2017 ORS 86.797¹
Effect of sale
  • actions for deficiency
  • restrictions

(1) If, under ORS 86.705 (Definitions for ORS 86.705 to 86.815) to 86.815 (Time within which foreclosure must be commenced), a trustee sells property covered by a trust deed, the trustee’s sale forecloses and terminates the interest in the property that belongs to a person to which notice of the sale was given under ORS 86.764 (Notice of sale for certain persons) and 86.774 (Service and publication of notice) or to a person that claims an interest by, through or under the person to which notice was given. A person whose interest the trustee’s sale foreclosed and terminated may not redeem the property from the purchaser at the trustee’s sale. A failure to give notice to a person entitled to notice does not affect the validity of the sale as to persons that were notified.

(2) Except in accordance with subsection (4) of this section, an action for a deficiency may not be brought after a trustee’s sale under ORS 86.705 (Definitions for ORS 86.705 to 86.815) to 86.815 (Time within which foreclosure must be commenced) or after a judicial foreclosure of a residential trust deed, and a judgment to foreclose a residential trust deed under ORS 88.010 (Foreclosure of lien by suit) may not include a money award for the amount of the debt against the grantor, the grantor’s successor in interest or another person obligated on:

(a) The note, bond or other obligation secured by the trust deed for the property that was subject to the trustee’s sale or the judicial foreclosure; or

(b) Any other note, bond or other obligation secured by a residential trust deed for, or mortgage on, the property that was subject to the trustee’s sale or the judicial foreclosure when the debt, of which the note, bond or other obligation is evidence:

(A) Was created on the same day as, and used as part of the same purchase or repurchase transaction as, the note, bond or other obligation secured by the foreclosed residential trust deed; and

(B) Is owed to or was originated by the beneficiary or an affiliate of the beneficiary in the residential trust deed that was subject to the trustee’s sale or the foreclosure.

(3) Notwithstanding ORS 88.103 (Sale of real property after mortgage foreclosure), if a judicial foreclosure of a trust deed that is not a residential trust deed results in a judgment that includes a money award, the judgment must provide that execution may issue for the amount by which the unpaid balance of the money award exceeds the net sale proceeds that are payable to the judgment creditor from the sale of the property that is subject to the foreclosure if:

(a) The net sale proceeds are insufficient to satisfy the money award; and

(b) The plaintiff requests the provision in the complaint.

(4) This section does not preclude:

(a) An action that forecloses, judicially or nonjudicially:

(A) Other property covered by the trust deed that is the subject of the foreclosure; or

(B) Another trust deed, mortgage, security agreement, consensual or nonconsensual security interest or lien that covers other real or personal property that is also used as security for the note, bond or other obligation that is secured by the trust deed for the property that was sold.

(b) An action against a guarantor for a deficiency that remains after a judicial foreclosure.

(5) A guarantor of an obligation secured by a residential trust deed may not recover a deficiency from the grantor or a successor in interest of the grantor. [Formerly 86.770; 2015 c.291 §3]

(formerly 86.770)

Notes of Decisions

Prohibi­tion against further ac­tion to collect deficiency following foreclosure sale does not prevent plaintiff from seeking other relief in same ac­tion seeking foreclosure. Siuslaw Valley Bank v. Canfield Assoc. Ore. Ltd., 64 Or App 198, 667 P2d 1035 (1983)

Por­tion of judg­ment for attorney fees, costs and disburse­ments that was not satisfied from proceeds of judicial foreclosure and sheriff’s sale is “deficiency judg­ment” and forbidden by this sec­tion. Cottage Grove Apart­ment Investors v. Brandenfels, 69 Or App 192, 684 P2d 1235 (1984)

Trust deed foreclosed was commercial despite apart­ment on premises because residence was incidental to storage business and residence exemp­tion was intended to apply to individuals only. Oregon Bank v. Hawkins, 71 Or App 791, 693 P2d 1321 (1984)

Beneficiary under “commercial” trust deed can get deficiency judg­ment after foreclosing trust deed by judicial pro­ceed­ing, regardless of whether it is purchase money trust deed. FDIC v. Burdell, 92 Or App 389, 759 P2d 282 (1988), aff’d 307 Or 285, 766 P2d 1032 (1988)

