ORS 87.007: Protection from construction liens perfected after sale of residential property completed; requirements; seller options; rules; delivery of form to purchaser; penalty; damages; defenses.

(1) This section applies to a sale of the following residential property: (a) A new single family residence or a single family residence where the sales price is $50,000 or more for original construction or the contract price is $50,000 or more for improvements to the residence completed within three months before the date the property is sold. (b) A new condominium unit or a condominium unit where the sales price is $50,000 or more for original construction or the contract price is $50,000 or more for improvements to the condominium unit completed within three months before the date the property is sold. As used in this paragraph, “condominium unit” has the meaning given that term in ORS 100.005. (c) A new residential building or a residential building where the sales price is $50,000 or more for original construction or the contract price is $50,000 or more for improvements to the residential building completed within three months before the date the property is sold. As used in this paragraph, “residential building” means a building or structure that contains not more than four dwelling units capable of use as residences or homes. (2) An owner of record at the time the owner of record sells residential property to a purchaser shall protect the purchaser from claims of lien that arise before the date on which the sale is complete but that may become perfected under ORS 87.035 after the date on which the sale is complete by one of the following methods: (a) Purchase or otherwise provide title insurance on the purchaser’s behalf by means of a policy issued: (A) Without exception for filed and unfiled claims of construction lien that exist at the closing date of the purchase; and (B) On forms and at rates filed with, but not disapproved by, the Director of the Department of Consumer and Business Services. (b) Retain in escrow, as defined in ORS 696.505, an amount of funds that is not less than 25 percent of the sale price of the residential property. The funds must be maintained in or released from escrow in accordance with written instructions to the escrow agent from the purchaser and the owner that sold the property. The written instructions shall require the escrow agent to pay upon the purchaser’s demand a claim of lien that is perfected after the date of the sale of the property and that the owner that sold the property has not paid. The escrow agent shall make the payment from the amount maintained in escrow. The escrow agent shall release the unused funds from escrow to the owner that sold the property if the escrow agent receives a request from the owner that sold the property and the owner that sold the property provides documentation from a title company that: (A) A claim of lien has not been perfected against the property and 90 days have passed since the date that construction was completed; or (B) A claim of lien has been perfected against the property, that 135 days have passed since the date that each such claim of lien was filed and that all perfected claims of lien have been released or waived. (c) Maintain a bond or letter of credit in an amount that is not less than 25 percent of the sale price of the property. The Construction Contractors Board shall prescribe by rule the amount, terms and conditions of the bond or letter of credit to be maintained under this paragraph. (d) Obtain written waivers from every person that claims or perfects a lien or liens under ORS 87.010 or 87.035 that, in an aggregate amount, exceed $5,000 with respect to the property and provide copies of the waivers to the purchaser not later than the date the sale of the property is completed. (e) Complete the sale of the residential property after the deadline for perfecting a claim of lien under ORS 87.035 with respect to the property. (3) Not later than the date on which the sale of the residential property is completed, the owner who sold the property shall complete, sign and deliver to the purchaser a form that specifies the method that the owner has selected to comply with the requirements of subsection (2) of this section or that states that subsection (2) of this section does not apply to the sale of the property. The notice must be in a form the Construction Contractors Board designates by rule under ORS 701.235. (4) A real estate licensee, as defined in ORS 696.010, acting in the professional capacity of a licensee is not liable in a criminal, civil or administrative proceeding that arises out of the failure of an owner of record to comply with subsection (2) or (3) of this section. (5) Violation of subsection (3) of this section is a Class A violation. (6) In addition to any other remedy or penalty provided by law, a purchaser may bring an action to recover up to twice the amount of actual damages caused by a violation of subsection (2) of this section. The court may award to the prevailing party, in addition to costs and disbursements, reasonable attorney fees. Any action brought under this subsection must be commenced not later than two years after the date on which the sale of the property is completed. (7) For purposes of subsections (5) and (6) of this section and ORS 646.608: (a) It is a defense to a violation of subsection (2) or (3) of this section that no enforcement or attempt to enforce a claim of lien against the property that is the subject of the sale occurred before the date the sale of the property was completed; and (b) As to a claim of lien, it is a defense to a violation of subsection (2) or (3) of this section if the owner that sold the property: (A) Proves that the claim of lien against the property that is the subject of the sale is invalid; or (B) Satisfies the claim of lien or obtains a release from the claim of lien on the property that is the subject of the sale. (8) A violation of subsection (2) or (3) of this section does not occur with respect to a lien described in ORS 87.010 during the period that the validity of the lien is disputed in a judicial proceeding or a proceeding described in ORS chapter 701. (9) Nothing in this section requires the payment of a lien that is not otherwise valid. This section does not apply to claims of lien perfected by persons that furnish materials, equipment, services or labor at the request of the purchaser of the residential property. [2003 c.778 §2; 2010 c.77 §1]