Oregon Homebuyer Protection Act of 2003 (HPA)

In 2003, the Oregon legislature passed the Oregon Homebuyer Protection Act (commonly known as the HPA). The purpose of this act is to provide more protection to home buyers from contractors’ liens. In Oregon, anyone who provides labor, services or supplies for improvements on property may file a lien against the property if the contractor/supplier is not paid in full. These liens for unpaid bills are commonly known as contractors’ liens, but also may be known as mechanics’ liens or materialmens’ liens. The unpaid bills are usually the responsibility of the seller, but the liens may be recorded after closing and affect the buyer. The HPA requires that the seller provide the buyer with a notice of the specific method that the seller will use to protect the buyer’s interest in the property from contractors’ liens. The law took affect January 1, 2004 and applies to residential property sales that close on or after January 1, 2004.

Most of this information has been obtained from the website of the Oregon Construction Contractors Board.

Here is an excerpt from the Oregon Administrative Rules regarding the HPA, which provide specific information as to who is required to comply, what transactions fall under the HPA and how to comply with the law.

OAR 812-001-0300

Requirements for Notice of Compliance with Homebuyer Protection Act

Under ORS 87.007(3), a seller of residential property must deliver a Notice of Compliance with Homebuyer Protection Act on or before the date the sale of the property closes to the purchaser of:

(a) A new single family residence, condominium or residential building; or

(b) An existing single-family residence, condominium or residential building where:

(i) The price for original construction, including but not limited to an addition to the single family residence, condominium or residential building, that is completed within three months prior to the date of the sale of the property is $50,000 or more; or

(ii) The contract price for improvements to the single-family residence, condominium or residential building that are completed within three months prior to the date of the sale of the property is $50,000 or more.
The seller must deliver the notice required under ORS 87.007(3) on or before the close of the sale of the property.
The notice required under ORS 87.007(3) shall be on the form adopted under OAR

812-001-0200.
Under ORS 87.007(3), a seller of residential property may specify on the Notice of Compliance with Homebuyer Protection Act that ORS 87.007(2) does not apply to the sale of the property if the seller knows that no person may enforce a valid lien against the property because:

(a) The last day to perfect any lien on the property under ORS 87.035 was prior to the date of sale of the property; and

(b) No lien was perfected.

Stat. Auth.: ORS 87.007, 670.310, & 701.235
Stats. Implemented: ORS 87, 87.007, & 701

Hist.: CCB 13-2003(Temp), f. 12-19-03, cert. ef. 1-1-04 thru 6-14-04; CCB 2-2004, f. 2-

27-04, cert. ef. 3-1-04; CCB 4-2004, f. 5-28-04, cert. ef. 6-1-04; Renumbered from 812- 001-0022, CCB 7-2005, f. 12-7-05, cert. ef. 1-1-06

Here is the format of the Notice of Compliance that the seller is required to give to the buyer. This document is available as a PDF document for your use.

Notice of Compliance with the Homebuyer Protection Act (HPA) Chapter 778, Oregon Laws 2003 (HB 3539)

In compliance with Oregon law, the below mentioned Seller hereby describes the method that the Seller has selected to comply with the requirements of section 2 (2) of chapter 778 Oregon Laws 2003 (HB 3539), referred to below as “HPA.”

I.

Address or description of Property being sold: ____________________________________________________________ ____________________________________________________________
Date of purchase: _________________________________________________, 2_________

II.

(Check A or B)

A. £ Section 2 (2) of the HPA (which includes the provision listed in part B of this form) does not apply to the sale of the above described Property.

- OR -

B. £ Section 2 (2) of the HPA applies to the sale of the above described Property. Seller complied with section 2 (2) of the HPA by (check which one applies):

£ Title Insurance as defined in section 2 (2) (a) of the HPA.
£ Retained in Escrow not less than 25 percent of the sale price described in section 2 (2)(b) of the HPA.
£ Bond or Letter of Credit as defined in section 2 (2)(c) of the HPA.
£ Written Waivers received from every person claiming a lien as described in section 2 (2)(d) of the HPA.
£ Completed Sale After the Deadline for perfecting liens as described in section 2 (2)(e) of the HPA.
£ Waiver from Buyer in the form provided by section 9 of the HPA as described by section 2 (2)(f) of the HPA. (This waiver must be on a separate form. This form does not constitute the waiver itself.)

III.

Seller	Buyer
Company Name (if applicable)	Name of buyer
Agent of Company or Individual Seller	Additional names (if applicable)
Title of Company Agent (if applicable)
(signature)	(signature)
Date delivered:	Date delivered:

Instructions for Completion of Homebuyer Protection Act of 2003 Notice of Compliance

These instructions are provided to assist sellers of residential property in complying with the Oregon Home Buyer Protection Act of 2003 (HPA). The HPA protects residential property buyers against construction liens filed in county records after the sale of the property where such liens arise out of new construction, additions or remodeling within 90 days of the date of the sale.

Disclaimer

These instructions do not constitute legal advice. For questions, please contact an attorney.

Who must complete this form?

A residential property owner selling A new single family residence, condominium unit or residential building (containing four or fewer dwelling units).

- OR -

An existing single family residence, condominium unit or residential building (containing four or fewer dwelling units) that had at least $50,000 worth of improvements, additions or remodeling completed within 90 days of the date of the sale.

Instructions for Section A

If the property fits the description above, but the seller knows that no person may file a lien against the property, the seller may check the box in Section A of the form.

Instructions for Section B

If the seller knows that it is possible for someone to file a lien against the property, the seller must check Section B of the form and at least one corresponding box that applies to the action the seller took, or will take to comply with the HPA.

Box 1 Title Insurance – The seller has or will purchase or provide an owner’s extended coverage title insurance policy or equivalent that does not except filed or unfiled claims of lien. A standard title insurance or a lender’s title insurance policy may not be sufficient.

Box 2 Retain in Escrow – The seller will arrange to retain in escrow an amount of not less than 25 percent of the sales price of the property. The escrow will pay any claims of lien not paid by the seller filed after the date of the sale. Any unused funds will be released to the seller upon fulfillment of the following conditions.

Claims of lien have not been filed against the property and at least 90 days have passed since the date the construction was completed.
One or more claims of lien was filed against the property, at least 135 days have passed since the date the liens were filed, and the liens were released or waived.

Box 3 Bond or Letter of Credit – The seller has or will maintain a bond or letter of credit. A Construction Contractors Board bond, required for licensure under ORS chapter 701, is not sufficient.

Box 4 Written Waivers – The seller has or will obtain written waivers from every subcontractor or supplier who claim liens of $5,000 or more. Provide copies of the waivers to the buyer no later than the date of the sale. (The CCB recommends consulting an attorney for assistance with preparing forms for waivers.)

Box 5 Completed Sale after the Deadline – The sale will not be completed until at least 75 days after the completion of all construction.

Box 6 Waiver from Buyer – The seller will obtain a signed waiver from the buyer stating that the buyer waivers the seller’s requirement to provide one of the methods of lien protection. The waiver must be on a separate form. (See HPA section 9 (2) for waiver requirements. A Waiver of HPA Protection form is also available on the CCB web site.)

Additional Instructions

The seller and the buyer must sign and date the form on or before the closing date of the sale. Both parties should retain a copy of the form. Compliance with the HPA is the sole responsibility of the seller.

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This educational series is created to allow Realtors to obtain continuing education. The articles are intended for general informational purposes and are not to be construed as legal advice or legal opinion on any specific facts or circumstances. You are advised to consult with an attorney concerning any questions about your rights or responsibilities in any specific situation.