Discussing Home Inspections May Be Good Risk Management - Oregon Real Estate News-Journal
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Oregon Real Estate
News-Journal
Official Publication of the Oregon Real Estate Agency Volume 75, Number 2, June 2021
Discussing Home
Inspections May Be
Good Risk Management
Steve Strode, Real Estate Commissioner
T
he Oregon Real Estate Agen- monplace in some market segments. In
cy does not generally offer context, these all may be viewed as rational
guidance on how to structure decisions by fully informed consumers.
transaction contingencies, and it For this article, I’d like to focus on waiv-
Commissioner also does not issue legal advice to ing inspections. As a general rule, buyers’
Steve Strode licensees. But in this column I do comment agents recommend that their clients have
on trends we are observing, both inside the a home inspection contingency when pos-
Agency and the regulatory environment sible. Additionally, real estate transaction
across jurisdictions, to help licensees oper- documents typically have cautionary lan-
ate their businesses and best serve Oregon guage to buyers about the implications of
consumers. waiving that contingency. In an effort to “do
To say that the real estate market is hot whatever it takes” to get an offer accepted
in many segments is not news and not an in this market, I’m hearing that buyers are
understatement. In my stakeholder engage- choosing to waive inspections to make their
ment this past year, I have heard countless offer as attractive as possible to sellers.
times of the challenges buyers face to get Sellers, on the other hand, may feel that
their offers accepted. Competing multiple not having an inspection is one way to
offers, paying over list price, and waiving guarantee a smoother transaction. Since
various contingencies have become com- Please see Good Risk Management on page 2
IN THIS ISSUE
Oregon Real Estate
Discussing Home Inspections May Be New Property Management Guide
Agency
Good Risk Management......................1 Now Available...................................... 5
530 Center St. NE
Advertising Hot Topics: Written Permis- A Brief Look at the Recent History of
Suite 100
sion and Alternative Names.................3 Residential Condominium Production
Salem, OR 97301
Listing Price and Your Obligations.........4 in Oregon............................................. 6
(503) 378-4170
License Renewal Options......................5 Administrative Actions........................... 8
(503) 378-2491 Fax
www.oregon.gov/rea
Good Risk Management
Continued from page 1
transactions often fail over what is discov- buyer and seller and that there was no li-
ered during the inspection or the inability cense law violation by the licensee.
to negotiate new terms related to repairs When the Agency determines it is a
or price, sellers often view this waiver as civil matter, we will close the complaint
a win. and send a letter to the complainant that
I’d like to offer an additional perspective. contains the following language:
Real estate licensees acting as a seller’s "After a review of the documents sub-
agent, buyer’s agent, or agent to both buyer mitted by both parties, it appears that the
and seller, have obligations to parties in a issue addressed in the complaint is a civil
transaction as defined in Oregon Revised matter and not within the jurisdiction of
Statute (ORS) 696.800 through 696.880. the Agency. Therefore, it is suggested that
Here at the Real Estate Agency, we rou- you seek legal advice."
tinely receive complaints from consumers
after transactions close relating to “Failure Although the complaint is then closed,
to Disclose” allegations. For example, a please remember that if a court does sub-
problem is uncovered upon moving that was sequently issue an adverse decision against
not disclosed on a Seller’s Property Dis- a licensee in a civil proceeding, Oregon
closure Statement. The consumer believe Administrative Rules (OAR) require that
that the seller, the listing agent, buyer’s a licensee must notify the Agency within
agent —or any combination of the three 20 calendar days (see OAR 863-015-0175
— knew or should have known about a for full text).
potential problem and chose not to disclose Since the practice of waiving inspections
to the buyer. The consumer will allege that is a product of a recently extreme tight
a licensee failed in their duties to disclose market, it is too soon to draw conclusions
material facts that are “not apparent or read- about complaint trends. The Agency will
ily ascertainable to a party.” track this issue to see if we see an uptick.
If the Agency believes there was a licens- In the meantime, listing agents may wish
ing violation, we will open an investigation. to share with sellers the pros and cons of
Historically, many of these cases are closed allowing a buyer’s home inspection — to
without any action against the licensee for enable the buyers to proceed to closing fully
one of two reasons: the respondent (buyer’s informed, even if they have to negotiate
or seller’s agent) provides documentation to the transaction further. Risk level toler-
the Agency that the buyer was able to per- ance varies from seller to seller, so having
form their full due diligence via a method this sensitive conversation as a part of the
such as a home inspection, or the Agency transaction may be considered a good risk
determines that it is a civil matter between management practice for licensees.
Oregon Real Estate
Board Meeting
August 2, 2021, 10:00 a.m. by videoconference
The public is welcome to this virtual general meeting of the Board. Learn about
the Board's responsibilities and the Oregon Real Estate Agency's current efforts.
