With its lush landscapes and relatively affordable price, Oregon is quickly becoming a sought-after place to live. During the pandemic, densely populated and expensive cities like San Francisco, Los Angeles and Seattle are experiencing an exodus of residents as many big city dwellers flock to other locations for remote work.
As a result, the buying and selling of real estate in Oregon has exploded in recent years. This interest, combined with rapid development to accommodate the growing population, means that Oregon’s neighborhoods are constantly growing and changing. It also means that parties to real estate transactions need to be very careful about how they fill out and review ownership disclosure forms.
Under Oregon law, a seller must disclose to the buyer any “material defect” known to the seller that would not be readily apparent to a buyer. These material defects are disclosed in a form called the “Seller’s Ownership Disclosure Statement” and requires the seller to disclose their personal knowledge of the property, which includes specific information about features such as water sources, systems sewers, insulation, leaks, electrical systems, plumbing, drainage, and more. The otherwise simple quiz ends with a tricky catch-all question, however: “Are there any other material defects affecting this property or its value that a potential buyer should be aware of?”
This last question poses a significant challenge because it invites the seller to provide information not only on the property itself, but on the potential outside factors that can affect the value of the property. For example, in developing neighborhoods that are experiencing significant growth, there may be future plans to add a noisy freeway, change school district boundaries, or add a large-scale apartment complex to a previously sleepy area that could significantly increase pedestrian and vehicular traffic. . Although neighborhoods inevitably change over time, many sales disputes can be avoided simply by making sure to disclose information about future developments that may impact the desirability and value of the property. To that end, sellers should err on the side of disclosure and include information about upcoming changes in the neighborhood. Given the subjectivity of what qualifies as a “material defect,” disclosures should include arguably positive developments. For example, some might consider having a church in the street as a positive attribute and others might not.
But the responsibility does not lie solely with the sellers. Buyers should also do their own due diligence by researching a neighborhood before rushing into a sale. To avoid unpleasant surprises, buyers should request and review public documents that may shed light on future developments in the neighborhood. These public records include: local building permits, zoning applications, zoning restrictions, and other planning actions that can provide insight into future construction, building heights, and commercial use. More importantly, these public documents can set buyers’ expectations and help them find their “home sweet home.”
Taking these steps can help prevent future disputes: buyers will feel informed about their purchase and sellers will reduce their exposure to claims. Ultimately, a win-win.