Buyer Advisory Guide

OREGON PROPERTY BUYER ADVISORY

PROPERTY CONDITION INSPECTION AND INVESTIGATION

DOCUMENT INSPECTION AND INVESTIGATION

OREGON PROPERTY BUYER ADVISORY
A CONSUMER INFORMATION PUBLICATION
OF THE OREGON REAL ESTATE AGENCY

A real estate licensee is vital to the home buying process and can provide a
variety of services in locating property, negotiating the sale and advising the
buyer. A real estate agent is generally not qualified to discover defects or
evaluate the physical condition of property; however, a real estate agent can
assist a buyer in finding qualified inspectors and provide the buyer with
documents and other resources containing vital information about a prospective
new home.

This Advisory is designed to assist home buyers in meeting their obligation to
satisfy themselves as to the condition and desirability of property they are
interested in purchasing. Common issues in real property transactions that home
buyers often decide to investigate or verify are summarized in this Advisory. In
addition to investigating or verifying these common issues, the buyer should
tell the licensee with whom they are working about any special concerns or
issues the buyer may have regarding the condition of the property or surrounding
area. Such special concerns are not addressed in this Advisory.

PROPERTY CONDITION INSPECTION AND INVESTIGATION

Professional Home Inspections
OBTAINING A PROFESSIONAL HOME INSPECTION IS THE SINGLE
MOST IMPORTANT THING A BUYER CAN DO FOR THEIR PROTECTION.
A professional home inspection report will provide the buyer with detailed information
about the home’s physical condition, its systems and fixtures and usually note any
potential future problems. The buyer should carefully review an inspector’s proposal
to determine the scope of the inspection. Some home inspectors may not inspect heating
and cooling systems, the roof or other systems or components. A home inspection should
be done by a home inspector or contractor licensed by the Oregon Construction
Contractors Board (CCB). To inspect two or more components (i.e., roof, siding,
structural), the home inspector must be certified and either be a licensed
construction contractor or work for a licensed construction company.

Also, a home inspector is not allowed to perform the repairs within a twelve-month
period following the inspection. Buyers can review state home inspector requirements
and standards of practice for inspectors on-line at: http://ccbed.ccb.state.or.us/WebPDF/CCB/Publications/hi-s-sop.pdf. Additional information about inspections and inspectors
is available from the Oregon Association of Home Inspectors at: www.oahi.org or the
InterNational Association of Certified Home Inspectors at www.nachi.org.
Inspection of property is beyond the scope of expertise of a real estate licensee,
but real estate licensees can provide buyers with a list of local inspectors.
Licensees ordinarily will not recommend a specific inspector. Before hiring an inspector,
the buyer should check with the CCB to determine the inspector’s current license status
and whether there are any past or pending claims against the inspector. This can be
done by visiting: https://ccbed.ccb.state.or.us/ccb_frames/consumer_info/ccb_index.htm.

Buyers should not rely upon reports done for others (previous buyers and/or sellers),
because the report may not be accurate and buyers may have no recourse against
an inspector they have not retained. Most residential sale contracts contain a
clause that allows the buyer to withdraw from the agreement if a professional
inspection they have done shows defects in the property. You will want to take
advantage of this important right by obtaining your own professional home
inspection report from a licensed professional inspector within the time frame
specified in the sale contract. Unless otherwise provided for in the Sale
Agreement, the cost of the inspection will not be refunded should you withdraw
from the Agreement.

Pest and Dry Rot Inspection
Pest and dry rot inspections are done in many residential real estate
transactions and may be required by the lender. A pest and dry rot inspection
may or may not be included in a whole home inspection. If a pest and dry rot
inspection is desired or required and the buyer is obtaining a whole home
inspection, the buyer should verify that the inspection obtained covers pest and
dry rot and the inspector is properly licensed. The license status of home
inspectors can be checked at:
https://ccbed.ccb.state.or.us/ccb_frames/consumer_info/ccb_index.htm. Pest
control operators who do inspections and treatment are licensed by the Oregon
Department of Agriculture. Buyers can check on licensing of pest control
operators and applicators by calling the Oregon Department of Agriculture at
(503) 986-4635 or online at http://oda.state.or.us/dbs/search.lasso#pesticide
Real estate licensees do not have the training or expertise to inspect property
for pests or dry rot. Like any property condition report, buyers should not rely
on the report of an inspector they did not hire. A pest and dry rot inspection
is a limited inspection and is no substitute for a complete whole home
inspection by a licensed home inspector.

