Setoff for certain amounts payable to underlying lienholders
(1) Notwithstanding ORS 18.615 (Garnishable property generally), a garnishee may apply a setoff against amounts owing to the debtor under the terms of a land sale contract, under the terms of a promissory note or other evidence of indebtedness that is secured by a mortgage or trust deed, or under the terms of a security agreement as defined in ORS 79.0102 (UCC 9-102. Definitions and index of definitions), to the extent that those amounts are actually paid to another person:
(a) Who is entitled to receive the amounts under the terms of the land sale contract, mortgage, trust deed or security agreement, or under the terms of any other land sale contract, mortgage, trust deed or security agreement that is secured by the same property that is the subject of the land sale contract, mortgage, trust deed or security agreement; and
(b) Who has an interest in the property that is the subject of the land sale contract, mortgage, trust deed or security agreement that is superior to the interest of the creditor under the laws that would govern a foreclosure, trust deed sale, repossession or other action against the property that is the subject of the land sale contract, mortgage, trust deed or security agreement.
(2) A garnishee must deliver in the manner required by ORS 18.600 (Definitions) to 18.850 (Challenge to garnishment form) all amounts in the garnishee’s possession, control or custody at the time of delivery of the writ of garnishment that are not actually paid by the garnishee to another person as described in subsection (1) of this section, unless those amounts are exempt from execution under other law.
(3) A garnishee who applies a setoff under this section must disclose that the setoff has been applied, and the amount of the setoff, in the garnishee response required by ORS 18.680 (Response required). The garnishee must certify in the garnishee response that the amounts specified in the certificate were actually paid by the garnishee to another person entitled to receive those amounts under subsection (1) of this section. [2001 c.249 §9; 2001 c.445 §159a]
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