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In Oregon, sellers of residential property are required by law to provide a Seller's Property Disclosure Statement to potential buyers. This disclosure outlines important details about the property's condition that could influence a buyer's decision. Understanding what sellers must disclose can help buyers make informed decisions and protect their investment.
The Seller's Property Disclosure Statement requires sellers to answer questions about over 50 items related to the property's condition and history. Sellers must indicate if they are aware of any issues like structural damage, pest infestations, roof leaks, flooding, zoning violations, or neighborhood noise problems. The disclosure also covers items like sewer connections, hazardous materials, pending litigation, and whether the property is part of a homeowner's association.
Oregon law states that sellers must complete this disclosure to the best of their knowledge. If sellers are unsure about an item, they should mark "do not know." Providing false information is illegal and could make the sale voidable by the buyer. Sellers must also update the disclosure if they become aware of any changes during the transaction process.
It's important for sellers to take the disclosure statement seriously and provide truthful information. Many items require the seller to elaborate on answers like "yes" or "don't know." Sellers should avoid shrugging off any defects just because they seem minor. What may not bother the seller could be a major concern for buyers.
The disclosure statement must be delivered to buyers as soon as possible once an offer is made. Buyers have the right to back out of the deal within five days of receiving the disclosure if they have concerns about items revealed. Sellers sometimes try to avoid disclosing issues by claiming they were unaware, but this tactic often backfires. Savvy buyers will still find out about problems through inspections, and then they will have legal recourse against the seller.
In Oregon, a Seller's Property Disclosure Statement must be provided to buyers whenever residential property is being sold or transferred. This includes single-family homes, condos, townhouses, duplexes, triplexes, quadplexes, manufactured homes, and vacant land zoned for residential use.
The disclosure form is required for most types of residential sales transactions in the state. This includes standard sales between private parties, short sales, foreclosure sales, and REO (bank-owned) property sales. Sellers are obligated to provide the disclosure statement once they have received an offer to purchase from a potential buyer.
Some situations where a disclosure may not be required are probate sales, court ordered sales, government agency sales, and inheritance transfers between family members. However, it's recommended that sellers complete the disclosure even in these cases. Providing more information upfront can help avoid problems or disputes after closing.
The disclosure statement is crucial when selling rental properties or investment properties. Often, landlords are unaware of issues that tenants have dealt with over the years. Tenants may not have notified the landlord about small leaks, pest control visits, or other maintenance concerns. Landlords should make inquiries with tenants and property managers to uncover any potential property defects before completing the disclosure form.
For sellers trying to market their home alone without an agent, the disclosure process can feel intimidating. But it's an essential step that can't be skipped. Sellers who avoid or falsify the disclosure are taking huge legal risks. If undisclosed issues are found by the buyer before closing, the buyer can terminate the deal and demand their earnest money deposit back. Worse yet, if serious undisclosed problems are discovered after closing, the buyer could sue the seller for repayment of repair costs, damages, and legal fees. Using a knowledgeable real estate agent is the best way for sellers to navigate the disclosure process correctly.
Structural Systems - Sellers must note any current or past damage, repairs, modifications, or defects related to the foundation, walls, roof, chimneys, floors, ceilings, inside and outside stairs, patios, decks, porches, garages, carports, pools, hot tubs, and outbuildings. Any structural problems, even if repaired, must be disclosed.
Systems and Fixtures - The seller must disclose information about the property's electrical system, plumbing system, septic tank/sewer system, heating and cooling systems, security system, fire sprinkler system, sump pump, irrigation system, TV antenna, and any leased systems or fixtures on the property. Known defects must be noted.
Infestations - Sellers must indicate if there is any damage or evidence of insects like termites or wood boring beetles. Past or current infestations of rodents, bats, bed bugs, or other pests must also be disclosed. Even a minor amount of damage should be noted.
Other Damage - All water intrusion issues from sources like rain, flood, sewer backup, or plumbing leaks must be disclosed. Any damage from wind, fire, smoke, hail, lightning, fallen trees, soil movement, earthquake, erosion, or accidents should be noted as well.
Environmental Issues - Sellers must disclose any past or present hazardous materials on the property, including underground fuel storage tanks, asbestos, radon gas, lead-based paint, or chemical spills. They must also note any past drug manufacturing or landfills on the property.
Neighborhood - Factors that affect the neighborhood like airport noise, commercial properties, nuisances, sex offenders nearby, or future development plans should all be disclosed if the seller is aware of them.
Homeowners' Association - If the property is part of an HOA, details on dues, fees, rules, and pending litigation or assessments need to be provided. The HOA should be able to furnish this information.