More information on the Agency's website.
2 June 2021 Oregon Real Estate News-JournalAdvertising Hot Topics: Written
Permission and Alternative Names
Meghan Lewis, Compliance Coordinator, Oregon Real Estate Agency
Oregon Administrative Rule (OAR) 863- property owner to advertise. Is this
015-0125(2)(f) states that advertising shall be a violation of the advertising rule? If
conducted only with the written permission the listing content is shared publicly it
of the property owner, or authorized agent of will most likely be advertised electroni-
the owner, if for the purpose of offering real cally via internet marketing on numerous
estate for sale, exchange, or lease. online sources. This includes brokerage
OAR 863-014-0067(3) states that a li- websites, marketing emails, and licensee
censee may apply to register an alternative social media. In a listing in which the
name for the purposes of advertising under seller or property owner has agreed to
OAR 863-015-0125. To do so, a real estate advertise, publicly sharing this listing
licensee submits an online alternative name content is in the consumer’s best interest.
registration application via eLicense with
documentation showing that the licensee is As long as the advertising is truthful
commonly known by the alternative name. and not deceptive or misleading, and the
1. What does it mean that advertising can public is clear that the licensee is merely
only be conducted with the “written sharing the advertising, the Agency
permission” of the property owner? does not interpret this as a violation.
“Written permission” means a licensee Examples of advertising shared listing
has entered into a contract, such as the content identifies the listing broker and
listing agreement, where the seller per- may include language such as, “Listing
mits the licensee to act on behalf of the courtesy of…” or “Presented by…” to
seller in advertising the real estate for ensure the advertising is truthful and not
sale, lease, or exchange. As a reminder, deceptive and misleading.
a listing agreement must be signed by all 4. My MLS has their own rules regard-
parties to the agreement. ing advertising. Are they in violation
2. Do I need a seller’s written permission of real estate license law? The Agency
for every advertising platform or web- rules establish advertising requirements
site where the real estate is advertised? for licensees, which at a minimum must
The intent of the advertising rule is that be met. Individual MLS or professional
written permission is obtained from the trade associations may create their own
seller at the onset of the listing agree- rules for their members regarding social
ment to advertise and promote the real media and sharing information that may
estate for sale, lease, or exchange. The be more restrictive than the requirements
listing agreement will determine if the set forth in Oregon Administrative Rule
real estate may be advertised publicly 863-015-125, and this is allowable.
(or not), and terms may include the use 5. What is an alternative name? An
of a multiple listing service (MLS), in- alternative name is a name the licensee
ternet marketing, and a lockbox, as well is known by publicly that is not the li-
as the right to use the listing content, for censee’s licensed name. If you are known
example, property description, photos, by a name other than your licensed name,
videos, and virtual tours. you may apply to register an alternative
3. I see my seller’s real estate advertised name for the purposes of advertising
on other brokerage websites and other under OAR 863-015-0125. If you use a
licensee’s social media and they do registered alternative name in advertis-
not have written permission from the Please see Advertising Hot Topics on page 4
Oregon Real Estate News-Journal June 2021 3Listing Price and
Your Obligations
Liz Hayes, Investigator/Auditor, Oregon Real Estate Agency
Unprecedented. Variant. Asymp-
tomatic. Herd Immunity. The list
goes on. These words and phrases
have found a place in our homes
and interactions. And, the real es-
tate industry has had to evolve and
adapt in these ever-changing times.
The Portland metro area hous-
ing market, while taking an initial
COVID-hit, has bounced back
with force. RMLS records show
only 0.7 months of inventory in the
Portland area for May 2021, down
from 2.3 months of inventory in
May 2020 — a decrease of nearly Image by Paul Brennan from Pixabay
70%. Demand is high and listings are few.
You don't need me to tell you that this is a ness. However, you must ensure you remain
sellers' market. in compliance with Agency rule and statute,
Last year, I reviewed a transaction involv- even if you believe you are only looking out
ing a property listed drastically under market for your client's best interest.
value — a price the seller was never willing to To deal honestly and in good faith, present
accept. As expected in this sellers' market, the all written offers and other written notices and
listing drew a lot of attention, and a bidding communication, and disclose known material
war ensued. Many offers were tens of thou- facts; these are the affirmative duties you owe
sands over listing price and not accepted. The to all parties involved in a real estate transac-
seller was thrilled because they secured the tion. While Zoom meetings may be part of the
price they wanted, but many buyers felt duped new normal, your agent obligations remain
and frustrated with this marketing strategy. the same.
