Taxes

Unlike some states, transfer taxes are not common in Oregon. In fact, Oregon's constitution prohibits transfer taxes, with one exception. In Washington County, there is a $1 per $1,000 transfer tax. This means if you are selling real property in Washington County, you would be subject to a $100 transfer tax on the sale of $100,000 home.

Attorney Assistance Not Required in Oregon, But Recommended

Although it is not customary in Oregon to hire an attorney to help with the sale of a home, given the significance of the transaction, uniqueness of many transactions, and possibility for substantial liability, having an attorney by your side is smart. An attorney can be particularly helpful in addressing questions or concerns you have about the sale agreement and disclosure statement. And if you discover, through title review, that there are title defects that need to be addressed before closing, an attorney can help you resolve those.

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