Completing the Seller's Property Disclosure Statement accurately is crucial for Oregon home sellers. This legally required form allows sellers to transparently inform buyers about the home's condition. If sellers misrepresent or omit information on the statement, they can be sued by unhappy buyers after closing. Follow these guidelines to complete the statement properly:
Read Carefully - Sellers should read every question and instruction thoroughly. The questions are detailed and comprehensive. Simply skimming the form can cause important items to be missed. Pay attention to sections that require elaborating on a "yes" response.
Speak to Your Agent - Real estate agents often have insights about common disclosure pitfalls. They may suggest wording on how to explain defects or issues. Agents can also explain the implications of answering "yes" or "don't know" for items.
Conduct Research - Sellers should not rely on memory alone when completing the form. Checking maintenance records and gathering documentation helps provide accurate information. Sellers can request inspection reports or maintenance records from the HOA to answer community-related questions.
Inspect the Property - Walk through the home just before completing the disclosure to note any visible issues. Check the roof, siding, landscaping, appliances, plumbing and electrical fixtures. Updated disclosures may be required later if new issues are found, but starting off with a thorough inspection prevents surprises.
Disclose Everything - It's better to over-disclose minor issues than risk allegations of hiding defects. Be upfront about small leaks, cracks, stains, or anything that requires repair, even if the seller plans to fix it before closing. For serious issues, provide details like location, repair history, and remaining damage. Describe any environmental issues, infestations, or underground tanks truthfully.
Elaborate When Needed - Simply checking "yes" without explanation can be misleading. If a roof leak was repaired five years ago but caused minor ceiling damage, the seller should note both the repair date and remaining damage. For large or complex issues, attach supporting documents like inspection reports.
Update as Needed - Sellers must notify the buyer and provide an updated disclosure if they become aware of changes during the transaction. A new roof leak or recent pest control visit would warrant an update. Changes can also include revised HOA fees or new assessment notices.
Intentionally failing to disclose known defects or issues on a Seller"s Property Disclosure Statement is illegal in Oregon. Yet some sellers rationalize trying to hide problems to make a sale. This dishonest tactic often ends disastrously for sellers down the road.
When buyers don"t receive full disclosure from the seller, they lose the ability to make an informed decision about the property. Buying a home is the largest investment most people ever make. Hidden defects can cost tens of thousands in unexpected repairs and repairs, destroying a buyer"s budget and financial security.
Non-disclosure erodes the trust in the real estate transaction process. When buyers learn they were deceived, it often sparks nasty legal battles between buyers and sellers. Lawsuits related to non-disclosure are on the rise nationwide. Sellers are getting hit with lawsuits years after closing when buyers finally uncover evidence of non-disclosure.
For example, a California couple bought a home after receiving a disclosure statement claiming no water intrusion or mold issues. Two years after moving in, they learned the crawlspace had extensive water damage and mold growth that was improperly repaired before selling. In reality, the sellers had sued the home builder over this issue and received a big settlement because repairs were unsuccessful. The couple sued the sellers for deliberately concealing the mold and water intrusion defects and won a large judgement to pay for mold remediation and repairs.
In another case, Washington state homebuyers uncovered letters written by the seller documenting major flooding and sewer backups shortly before selling to them. The problems were not disclosed. The buyers sued and were awarded $60,000 in damages plus attorney fees. The judge determined the seller"s deceit was intentional financial fraud.
Non-disclosure cases often hinge on proving the seller knowingly concealed issues. This is easier to show if the seller previously filed insurance claims for defects, sued builders over construction defects, or documented issues in work orders or communications with contractors. Home inspection reports and contractor estimates can also prove the seller was aware of problems.
When buyers uncover issues that were not properly disclosed after the purchase, they face an incredibly stressful and costly situation. Buyers must immediately address any urgent safety issues or risks of further property damage. But they also have to investigate if the seller intentionally hid the problems, and if legal action is warranted.
For severe undisclosed defects, many buyers do file lawsuits against sellers to recover repair costs. Some cases settle out of court, but other buyers pursue litigation all the way to trial to prove fraudulent concealment and maximize damages. Lawsuits related to non-disclosure have surged in recent years as buyers become more informed about their rights.
A common problem is undisclosed water damage from leaks, flooding, or sewer backups. Buyers often discover hidden water damage once carpet or walls are removed during remodeling. Sellers may try to patch just the surface damage without disclosing the full scope of repairs needed. In 2016, an Ohio couple purchased a home after receiving a disclosure claiming no roof or water intrusion issues. Two years later, during kitchen remodeling, the scope of concealed water damage was revealed. Their lawsuit uncovered the seller's insurance claims detailing extensive damage that was never fully repaired. The jury awarded the couple over $100,000 in damages.