Oregon Revised Statute (ORS) 696.800(6)
defines "Listing Price" as the amount ex-
pressed in dollars, specified in the listing
agreement, for which the seller is willing to Advertising Hot Topics
sell the real property through the listing agent. Continued from page 3
The keyword here is “willing.” If you list a
property at a price you know the seller will ing, you are required to include your real
not accept, you are in violation of Oregon Ad- estate license number.
ministrative Rule 863-015-0125(2)(b), which 6. Can I register a “team” or “group”
states that advertising by a licensee in process name as an alternative name? No. A
and substance must be truthful and not decep- registered alternative name is for indi-
tive or misleading. And, it could be grounds vidual licensees only. You may advertise
for discipline under ORS 696.301(4) for using the term “team” or “group” only if
knowingly publishing misleading advertising. you comply with OAR 863-015-0125(7).
The Agency understands competition is Make sure that the registered business
fierce, and we support your efforts to find cre- name is immediately noticeable on all
ative and innovative ways to earn new busi- advertising.
4 June 2021 Oregon Real Estate News-JournalLicense Renewal Options
When it’s time to renew your Oregon real eLicense and pay the $150 fee.
estate license, you have choices depending
on your personal circumstances. Late Renewal
On Time Active Renewal If your license expires, you have one year to
renew the license late. You cannot conduct
To renew your license active and continue professional real estate activity until the
to conduct professional real estate activity, license is active again.
complete your required continuing educa- To renew an active license late, com-
tion and renew your active license in eLi- plete your required continuing education
cense, including paying the $300 fee, no and then renew your license in eLicense.
later than your license expiration date. The fee is $300 plus a $150 late fee.
You can renew your inactive license
On Time Inactive Renewal late with a $150 fee and $150 late fee. If
your license is inactive for more than 2
You can renew your license inactive to consecutive years, you must take and pass
keep rights to your license while you don’t a reactivation exam to be eligible to acti-
conduct professional real estate activity. vate your license. When you are ready to
Renew your license inactive in eLicense, reactivate your license, you will apply to
including paying the $150, by your license reactivate in eLicense and pay the $150 fee.
renewal date. Remember, while your license
is inactive, you cannot conduct professional If you do not renew your license within one
real estate activity. year of your license expiration date, your
If your license is inactive for more than 2 license will lapse. This means you lose
consecutive years, you must take and pass a all rights to the license. If you wish to be
reactivation exam to be eligible to reactivate licensed again, you must start the process
your license. for a new license, including background
When you are ready to reactivate your check, examination, and, depending on the
license, you will apply to reactivate in timeframe, pre-license education.
New Property Management
Guide Now Available
The Oregon Real Estate Agency released a new publication
to guide licensees managing rental real estate.
Welcome to Property Management in Oregon was writ-
ten in user-friendly language to outline the requirements
of property management, including:
• Entering into Property Management Agreements
• Opening Clients’ Trust Accounts
• Reconciling Clients' Trust Accounts
• Maintaining Records
• Terminating Property Management Agreements
A Spanish language version is coming soon.
Oregon Real Estate News-Journal June 2021 5A Brief Look at the Recent History
of Residential Condominium
Production in Oregon
Michael Hanifan, Land Development Manager, Oregon Real Estate Agency
It’s not news that Oregon is currently expe- last five years (2016 thru 2020) the state has
riencing a shortage of housing. What some generated an average of 720 new residential
may not be aware of is that, in addition to the units. The disparity between 2007 and 2019
regulation of licensees, the Real Estate Agency is the result of several changes occurring
is home to the Land Development Division, in the 2007 timeframe. The first was a leg-
which is responsible for review and approval islative change. In response to the flurry of
of all new condos within the state. Although a conversions that were taking place, the 2007
small fraction of overall housing available on Oregon Legislature passed HB 3186, which
the market each year, condos are an option for implemented some
those looking for a home, and members of the tenant protections
public (and brokers) are often curious about and added other re-
how many condominiums are being created quirements onto the
each year. With that in mind, this article is a condo conversion
quick overview of the recent history of condo process. The second
projects in Oregon, influences on develop- change was a de-
ment, and potential effects of recent legislation crease in availabil-
on future condominiums. ity of rental projects
Generally speaking, condo projects track that could be easily
other residential development over time. In converted to condo-
the boom just before the 2nd Great Recession, miniums.
more than 125 condominiums were created in Post 2007, the
2007 alone. As that recession started in early emphasis has been
2007, that large number really reflects the on new construc-
pipeline of projects that were committed in tion infill condo-
2006, but nevertheless demonstrates the furi- minium projects.