Defective Products and Materials
Some materials used in home construction are, or have been, subject to a recall,
class action suit, settlement or litigation. These materials are typically, but
not limited to, modern engineered construction materials used for siding,
roofing, insulation or other building purposes. It is critical that a buyer
carefully review any disclosures or representations of the seller regarding such
materials. A real estate licensee may assist the buyer in that review, but
inspection of property for defective products, systems, fixtures or materials is
beyond the scope of expertise of a real estate licensee. The buyer, therefore,
should make certain inspection for such materials is within the scope of any
home inspection ordered by the buyer. Like any property condition report, buyers
should not rely on the report of an inspector they did not hire.

Similarly, homes may contain products in their systems or fixtures that are, or
have been, subject to a recall, class action suit, settlement or litigation.
Plumbing, heating and electrical systems, among others, may contain such
products. It is critical that a buyer carefully review any disclosures or
representations of the seller regarding such products. The buyer should,
therefore, make certain inspection for such products is within the scope of any
home inspection ordered by the buyer. A real estate licensee can help the buyer
find a suitable inspector.

Repairs and Remodels
Buyers should look for signs of repairs or remodeling when viewing property. If
repairs or remodeling have been done, the buyer will want to make certain the
work was properly done. Buyers can ask the seller for any invoices or other
documentation for the work but, as with other questions of property condition,
there is no substitute for professional inspection. A real estate licensee can
help the buyer assess the need for a building code compliance inspection but do
not themselves have the training or expertise to evaluate building code
compliance. Information about building permits can be found at:
http://www.permitsprotect.info/, a service of the Department of Consumer &
Business Services Building Codes Division. If building permits were required for
work done on the property (such permits are typically required for structural
changes, new additions, and new plumbing and electrical work), the buyer should
check with the city or county building department to make sure the permits are
in order. If permits were not properly obtained, the new property owner could be
held responsible. Ask your agent for assistance or you can find the website for
the county in which the property is located by visiting:
http://www.aocweb.org/aoc/AboutOregonCounties/CountyLinks/tabid/72/Default.aspx
Websites for cities can be found at:
http://www.orcities.org/CityResources/CityInformation/tabid/846/Default.aspx.
If repairs or remodels have been completed very recently, the buyer should take
steps to determine if there is any possibility of construction liens being filed
against the property after the sale has closed. This can be done by the buyer
raising the issue with their title insurance provider.

If any repairs are being required during the transaction, the buyer should
insure a licensed construction contractor is doing the repairs. After the
repairs have been done, the buyer should consider having a re-inspection done to
assure the repairs were done properly.

Sewer and Septic Systems
Whether the property is connected to a city sewer, septic system or other
on-site waste water treatment system is important information. Even if the MLS
data sheet or Seller’s Property Disclosure Statement indicate that the home is
connected to the city sewer, the buyer should have their home inspector, or a
licensed plumber, verify the connection and its condition. Real estate licensees
are not licensed to do plumbing or septic inspections. If the property has a
septic system or other on-site wastewater treatment system, the system should be
inspected by a licensed septic system installer or other on-site waste water
treatment system professional hired by the buyer. Information about on-site
waste water treatment systems, and licensed installers and pumpers, can be found
on the website for the Oregon Department of Environmental Quality (DEQ) at:
http://www.deq.state.or.us/wq/onsite/onsite.htm. Buyers should check with the
appropriate county department for specific information on a particular property.

Wells
If domestic water for the property is supplied by a private well, the seller is
required by state law to test the well for total coliform bacteria and nitrates.
Buyers may also want to have the well tested for contaminants other than
bacteria and nitrates. Buyers should verify that the seller uses proper
procedures when having the well tested. More information on this state law
requirement can be found at
http://www.dhs.state.or.us/publichealth/dwp/dwtfaq.cfm. State law also requires
that all private wells not already registered with the state be registered at
the time the property is transferred. Real estate forms in use in Oregon often
delegate to the buyer the responsibility for registering the well. For
information on the state well registration program, visit:
http://egov.oregon.gov/OWRD/GW/well_id.shtml.