Non-disclosed pest infestations are another huge issue. Termites and wood-boring beetles often infest hidden areas buyers don't inspect. An Ohio seller failed to disclose severe termite damage in their basement, although they previously had the house tented by an exterminator. After closing, the buyers later found chewed wood studs, joists, and sills that required $25,000 in structural repairs. The jury determined the seller's deception was fraudulent and intentional.
Mold infestations are also commonly concealed. A Georgia family sued upon finding undisclosed mold behind walls that was making their child sick. Their inspector only did a visual inspection and didn't catch the hidden mold before closing. The sellers provided no disclosure about their mold remediation attempts before selling. The jury awarded the buyers over $300,000 to fully remediate the toxicity and reconstruct the home.
Full and honest disclosure is the best legal protection a seller can have in an Oregon real estate transaction. Disclosure statements create a record showing the seller revealed all known material facts about the property"s condition to the buyer prior to sale.
Disclosures protect sellers from post-sale lawsuits filed by dissatisfied buyers. With no paper trail of disclosure, buyers can falsely claim the seller hid issues from them. Sellers without disclosures have no concrete evidence showing they shared defect information upfront with buyers.
Conversely, a detailed disclosure statement demonstrates the seller"s good faith effort to inform buyers before the sale, even about minor flaws. Buyers sign an acknowledgement that they received and reviewed the disclosure. This makes it much harder for buyers to later plead ignorance about disclosed issues. Sellers can point to the form as legal proof they were transparent.
For example, Maria and Jeremy Taylor decided to sell their Portland home after two years of ownership. The Taylors noticed a few small leaks develop around some windows during heavy rains. These leaks caused minor interior wall damage. On their disclosure statement, the Taylors reported the leaks and wall damage truthfully. The buyers acknowledged the disclosure in writing during the sale.
Two years after the sale closed, the buyers called the Taylors threatening to sue them for fraud. The buyers claimed they were never informed about "serious water intrusion defects" that caused extensive damage and mold growth costing $15,000 to repair. The buyers accused the Taylors of intentionally hiding the water leaks.
Because the Taylors disclosed the water intrusion issues upfront on the statement, they had strong legal grounds to defend themselves. The disclosure statement and buyer acknowledgement showed they had fully informed the buyers about the leaks before the transaction. The Taylors provided their real estate attorney with a copy of the signed disclosure statement as evidence of their transparency with the buyers.
After reviewing the documentation, the attorney called the buyers" bluff and made it clear the Taylors would countersue if they pursued any legal action. The buyers quickly dropped their threats and demands, wanting to avoid a lawsuit they had little chance of winning. The disclosure statement had effectively protected the Taylors against fraudulent accusations.
For most sellers, having an experienced real estate agent guide them through the property disclosure process can help avoid costly mistakes. Agents know the complex legal issues surrounding disclosure and how to properly complete the forms. They also offer an objective perspective to advise sellers on appropriate disclosure.
Real estate agents routinely see the consequences when sellers try to hide issues from buyers. This deters agents from ever suggesting their clients conceal defects. They understand the legal and ethical duties of transparency in a real estate transaction. Agents can draw from years of experience on which issues must be disclosed, and how to best communicate them.
For example, Lee and Marie Roberts listed their Portland home for sale last year. During a heavy rainstorm, Lee noticed a small leak in the laundry room ceiling and minor water damage on the drywall. The Robertses had never seen leaks in that area before. Their agent advised them to note the new water intrusion on the disclosure statement since it was active leakage. Though it seemed insignificant, disclosing the issue could prevent major problems down the road. The Roberts followed their agent's guidance.
Sure enough, during a pre-closing walkthrough, the buyers saw the laundry room ceiling leak and requested the Robertses repair it before closing. Because the issue was already disclosed properly, the sellers happily made the repair. This avoided a dispute that could have cancelled the transaction. The agent's advice to disclose the minor leak resolved the issue smoothly.
Sellers completing the disclosure alone often struggle with how much detail to provide. They may leave out important facts thinking it will improve marketability. Agents can counsel clients to focus on transparency rather than how issues may be perceived.
Full disclosure also reduces an agent's liability. As representatives in the transaction, agents could be included in any lawsuits against sellers regarding non-disclosure. When advising clients to fully disclose, agents protect their own interests against claims of misrepresentation.