ous pace of condo creation during that time- The overwhelming
frame. As the chart to the right demonstrates, majority of new
the condo market has been recovering largely condominiums filed
in step with the rest of the economy, with 2010 over the last couple
through 2014 acting as a reset phase before de- of years have been
velopers began to ramp up production again. between 2 and 4
Interestingly, the market post-2007 is actu- units. The pace of
ally much stronger than it appears. While 2007 development had
was a year of record condominium creation, increased year over
the actual number of condominiums built was year between 2015
significantly less that what we’ve seen over the and 2019. 2020 was
last couple of years. Of the 125 condominiums likely to continue
created in 2007, only 46 were “new starts”, the that trend, but the
other 79 being condominium conversions. By pandemic halted
contrast, in 2019 there were 79 “new starts” then slowed con-
with no true condo conversions (there were a struction. On top of
total of 14 ADU-type conversions1). Over the construction woes,
6 June 2021 Oregon Real Estate News-Journalthere was some concern about living in a to HB 2001, allowing the middle housing
condo that had a common entry area, or living construction under HB 2001 to be separated
in an urban setting in close proximity with oth- into individual lots. This obviously provides
ers. However, the smaller projects located in developers an alternative to creating a condo
suburbs seem less affected by those concerns. when creating middle housing, which should
We are watching for possible growth in reduce the volume of condos resulting from
condominium production starting near the HB 2001. However, not every lot or parcel
end of 2021 or early 2022 as a result of both is conveniently divided and, therefore, we
the continued strong demand for housing expect a portion of the construction result-
and HB 2001. The law, passed by the 2019 ing from HB 2001 to be directed into condo
Oregon Legislature (the “middle housing” development.
bill) provides for construction of multiple
dwellings, such as duplexes or triplexes, on
land zoned single-family residential. This 1
An ADU conversion is shorthand for situ-
provides additional flexibility for developers, ations where an ADU is built and then the
which should translate into more construction two dwellings are made into a condominium.
opportunities. Another bill with potential The primary dwelling is actually considered
impact on condominium creation is SB 458 the conversion because it was previously
(2021 Regular Session). This bill is a sequel occupied.
Oregon Real Estate News-Journal June 2021 7OREGON REAL ESTATE
NEWS-JOURNAL
Official Publication
Oregon Real Estate Agency
530 Center St. NE Ste. 100
Salem, Oregon 97301
Telephone: (503) 378-4170
Facsimile:
(503) 378-2491
(503) 373-7153 Regulation
Web Page:
http://www.oregon.gov/rea
Administrative Actions
OREGON REAL ESTATE
AGENCY
Kate Brown, Governor
Steve Strode, Commissioner
REAL ESTATE BOARD The Oregon Real Estate Agency is required by law to publish disciplinary actions. The final
Alex MacLean Chairperson, order for each action can be viewed by clicking on the individual names listed below.
Lake Oswego Please note that there are individuals with real estate licenses that may have the same or
Patricia Ihnat, Vice Chairper- similar names as those listed below, even in the same market area. If you are in doubt if an
son, Portland individual listed here is someone you know or you are working with, please contact the Agency
Marie Due, Florence for verification.
Debra Gisriel, Klamath Falls
Stipulated settlements do not necessarily reflect all the factual violations initially alleged
and Springfield by the Agency. Sanctions may have been adjusted as part of the negotiation process. Such
Susan Glen, Portland
settlements may not, therefore, directly compare in severity or sanction with other cases.
Jose Gonzalez, Salem
Reprimand Robbins, Sean (Newport Beach, California)
David Hamilton, Portland Principal Broker 201206043, Stipulated
Kim Heddinger, Eugene Adle, Michael (Ruidoso, New Mexico) Prin- order dated June 6, 2021.
Lawnae Hunter, Bend cipal Broker 201227272, Stipulated order
dated April 21, 2021. Walsh, Abraham (Clackamas) Property
The Oregon Real Estate News-
Manager 201213877, Stipulated order dated
Journal is published by the Farhoud, Farrah (Portland) Property Manager June 15, 2021
Oregon Real Estate Agency as 201215170, Stipulated order dated April 15,
an educational service to all 2021. Revocation
real estate licensees in the state
under the provisions of section
696.445 of the Oregon Revised
Hamley, Joel (Happy Valley) Principal Bro- Lappin, Melissa (Beaverton) Property Man-
Statutes. ker 200411095, Stipulated order dated June ager 201210106, Final default order dated
17, 2021. May 18, 2021.
Mesheal Heyman, Editor
Vol. 75, No.2
James, Brian (Grants Pass) Broker 201227644, Civil Penalty
June 2021
Stipulated order dated April 1, 2021.
Mahon, Brian T. (Pottsville, Pennsylvania)
Leiner, Jason Scott (Portland) Principal Unlicensed, Final default order dated May
Broker 200907119, Stipulated order dated 18, 2021, issuing a cease and desist order
May 21, 2021. and a $500 civil penalty.
8 June 2021 Oregon Real Estate News-JournalYou can also read