Elec­tion of remedy of non-judicial foreclosure occurs only upon sale and because plaintiff abandoned its non-judicial foreclosure pro­ceed­ing before sale, no elec­tion of remedies occurred. Barclaysamerican/Financial Inc. v. Boone, 95 Or App 347, 768 P2d 439 (1989), on reconsidera­tion 96 Or App 635, 773 P2d 1338 (1989)

Trust deed anti-deficiency pro­vi­sion in this sec­tion does not initially preclude ac­tion being brought on note secured by trust deed. Beckhuson v. Frank, 97 Or App 347, 775 P2d 923 (1989), Sup Ct review denied

When two trust deeds describe same prop­erty as security, trust deed beneficiary may foreclose non-judicially on one deed to obtain title to prop­erty and then bring ac­tion on other note. Urbach v. Monchamp Corp. 110 Or App 275, 821 P2d 1116 (1991), Sup Ct review denied

State anti-deficiency law is not preempted by federal Depart­ment of Veterans Affairs regula­tions so long as state law provides method for secretary of Depart­ment to exercise right of indemnity and receive full measure of protec­tion without displacing state law. Connelly v. Derwinski, 961 F2d 129 (1992)

Plaintiffs, who signed deed of trust with defendant creditor and who defaulted on mortgage, could not challenge properly noticed trustee’s sale of home 19 months after date of sale because plaintiff’s interest in home was foreclosed and terminated at sale. Mikityuk v. Northwest Trustee Services, Inc., 952 F. Supp. 2d 958 (D. Or. 2013); Roisland v. Flagstar Bank, FSB, 989 F. Supp. 2d 1095 (D. Or. 2013)

Where real prop­erty used as security for loan obliga­tion was sold at trustee’s sale but sale was not con­ducted by trustee, this sec­tion does not bar prop­erty owner from post-sale challenge because this sec­tion applies only to validly con­ducted trustee sales. Wolf v. GMAC Mortgage, LLC, 276 Or App 541, 370 P3d 1254 (2016). But see DiGregorio v. Bayview Loan Servicing, LLC, 281 Or App 484, 381 P3d 961 (2016)

Where grantor of trust deed had notice that prop­erty was being sold at trustee’s sale under Oregon Trust Deed Act, this sec­tion precludes post-sale challenge on sole ground that trustee’s notice of sale did not correctly identify beneficiary of trust deed. DiGregorio v. Bayview Loan Servicing, LLC, 281 Or App 484, 381 P3d 961 (2016), Sup Ct review denied

This sec­tion does not mandate strict compliance with every pro­vi­sion of Oregon Trust Deed Act for trustee’s sale to be valid and before per­son’s prop­erty interests may be terminated by trustee’s sale; thus, purported failure to identify beneficiary of trust deed in notice of sale did not render this sec­tion inapplicable and trustee’s sale invalid. DiGregorio v. Bayview Loan Servicing, LLC, 281 Or App 484, 381 P3d 961 (2016), Sup Ct review denied

This sec­tion does not allow post-sale challenges based on viola­tion of each and every technical pro­vi­sion of Oregon Trust Deed Act; thus, where only defect in foreclosure process was that notice of non-judicial foreclosure sale failed to identify proper beneficiary, this sec­tion barred borrower’s claim that trustee’s sale was void. Woods v. United States Bank N.A., 831 F3d 1159 (9th Cir. 2016)

Law Review Cita­tions

69 OLR 880 (1990)

1 Legislative Counsel Committee, CHAPTER 86—Mortgages; Trust Deeds, https://­www.­oregonlegislature.­gov/­bills_laws/­ors/­ors086.­html (2017) (last ac­cessed Mar. 30, 2018).
 
2 Legislative Counsel Committee, Annotations to the Oregon Revised Stat­utes, Cumulative Supplement - 2017, Chapter 86, https://­www.­oregonlegislature.­gov/­bills_laws/­ors/­ano086.­html (2017) (last ac­cessed Mar. 30, 2018).
 
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.