Well Flow Tests: If domestic water is supplied by a private well, the buyer
should verify to the extent possible whether the well provides adequate water
for domestic needs. It is strongly recommended that a well flow test be
conducted prior to the purchase of any property that depends on a well for
domestic water. Careful attention should be paid to any disclosures or
representations by the seller. Buyers should review all available well records.
More information on well logs is available at:
http://apps2.wrd.state.or.us/apps/gw/well_log/Default.aspx. Buyers are advised
to have well flow tested by a professional. While real estate licensees are not
trained and do not have the expertise to test wells, they may be able to direct
you to the appropriate well professionals. Even when wells are inspected and
tested, it is impossible to guarantee a continued supply of water. Catastrophic
events can and do occur that can change the well quality virtually overnight.
Other events, such as development and drought, can affect the quality of an
aquifer over time. Any test of a well is merely a snapshot in time and is not an
indication of a well’s performance in the future. Any kind of well report should
be viewed in this light. PROFESSIONAL INSPECTION, WELL LOG REVIEW
AND FLOW TESTS ARE ABSOLUTELY CRITICAL IN DETERMINING
THE CONDITION OF A PRIVATE WELL.

Underground Oil Storage Tanks
Buyers should be aware of potential problems associated with underground oil
storage tanks. Although home heating oil tanks are not regulated, such tanks can
cause serious problems if they have leaked oil. Advice on home heating oil tanks
and the problems associated with them can be found at:
http://www.deq.state.or.us/lq/tanks/index.htm

A buyer who knows or suspects that property has an underground storage tank
should take appropriate steps to protect his own interests, including seeking
information from the Department of Environmental Quality (DEQ) and, if
necessary, consulting with an environmental hazards specialist or attorney.
BUYERS ARE ADVISED TO HIRE APPROPRIATELY TRAINED ENVIRONMENTAL PROFESSIONALS TO INSPECT THE PROPERTY IF AN UNDERGROUD OIL
STORAGE TANK IS FOUND OR SUSPECTED.
Oil storage tank inspection, decommissioning and cleanup requires a special
license from DEQ. A list of licensed providers can be found at
http://www.deq.state.or.us/lq/tanks/index.htm or ask your real estate licensee
for assistance in finding the proper professional.

Environmental Hazards
Buyers should carefully review the Seller’s Property Disclosure Statement and
any inspection reports available to determine if any of a number of potential
environmental hazards may require further investigation. Environmental hazards
include everything from expansive soils to landslides to forest fires, tsunamis,
floods and earthquakes. Environmental hazards can also include indoor air
quality (e.g., radon or carbon monoxide) and hazardous materials, like asbestos.
Buyers concerned about external environmental hazards should check with the
county in which the property is located. Oregon counties can be located at:
http://www.aocweb.org/aoc/AboutOregonCounties/CountyLinks/tabid/72/Default.aspx
. Flood plain maps and information are available from the Federal Emergency
Management Agency (FEMA) at: http://www.fema.gov/business/nfip/sfhdform.shtm.
The Environmental Protection Agency (EPA) provides a great deal of information
about indoor hazards on its website at: www.epa.gov/iaq/iaqinfo.html. Superfund
sites are areas that have been listed by the federal government as contaminated.
A wealth of information on superfund sites, including their locations, is
available by visiting the EPA’s website at: http://www.epa.gov/superfund/sites/.
Information on Oregon superfund sites can be obtained from the Oregon Department
of Human Services at:
http://www.dhs.state.or.us/publichealth/superfund/sites.cfm. Real estate
licensees are not trained, and do not have the expertise, to discover and
evaluate environmental hazards. Buyers, therefore, are advised to hire
appropriately trained environmental professionals to inspect the property and
its systems or fixtures for environmental hazards.

Wood stoves
DEQ has developed a statewide wood stove program to promote the use of
cleaner-burning wood stoves and to help homeowners to burn wood more efficiently
and with less pollution. Under Oregon law, no person may sell, offer to sell or
advertise to sell a used, non-certified wood stove. Non-certified wood stoves
(including fireplace inserts) are older models (mostly pre-1985) that have not
been certified by the DEQ or the federal Environmental Protection Agency to meet
cleaner-burning smoke emission standards. Your community may have additional
rules governing the sale of or use of wood stoves and fireplaces. Ask your agent
for assistance or you can find the website for the county in which the property
is located by visiting:
http://www.aocweb.org/aoc/AboutOregonCounties/CountyLinks/tabid/72/Default.aspx.
Websites for cities can be found at:
http://www.orcities.org/CityResources/CityInformation/tabid/846/Default.aspx.
Buyers should contact their insurer early in the home buying process to
determine what, if any, effect, a fireplace or wood stove may have on the
availability or cost of fire insurance For more information on wood stoves,
visit: http://www.deq.state.or.us/aq/burning/woodstoves/101.htm. Inspection of
fireplaces and woodstoves requires special training and expertise. Although a
real estate licensee may be able to help you find a local wood stove
professional, they cannot themselves inspect or evaluate a wood stove.

