Real estate is formally called “real property” in Oregon law. Personal property is all property other than real estate, including tangible things you can touch such as your car, the contents of your pocket, and your lawn mower, as well as intangible things such as your bank account, or stocks and bonds.
“Property,” in Oregon law means both real property and personal property.
Usually, if one is working through a real estate agent, a seller will sign a listing agreement. Some buyers also sign various kinds of agency agreements. Both of these agreements will usually bind a signer to work with a particular real estate agent. In such cases, the agreement will likely require the payment of a commission to that real estate agent even if a seller finds a buyer in some fashion other than through the real estate agent. Similarly, such agreements will usually require a commission payment to the real estate agent even if a deal is arranged after the termination of the agreement in question, if the buyer and seller were introduced to one another by the real estate agent.
Often the first (and possibly most important) document in any individual transaction is what is called a Residential Real Estate Sale Agreement, or a Land Sale Contract and Earnest Money Agreement.
These documents usually specify the property in question. Contrary to popular belief, these documents should specify the property using a legal description, not just a street address or a property tax account number.
Legal descriptions are easy to find. Most title companies will provide the most recent recorded deed for any given street address to a real estate agent or a lawyer for free, and usually within an hour or so of the request being made.
Some people believe that these preliminary documents are not binding, because they are usually replaced by more detailed documents when a real estate transaction closes. This is NOT true. The documents are binding, if properly completed, and can bind a person to go forward with a sale or purchase that they later regret, or on terms that they find difficult to live with.
For this reason, these documents, and any responses (such as a counter offer or an acceptance) should be very carefully considered. If you have any questions, you should see an attorney before you sign something, not afterwards. Although there may be something that can be done even after a document has been signed, the options available will be more limited, and the remedies will likely be more expensive.
If filled out carefully, proper opportunities to avoid the agreement while suffering no penalty can usually be built in. These special conditions can give buyers the ability to avoid the contract if they are unable to find acceptable financing, or if they find mechanical or structural defects, or if they find legal issues such as clouds on the title, easements which cause problems, or the like. On the other hand, special conditions can also give a seller the ability to avoid the contract if the buyer does not meet certain criteria. This can be particularly important to a seller if the property is to be sold through a land sale contract, where the buyer would pay the seller directly over a period of years, instead of obtaining a mortgage.
Both buyers and sellers should know that an offer is open for acceptance until revoked either expressly, or by the passage of a specified period of time, or by the occurrence of other events if properly specified. Both buyers and sellers should also know that if an offer is accepted without any changes, a binding contract will result. In addition, both buyers and sellers should know that a counter offer renders the original offer void. If one makes a counter offer, one cannot revive the earlier offer without the agreement of the other side.
After a Residential Real Estate Sale Agreement, or a Land Sale Contract and Earnest Money Agreement has been entered into, inspections may take place. It can be very important to make inspections in a timely fashion, or one may lose the right to avoid the contract, even if one later finds significant problems.
Similarly, after a Residential Real Estate Sale Agreement, or a Land Sale Contract and Earnest Money Agreement has been signed and accepted, a preliminary title report will be issued. This must be inspected to make sure that the property in question is, in fact, the property the parties think it is, and to make sure that there are no clouds on title (claims by other people to all or part of the property, for example). It can also be very important to make sure that there are no easements which would impinge on the property, and that the property can be used for the purposes intended. Related issues can include the need to ensure that there is proper access to the property, that all easements required for access are properly recorded and will grant the access needed for the time required, and the like.
Interesting issues can arise where there is an original grant of an easement that will terminate whenever it becomes possible to access the property in some other fashion. This can be a problem, for example, if the property borders a public road in some other place, where it might be difficult to build a driveway.
There can also be significant issues if there is a shared maintenance agreement for a shared access road, or the like.
Tax and other issues arising may arise if a parcel is restricted to exclusive farm or forest use. These issues can be particularly troubling if a purchaser does not conform to such uses following purchase.
One can also have difficulties if a lot cannot be used for the purposes intended if, for example, the fire department will not respond to a call from the property, or if the lot cannot be developed for other reasons.
In some cases, it can be very important to obtain a survey, to make sure that the land a person thinks he or she is buying is actually the property that appears in the legal description.
It can also be important to make sure that all partitions are legal. It is not unheard of, for example, for there to be a tax lot which is not actually a legal lot, if there has been a purported division of land at some time in the past which was not actually legal. Such purported lots may have purportedly been conveyed by prior deeds which may even have been recorded. They can also be shown on surveys, and on county property tax maps even though some partition of land in the past was actually not legal. It can cause a great deal of difficulty if one purchases such a lot.
Such matters are matters of concern for both buyers and sellers, since, once discovered, the seller will have to notify future potential buyers of such issues, and since, once discovered, the buyers will usually have a duty to inform the bank or other entity financing the transaction.
Often such matters can be resolved in negotiations between the parties, although sometimes other parties also have to be brought into the negotiations.
Assuming that all these hurdles are successfully negotiated, and the sale closes, title insurance will then issue. In addition to the title insurance that is often required by lenders, both buyers and sellers should be aware that special policies of title insurance can often be obtained at little additional cost as part of the same transaction, which will provide coverage for these individuals as well.
A skilled attorney can be of considerable assistance in these matters, protecting the interests and expectations of both buyers and sellers, and helping each to obtain what he or she expects in the bargain, while helping to avoid unexpected pitfalls.
NOTE: The above touches on only some of the issues about which one should be aware when buying or selling real estate. There are many other issues which may be of significance, and which may make a considerable difference in a given case. If any of these situations apply in your case, you may benefit from legal advice from a lawyer who is well versed in real estate issues. The above should not be considered legal advice, nor should it be taken as a statement of the only time that one might benefit from consulting a legal or other professional.