OAR 812-012-0145: Surety Bond Issued to Protect Purchasers of Residential Property from Lien Claims

A seller of residential property may provide a surety bond to satisfy the requirements of ORS 87.007(2)(c), provided that the bond complies with the following requirements. (1) The bond must be issued by an insurer authorized or approved to do business in this state. (2) The bond must be issued on or after the date of completion of the residential property. For purposes of this rule, the “date of completion” shall be determined in accordance with ORS 87.045. (3) The bond must be issued in an amount of not less than 25 percent of the sales price of the residential property. (4) The bond shall remain in effect: (a) Not less than 75 days after the date of completion if no lien is perfected under ORS 87.035 against the residential property; or (b) If one or more liens are perfected against the residential property within 75 days from the date of completion, until: (A) All liens are released and the releases recorded; (B) The seller files a bond or makes a deposit and the seller files the required affidavit under ORS 87.076 to 87.081; (C) The surety files a bond or makes a deposit and the seller files the required affidavit under ORS 87.076 to 87.081; or (D) The surety pays the buyer the amount of the lien or the penal sum of the bond, whichever is less. (5) The bond shall include the following terms and conditions: “NOW, THEREFORE, the conditions of the foregoing obligation are that if the principal shall not permit any construction lien to be placed upon the subject property; shall obtain the release of all construction liens upon the subject property and have the releases recorded; or shall file a bond or deposit in accordance with ORS 87.076 to 87.081; then this obligation shall be void; otherwise to remain in full force and effect. “This bond is for the exclusive purpose of paying construction lien obligations encumbering (legal description or address of property) arising out of the sale by principal to (name(s) of purchaser(s)), in compliance with ORS 87.007(2)(c) and OAR 812-012-0145. “The bond shall be one continuing obligation, and the liability of the surety for the aggregate of any and all claims, which may arise hereunder, shall in no event exceed the penalty on this bond. “The bond shall remain in effect for not less than 75 days after the date of completion if no lien is perfected under ORS 87.035 against the property; or, if one or more liens are perfected against the property within 75 days from the date of completion, until (1) all liens are released and the releases recorded; (2) the principal files a bond or makes a deposit and the principal files the required affidavit under ORS 87.076 to 87.081; (3) the surety files a bond or makes a deposit and the surety files the required affidavit under 87.076 to 87.081; or (4) the surety pays the liens.”