Mold
Molds are one of a variety of biological contaminants which can be present in
human structures, including in residential housing. Mildew is perhaps the most
common and best known of the molds. Less well known, and far less common, are
certain molds identified as possible contributors to illness, particularly in
people with allergies. Such cases usually involve property with defective
siding, poor construction, water penetration problems, improper ventilation or
leaking plumbing. In a few cases, these problems have led to the growth of molds
which caused medical conditions in some people. Buyers, if concerned about
potentially harmful molds, should arrange for inspection by a qualified
professional. Information on moisture intrusion and mold problems associated
with human structures can be found at:
http://www.epa.gov/iaq/molds/moldresources.html. Inspection, discovery and
evaluation of specific water intrusion or mold problems requires extremely
specialized training and is well beyond the scope of a real estate licensee’s
expertise. Buyers are, therefore, advised to hire appropriately trained
professionals to inspect the property if the buyer is concerned about the
possibility of harmful molds.

Smoke Alarms
In Oregon, no person may sell a dwelling unless there is installed in the
dwelling unit an approved smoke detector or smoke alarm installed in accordance
with the rules of the State Fire Marshall. Because of this state law
requirement, most residential real estate sale forms contain a representation by
the seller that, at the earlier of possession or closing date, the dwelling will
have an operating smoke detector as required by law. In Oregon, ionization smoke
alarms (the most common type) must have a 10-year battery and a “hush” mechanism
which allows a person to temporarily disengage the alarm. All dwellings must
have the proper type, number and placement of alarms as required by the building
codes at the time the dwelling was constructed but not less than one alarm
adjacent to each sleeping area and at least one alarm on each level of the
dwelling. (Additional rules apply to rented property.) For information about
smoke alarm and detector requirements in Oregon, you should visit the State Fire
Marshall’s web site at: http://www.oregon.gov/OSP/SFM/Smoke_Alarms_Home.shtml.
Real estate licensees are not trained in building code compliance, therefore, if
there is doubt about whether a smoke alarm or detector system complies with
building and fire code requirements, a licensed home inspector, or the home
alarm or detector company that installed the system, should be able assist you.
Your real estate agent may be able to assist you in finding the right code
compliance professional.

Deaths, Crimes and External Conditions
In Oregon, certain social conditions that may be of concern to buyers are
considered not to be “material” by state law. Oregon Revised Statutes 93.275.
Ordinarily, “material facts” must be disclosed by the seller or the seller’s
agent. Because state law declares certain facts that may be important to a buyer
to be not material, buyers cannot rely on the seller disclosing this kind of
information. Buyers should undertake their own investigation if concerned that
the property or a neighboring property has been the site of a death, crime,
political activity, religious activity, or any other act or occurrence that does
not adversely affect the physical condition of, or title to, real property,
including that a convicted sex offender resides in the area. Concerned buyers
can contact their local police for more information. Websites for Oregon
counties can be found at:
http://www.aocweb.org/aoc/AboutOregonCounties/CountyLinks/tabid/72/Default.aspx.
Websites for cities can be found at:
http://www.orcities.org/CityResources/CityInformation/tabid/846/Default.aspx
.Some large cities (e.g., Portland) publish crime maps (e.g.,
www.portlandmaps.com) on their website. Information about registered sex
offenders can be found by visiting http://egov.oregon.gov/DOC/faqs.shtml. Buyers
concerned that neighborhood properties may have been used for illegal drug
manufacture can visit
http://www.oregonbcd.org/druglabs/druglabs.html, the website of the Building
Codes Division, for more information. Information on Oregon’s Drug Lab Clean Up
Program and meth labs can be found at:
http://www.dhs.state.or.us/publichealth/druglab/methlab.cfm. Under Oregon law,
neither the seller nor their agent is allowed to disclose that an owner or
occupant of the real property has or had human immunodeficiency virus or
acquired immune deficiency syndrome.

