Introduction.  Contract law is pretty basic; once the agreement becomes “binding” on a party, withdrawal normally cannot occur without consequences.  The OREF Sale Agreement is no different. Reduced to basics, if the Seller refuses to perform before closing, the Buyer has a right to file a claim in arbitration for specific performance (i.e., asking the arbitrator to enter an award requiring the seller to perform the terms of the Sale Agreement) and for damages, if any. [Note: This issue can become complicated if the Seller had duties to perform before closing, such as subdividing the ..read more

[Clarification on caption: Yes, I’ve got my singular and plural nouns correct. “Oregon Realtors®” is the (recently new) name of the statewide association of Realtor®  members – ergo, the name Oregon Realtors® is singular. If one drops the registered bug (®) it becomes plural.] Background. Prior to the creation of Oregon Real Estate Forms LLC (“OREF”) in 1997, PMAR, ER, and OR had their own separate forms companies. In order of market share they were ranked as follows: PMAR, ER, OR. There were no limitations on where each Association’s forms could be used; PMAR members could use their for ..read more

Introduction. Regardless of how active (or inactive) the market is, sellers’ brokers should always be on the lookout for “red flags.” These are the often harmless-looking provisions that, if ignored, can later come back and bite sellers. Here are a few: The “Or Assigns” Provision. First, be aware that deep in the 2022 OREF Residential Sale Agreement (Sec.37(6)) is a single sentence that many Realtors® may be unfamiliar with. It states: “…Buyer’s rights under this Agreement, or in the Property, are not assignable without the prior written consent of Seller.” (Emphasis added.) Where does this is ..read more

Introduction. Generally, a contingency is an event that must occur (or not occur)[1] for the transaction to become binding (e.g., loan approval, condition of title, inspection report, sale of existing home, etc.). The reason it is called a “contingency” is that the transaction is contingent upon the event occurring (or not occurring), such as loan approval. If the buyer is not approved for the loan, buyer must timely notify the seller or seller’s agent, and the transaction is terminated, and the deposit refunded. If Buyer is approved, that contingency is deemed “satisfied” and goes away. Afte ..read more

Introduction.  The term “specific performance” is not, as commonly believed, a form of legal action that may be brought for enforcement of a contract.  Rather, it is a remedy for a breach of contract claim because the underlying agreement has not been performed. In other words, before reaching the issue of the remedy, a court or arbitrator must first conclude that the contract was breached.  If monetary damages for the breach can be awarded, there is no need to award specific performance.  For example, if a supplier promised to deliver me 25,000 widgets on July 1, but only ..read more

Introduction. As most Oregon Realtors® know, the OREF Sale Agreement provides that, subject to certain exclusions, all disputes that cannot be otherwise amicably resolved must be first mediated. If that isn’t successful, recourse is through mandatory arbitration. The filing of legal actions in court is not permitted except in cases seeking “provisional process” e.g., for injunctions, restraining orders, and similar matters requesting immediate and extraordinary relief. The Portland Metropolitan Association of Realtors® (“PMAR”) has its own mandatory mediation process, where disputes invo ..read more

Introduction. For many years before Covid, when Portland Metropolitan Association of Realtors® (“PMAR”) had live New Member Orientation (“NMO”) seminars, I spoke about real estate basics; the Sale Agreement, contingencies, financing, professional inspections, etc. One of the topics of discussion included title insurance. I would routinely ask the new licensees for a show of hands of those who looked over the preliminary title reports (“PTR”) when they came in after an escrow was opened. Only a very few hands were ever raised. To be clear, it is my opinion that review of the PTR ..read more

Discussion. The short answer is “Yes.” But the longer answer requires more explanation. First, a caveat:  By “review” I do not mean by the listing agent for the purpose of substantively changing a seller’s answers. Rather, by “review” I mean “review for completeness.” Oregon’s property disclosure statute, ORS 105.464, instructs sellers to: “Please complete the following form. Do not leave any spaces blank.” (Emphasis added.) Accordingly, it is my belief that brokers for both sellers and buyers should routinely review disclosure forms to confirm they are com ..read more

Introduction. Oregon’s property disclosure law was first created in the 1993 Legislative Session – nearly 30 years ago. This was back when the idea of sellers having to “disclose” any information about their homes was a foreign concept. Short of outright fraud, caveat emptor[1] was the rule of the day. Of course, if a seller intentionally misrepresented the condition of their property, it was actionable – but sellers were not then required to make any disclosures, thus leaving buyers to learn as much as they could about the property on their own, before makin ..read more

Earnest Money Deposits Generally. The term “earnest money” has been historically used to refer to the “deposit” paid by buyers that accompany an offer to purchase real property. Metaphorically, it is intended to show the buyer’s “good faith” intent to complete the purchase. Most written agreements provide that the earnest money will be forfeited to the seller should the buyer default under the terms of the contract. If the transaction fails for reasons unrelated to the buyer’s nonperformance, the earnest money deposit is normally refunded. OREF Sale Agreement. The OREF Sale Agreemen ..read more