2007 ORS 87.007¹
Protection of purchasers of residential property from construction liens that may be perfected after sale of property completed
  • requirements for sale of residential property
  • seller options
  • rules
  • delivery of form to purchaser
  • penalty
  • damages
  • defenses

(1) This section applies to a sale of the following residential property:

(a) A new single family residence or a single family residence where the sales price for original construction or contract price for improvements to the residence completed within three months prior to the date of the sale of the property is $50,000 or more.

(b) A new condominium unit or a condominium unit where the sales price for original construction or contract price for improvements to the condominium unit completed within three months prior to the date of the sale of the property is $50,000 or more. As used in this paragraph, "condominium unit" has the meaning given that term in ORS 100.005 (Definitions).

(c) A new residential building or a residential building where the sales price for original construction or contract price for improvements to the residential building completed within three months prior to the date of the sale of the property is $50,000 or more. As used in this paragraph, "residential building" means a building or structure containing not more than four dwelling units capable of being used as residences or homes.

(2) For purposes of protecting purchasers of residential property with respect to claims of lien that arise before the date the sale of the residential property is completed but may be perfected under ORS 87.035 (Perfecting lien) after the date the sale of the property is completed, when an owner of record sells residential property to a purchaser, the owner shall provide such protection by one of the following methods:

(a) Purchase or otherwise provide title insurance on behalf of the purchaser by a policy issued:

(A) Without exception for filed and unfiled claims of construction lien existing at the date of closing of the purchase; and

(B) On forms and at rates filed with, but not disapproved by, the Director of the Department of Consumer and Business Services.

(b) Retain in escrow, as defined in ORS 696.505 (Definitions for ORS 696.505 to 696.590), an amount of funds that is not less than 25 percent of the sale price of the residential property. The funds shall be maintained in or released from escrow pursuant to written instructions to the escrow agent from the owner that sold the property and the purchaser. The written instructions shall provide that any claims of lien that are perfected after the date of the sale of the property and that are not paid by the owner that sold the property shall be paid upon demand by the purchaser from the amount maintained in escrow. The escrow agent shall release the unused funds from escrow to the owner that sold the property if the escrow agent receives a request from the owner that sold the property and the owner provides documentation from a title company that:

(A) Claims of lien have not been perfected against the property and 90 days have passed since the date that construction was completed; or

(B) One or more claims of lien have been perfected against the property, that 135 days have passed since the date that each such claim of lien was filed and that all such perfected claims of lien have been released or waived.

(c) Maintain a bond or letter of credit in an amount that is not less than 25 percent of the sale price of the property. The Construction Contractors Board shall prescribe by rule the amount, terms and conditions of the bond or letter of credit to be maintained under this paragraph.

(d) Obtain written waivers from every person claiming a lien or liens in an aggregate amount that exceeds $5,000 with respect to the property under ORS 87.010 (Construction liens), 87.021 (Notice to owners) or 87.035 (Perfecting lien), and provide copies of the waivers to the purchaser not later than the date the sale of the property is completed.

(e) Complete the sale of the residential property after the deadline for perfecting all claims of liens under ORS 87.035 (Perfecting lien) with respect to the property.

(f) Obtain a signed written waiver from the purchaser of the residential property. The waiver shall be in a form described in ORS 87.091 (Form for waiver of application of provisions of ORS 87.007) and shall specify that the provisions of paragraphs (a) to (e) of this subsection do not apply to the sale of the residential property. The waiver must be printed on a form that is separate from any residential property sales contract or agreement and may be signed by the purchaser at any time after the purchaser enters into the sales contract or agreement with respect to the residential property and before closing of the transaction.

(3) Not later than the date the sale of the residential property is completed, the owner who sold the property shall complete, sign and deliver to the purchaser a form specifying the method that the owner has selected to comply with the requirements of subsection (2) of this section or that subsection (2) of this section does not apply to the sale of the property. The notice shall be in a form designated by the Construction Contractors Board by rule under ORS 701.235 (Rulemaking).

(4) A real estate licensee, as defined in ORS 696.010 (Definitions), acting in the professional capacity of a licensee may not be liable in any criminal, civil or administrative proceeding arising out of the failure of an owner of record to comply with subsection (2) or (3) of this section.

(5) Violation of subsection (3) of this section is a Class A violation.

(6) In addition to any other remedy or penalty provided by law, a purchaser may bring an action to recover up to twice the amount of actual damages caused by a violation of subsection (2) of this section. The court may award to the prevailing party, in addition to costs and disbursements, reasonable attorney fees. Any action brought under this subsection must be commenced not later than two years after the date the sale of the property is completed.

(7) For purposes of subsections (5) and (6) of this section and ORS 646.608 (Additional unlawful business, trade practices):

(a) It is a defense to a violation of subsection (2) or (3) of this section that there is no enforcement or attempted enforcement of any claim of lien against the property that is the subject of the sale arising before the date the sale of the property is completed; and

(b) As to any claim of lien, it is a defense to a violation of subsection (2) or (3) of this section if the owner that sold the property:

(A) Proves that the claim of lien against the property that is the subject of the sale is invalid; or

(B) Satisfies the claim of lien or obtains a release from the claim of lien on the property that is the subject of the sale.

(8) A violation of subsection (2) or (3) of this section is not considered to have occurred with respect to a lien described in ORS 87.010 (Construction liens) during the period that the validity of the lien is disputed in a judicial proceeding or a proceeding described in ORS chapter 701.

(9) Nothing in this section requires the payment of a lien that is not otherwise valid. This section does not apply to claims of lien perfected by persons furnishing any materials, equipment, services or labor at the request of the purchaser of the residential property. [2003 c.778 §2]

Notes of Decisions

In absence of express waiver by contractor of right to file construc­tion lien, agree­ment to arbitrate disputes did not prevent filing of lien and thereafter foreclosing to recover unpaid amounts and costs and attorney fees incurred in prepara­tion, filing and foreclosure of lien claim. Harris v. Dyer, 50 Or App 223, 623 P2d 662 (1981), as modified by 292 Or 233, 637 P2d 918 (1981)

1 Legislative Counsel Committee, CHAPTER 87—Statutory Liens, https://­www.­oregonlegislature.­gov/­bills_laws/­ors/­087.­html (2007) (last ac­cessed Feb. 12, 2009).
 
2 Legislative Counsel Committee, Annotations to the Oregon Revised Stat­utes, Cumulative Supplement - 2007, Chapter 87, https://­www.­oregonlegislature.­gov/­bills_laws/­ors/­087ano.­htm (2007) (last ac­cessed Feb. 12, 2009).
 
3 OregonLaws.org assembles these lists by analyzing references between Sections. Each listed item refers back to the current Section in its own text. The result reveals relationships in the code that may not have otherwise been apparent.