Neighborhoods
Neighborhoods change over time so a buyer cannot expect the area surrounding
their home to stay as it is. Buyers concerned about potential development in the
surrounding area should check with governmental authorities to determine if any
large scale building projects are scheduled for the area. Building permits,
zoning applications and other planning actions are a matter of public record.
In Oregon, local governments must develop comprehensive plans that guide
development over long periods of time. These plans may include “overlay zones”
that can have a significant effect upon development. If concerned about
development, buyers should check with local government planning departments.
Information about planning departments can be found on the county or city
website: http://www.aocweb.org/Cnty-links-frm.htm
Or http://www.orcities.org/CityResources/CityInformation/tabid/846/Default.aspx..
For information on state road building projects, check with the Oregon
Department of Transportation at: http://www.oregon.gov/ODOT/HighwayRegions.shtml.
Location within a school district can be an important attribute of a neighborhood.
School boundaries, however, are subject to change. If location within a particular school
district is material to the purchase of real property, the buyer should investigate the
boundaries and the likelihood of change by contacting the school district directly.

Oregon law provides a “just compensation” right for some Oregon property owners
if a public entity enacts or enforces a land use regulation that restricts the
use of property and has the effect of reducing the value of the property.
The law allows, but does not require, governing bodies to modify, remove, or not
apply land use regulations in lieu of paying compensation. Property that has
been in single ownership or held in a family over a long period of time may have
more development potential and, therefore, value than has a neighboring property
purchased more recently. At the same time, some property may be less valuable
because of the potential for un-zoned, property specific uses on neighboring
property. Real estate licensees are not trained to predict the contingent and
uncertain potential effects of complex laws like Oregon compensation laws.
Clients who believe their decision to sell or purchase Oregon real estate may be
affected by Oregon’s property compensation laws are advised to seek the counsel
of appraisers, attorneys or other land use professionals.

DOCUMENT INSPECTION AND INVESTIGATION

Information Generally
Information from third parties contained in the many documents associated with
a real property transaction is not independently verified by real estate
licensees. It is the responsibility of the buyer to read the documents provided
and ask questions if uncertain or concerned. Interpretation of many real
property transaction documents involves the practice of law and is, therefore,
beyond the scope of a real estate licensee’s expertise. BUYERS UNCERTAIN
ABOUT THE LEGAL EFFECT OF DOCUMENTS SHOULD CONSULT
AN ATTORNEY.

MLS Information
Most properties marketed for sale by real estate licensees are listed in a
Multiple Listing Service (MLS). Information about the listing, provided to the
MLS by the listing broker, is made available to all subscribing members of the
MLS. This information is typically contained in what is called an MLS
“printout” or “data sheet.” Most of the information contained in an MLS data
sheet or printout is obtained from the seller or third-parties like the county
assessor’s office or other governmental entity. MLS data may be incomplete, an
approximation or otherwise inaccurate. Personal property cited on the MLS data
sheet should be included in the purchase agreement if the buyer wishes to have
the personal property included in the sale. BUYERS SHOULD NOT RELY ON MLS-
PROVIDED INFORMATION IF THAT INFORMATION IS CONSIDERED IMPORTANT UNLESS THE BUYER VERIFIES THE INFORMATION.

Seller’s Property Disclosure Statement
In most cases, residential property sellers in Oregon must provide a Seller’s
Property Disclosure Statement to each residential buyer who makes a written
offer. The form used by the seller is mandated by state law. The seller’s
representations regarding the property are based upon the seller’s actual
knowledge at the time the disclosure statement is made and are not the
representations of any financial institution that may have made or may make a
loan pertaining to the property, or that may have a security interest in the
property, or any real estate licensee engaged by the seller or buyer. Licensees
are not responsible for misrepresentations by the seller unless they know of the
misrepresentation and fail to disclose it. A buyer should carefully review the
seller disclosures and verify, or ask their licensee to verify, any statements
of concern. REVIEW OF THE SELLER’S PROPERTY DISCLOSURE STATEMENT
IS NO SUBSTITUTE FOR PROFESSIONAL INSPECTIONS.

Real Estate Sale Form (Sale Agreement)
A contract for the sale of real property must be in writing to be enforceable
in an Oregon court. A VERBAL OFFER OR ACCEPTANCE SHOULD NOT BE MADE
OR RELIED UPON. Contracts for the sale of property are often called “earnest money”
or “sale” agreements. They are legally binding contracts. Buyers and sellers
should seek competent legal advice before signing any contract they do not fully
understand. Sale agreements usually include provisions concerning who will hold
the earnest money and under what conditions it may be refunded to the buyer or
forfeited to the seller. Both buyers and sellers should carefully review these
provisions. The amount of earnest money pledged and the conditions under which
it may be refunded or forfeited are important matters that should be carefully
negotiated between the buyer and the seller.

