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2007: New Forms for a New Year
Many individuals make New Yearís resolutions relating to their professional lives. For brokers, resolutions may include providing a higher level of service to current clients, differentiating themselves by providing niche services, or reaching specific financial goals. An important piece of any brokerís New Yearís resolution is keeping up-to-date on new developments in the real estate industry. One example of new developments is revisions made by Oregon Real Estate Forms, LLC (“OREF”) to many of its forms, available January 1, 2007. This article outlines a number of significant changes to OREF forms and how they may impact brokersí licensed real estate activities.

Residential Real Estate Sale Agreement

Several of the OREF changes are made to the real estate sale agreement. One important change relates to a sellerís representations regarding the size of his or her property. The revised sale agreement now requires a seller to represent apparent property boundaries – such as hedges, fences or driveways – that do not materially differ from the actual property boundaries.

Previous versions of the sale agreement stated that a buyer should have the property surveyed if size or dimensions were of extreme importance. However, buyers of residential real estate do not typically hire surveyors to determine accurate property boundaries prior to purchasing real property.

Although this change seems immaterial, it ensures that buyers do not mistakenly assume that a hedge, fence or other visible line is an accurate representation of the actual property boundary. In addition, this change requires sellers to disclose information relating to property encroachments and/or use which impact the apparent size of the property being conveyed.

Another change in the sale agreement relates to lead-based paint inspections. Prior to 2007, the sale agreement included a checkbox which allowed a buyer to indicate interest in obtaining a lead-based paint inspection. However, even when a buyer did mark the checkbox, the parties were required by federal law to execute the Lead-Based Paint Disclosure Addendum. The Lead-Based Paint Disclosure Addendum continues to allow a buyer to indicate that he or she wishes to obtain a lead-based paint inspection. Brokers should be aware of this change in order to properly advise their clients.

The OREF sale agreement previously allowed parties to participate in mediation in order to resolve disputes, regardless of whether they were Realtors®. This provision did not specify where non-Realtors® should file for mediation. Non-Realtors® cannot use mediation services through the National Association of Realtors® or local Realtor® organizations unless Realtors® are named as parties in the mediation.

Accordingly, OREF revised the sale agreement so that it specifies that mediations which only involve non-Realtors® should be filed through Arbitration Service of Portland, Inc., another neutral mediator, or a mediation service.

Sellerís and Buyerís Counteroffer Forms

To avoid misunderstandings arising from multiple counteroffers, the OREF form has been modified to provide that everything in the prior offer or counteroffer is accepted “except as modified as follows __________” and that all other provisions are approved and accepted as applicable.

Repair Addendum

Prior to 2007, buyers and sellers negotiated repair items on one Repair Addendum. In cases where a buyer was requesting a large number of repairs or where a seller had a lengthy reply to a buyerís repair requests, the Repair Addendum did not contain enough space in which a buyer and seller could include all desired language.

Accordingly, OREF separated the Repair Addendum into two forms: Buyerís Repair Addendum and Sellerís Response to Repair Addendum. This housekeeping revision to the Repair Addendum will allow sellers and buyers more space in which to negotiate repairs, thereby eliminating possible confusion when too many items are squeezed into a small space on a form.

Notice of Demand for Disbursal of Disputed Funds

New rules relating to brokerís trust accounts and demands for return of earnest money were implemented under Oregon Administrative Rule 863-15-0186, which was enacted in 2006. This rule allows a broker to disburse earnest money to a party who has delivered a formal demand to the broker. The rule also requires the broker to deliver written notice to all parties that he or she has received a formal demand. Further, the rule specifies what this written notice must contain in order for it to sufficiently reduce the brokerís liability with regards to the earnest money.

The Notice of Demand for Disbursal of Disputed Funds document was created by OREF in response to the new rules. This document serves as a template for brokers who must give written notice to all parties of a transaction, and ensures that brokers fully comply with requirements contained in OAR 863-15-0186. A brokerís full compliance ensures that a broker receives the benefit of reduced liability in disbursing disputed earnest money.

Conclusion

Although many of the changes to the OREF forms seem minor, they are intended to reduce confusion in certain aspects of real estate transactions. Brokers benefit by familiarizing themselves with the revised forms to better serve their clients, reduce their liability, and further their professional careers.

 
This column contains general information only and must not be construed as legal advice. Questions may be submitted directly to Maylie & Grayson LLP by fax at (503) 775-1765, by email at or by mail at 7959 SE Foster Road, Portland, Oregon 97206.

7959 SE Foster Road Portland, Oregon 97206 T. 503.771.7929 F. 503.775.1765 
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