Most sale agreements are written using a standard form. In Oregon, most
licensees use a form developed specifically for Oregon real property
transactions. Many of these forms contain dispute resolution provisions that
require mediation or arbitration of disputes. Arbitration and mediation clauses
can affect legal rights, including the right to a judicial determination of a
claim and the right to appeal.

BUYERS AND SELLERS ARE RESPONSIBLE FOR SELECTING THE TERMS
AND CONDITIONS OF THEIR AGREEMENT. REAL ESTATE LICENSEES
CAN GIVE BUYERS IMPORTANT MARKETING, BUSINESS AND NEGOTIATING
ADVICE AND INFORMATION AND CAN ASSIST INPREPARATION OF THE SALE AGREEMENT BUT ONLY PURSUANT TO THE CLIENT’S INSTRUCTIONS.
REAL ESTATE LICENSEES ARE NOT ATTORNEYS AND ARE PROHIBITED BY LAW FROM GIVING LEGAL ADVICE. To obtain a referral for a real estate attorney,
visit the Oregon State Bar at http://www.osbar.org/public/legalhelp.html or contact
by phone at 503-684-3763 (Portland metro) or 800-452-7636 (greater Oregon).

Financing
The buyer’s ability to finance the property is an important contingency in most
residential transactions. Buyers must act in good faith and use best efforts to
obtain a loan if the sale is contingent upon obtaining a loan. Buyers often seek
pre-approval from a lender prior to writing an offer. A pre-approval letter
should state that the lender has reviewed the buyer’s credit report, income
requirement and cash to close and pre-approves the buyer for the loan, subject
to an acceptable appraisal of the property. The appraiser will normally work for
the lender, not the buyer. To check the status of an appraiser, visit the
Appraiser Certification and Licensure Board at:
http://www.oregonaclb.org/index.php?option=com_content&task=view&id=20&Itemid=112.
Once the appraisal has been received, the underwriter authorizes final loan
approval. Only when the underwriting process is completed will an actual loan be
secured. The entire financing process normally takes approximately 30-45 days.
If the seller is asked to finance any part of the transaction, the buyer’s
financial status will become material to the transaction. Any material defect
in the buyer’s financial status must be fully disclosed to the seller. Because
of the risks involved for the seller, the buyer should anticipate that the
seller will fully investigate the buyer’s credit worthiness prior to agreeing to
carry financing for the buyer. A real estate licensee cannot hide material
information from any party to a real estate transaction and should not be asked
to do so by the buyer or seller.

Title Report and Commitment
The title report, or commitment to insure, produced by a title insurance company
contains important information that must be reviewed by the buyer. In
particular, the report will list certain “exceptions” to the policy the company
will issue. Buyers should request copies of any documents mentioned in the
report that are not understood or raise concerns about the state of the title.
General information about title issues can be found at:
http://www.titlelawannotated.com. Questions about the title report and
associated documents can be directed to the title or escrow officer issuing the
report or to the buyer’s attorney or surveyor. Review of title reports for
legal deficiencies involves the practice of law.

Homeowners Insurance
The insurance claims history for a home may affect the cost of homeowners’
insurance, or even its insurability. Most insurance companies use a database
service called the Comprehensive Loss Underwriting Exchange (CLUE) to track
claims made. Depending on the content of the CLUE report, and the insurance
company’s policy, home insurance may prove more difficult to get than expected.
The buyer’s claims history and credit report may also be used to determine
insurability. Insurers have used CLUE reports and other information, coupled
with termination provisions in the policy, to cancel coverage after closing.
IT IS CRITICAL THAT BUYERS ARRANGE FOR HOMEOWNERS’ INSURANCE
EARLY IN THE PROCESS OF PURCHASING PROPERTY RATHER THAN WAITING
UNTIL CLOSING TO GET INSURANCE. If difficulty is experienced in obtaining the insurance, the buyer can ask the seller to furnish them with a copy of the CLUE report on the property.
Homeowners can obtain a copy of the report for their property online at:
http://www.choicetrust.com. Buyers may want to talk to the licensee they are
working with about whether obtaining suitable homeowners’ insurance should be
made a contingency of the sale. More information on homeowners insurance in
Oregon can be found at: http://www.insuranceoregon.org/.

Home Warranties
A home warranty is an insurance contract. Home warranties for existing homes
are common in today’s real estate market. The warranty generally covers the
repair and replacement of equipment and appliances such as dishwashers, plumbing
systems, electrical systems, and so on. Optional coverage may be available at
additional costs for pools, built-in spa equipment, well pumps and other
systems. Coverage and price vary considerably among warranty companies. A home
warranty can be included as a term of a purchase agreement. Some real estate
licensees provide home warranties to their clients. Buyers should discuss home
warranties with their agent prior to purchasing a home. Your agent can provide
you with information on companies offering home warranties for purchase.

Square Footage and Acreage
The square footage of structures and acreage data found in MLS printouts,
assessor records and the like are usually just estimates and should not be
relied upon. Many Oregon properties have not been surveyed and their exact
boundaries are not known. If square footage or land size is a material
consideration in a purchase, all structures and land should be measured by the
buyer or a licensed surveyor prior to entering into a sale agreement, or should
be made an express contingency of the agreement. You can find a licensed
surveyor in your area by visiting their website at: http://www.osbeels.org/.

Homeowners Association Documents, Covenants, Conditions and Restrictions
Covenants, conditions and restrictions, called “CC&Rs,” are formally recorded
private limitations on the right to use real property. Often, but not always,
CC&Rs are enforced by a homeowners’ association. Review of the CC&Rs is
typically part of a real estate sale. Although real estate licensees are
familiar with common CC&R provisions, determining the legal effect of specific
provisions is considered the practice of law in Oregon and, therefore, beyond
the expertise of a real estate licensee. If the subdivision in which the
property is located is governed by a homeowners’ association, the CC&Rs may be
very restrictive. Homeowners’ associations are often governed by their own
articles of incorporation, bylaws, rules and regulations. Homeowners’
association rules and regulations can significantly impact a buyer’s plans for
the property the buyer wants to purchase. Planned communities and condominiums
are very likely to have detailed homeowners’ association governing documents,
mandatory fees and ongoing homeowner obligations. Governing documents, fees
and homeowner obligations should be reviewed by the buyer during the transaction.
If you have questions about CC&Rs or your legal rights and remedies under
homeowners’ association governing documents, you should have your attorney
review the documents for you. A real estate licensee is prohibited by law from
giving legal advice. For more information on homeowners’ associations and CC&Rs,
visit http://www.realtor.com/BASICS/condos/ccr.asp.

Lead-Based Paint Disclosure Form
Residential property built before 1978 (called “target” housing) is subject to
the Residential Lead-Based Paint Disclosure Program administered by the
Environmental Protection Agency (EPA) and the Department of Housing and Urban
Development (HUD). The Act requires sellers of target housing to provide the
buyer with a lead-based paint disclosure and the pamphlet entitled Protect Your
Family From Lead in Your Home. Information about the requirements and samples
of the forms can be found at: http://www.hud.gov/offices/lead/disclosurerule/index.cfm
If you make an offer on a home built before 1978 and do not receive the
disclosure and pamphlet, you should ask your real estate licensee about
lead-based paint disclosures. For more information and to locate companies
certified and licensed to conduct lead-based paint testing or perform abatement,
visit http://www.dhs.state.or.us/publichealth/leadpaint/index.cfm for the
Department of Human Resources.

Property Taxes
“Real property in Oregon is taxed under a complicated formula that involves more
than just valuation of the property. Some properties (typically, but not
exclusively, farm or forest) are specially assessed and taxes deferred. The
sale of such property can result in changes in the tax status and result in the
levy of additional taxes. If a new home is being constructed and the closing
precedes completion of the home, the full taxes that will be due upon completion
may not be reflected in the closing statement. Buyer’s should carefully review
closing documents and property taxes and seek the advice of a tax professional
if concerned about the valuation, the taxes assessed or potential changes in the
tax status. Real estate licensees are not trained or licensed to provide tax advice. “

Additional Information:
Oregon Real Estate Agency: http://www.rea.state.or.us/
Oregon State Government: http://www.oregon.gov/
Association of Oregon Counties: http://www.aocweb.org
League of Oregon Cities: http://www.orcities.org
Oregon Association of REALTORS®: http://www.OregonRealtors.org

Buyer Advisory Guide

Questions? Just Ask!