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DISCLOSURE DUTIES BY SELLERS EXEMPT UNDER SELLER PROPERTY DISCLOSURE
By Phil Querin, PMAR Legal Counsel, Querin Law, LLC
Question
My buyer client recently purchased a property from a seller-builder. After closing we learned that the
property contained an abandoned underground storage tank that had never been disclosed to us. When I
confronted the builder, he said that he was exempt from the seller disclosure laws, so it was my buyer’s
problem. Can this possibly be correct?
Answer
Maybe it was the buyer’s problem fifty years ago during the days of caveat emptor, but that has not been
the law for the last several decades. Oregon law (ORS 466.878) requires the owner to pump out all
heating oil from an abandoned (unused) underground heating oil tank when:
(a) The tank is no longer used as a heating source.
(b) The tank has been replaced with a new one.
(c) The home or business is sold.
The builder was an “owner” and is therefore subject to the decommissioning requirements. It is true that
under ORS 105.464, an owner who sells a dwelling never occupied is excluded from having to complete
the seller property disclosure form. However, this exclusion only exempts the seller-builder from
completing the rest of the form. It does not exempt him from the duty of making full disclosure of all
known material defects in the property. You will see that in virtually every OREF Sale Agreement, the
seller makes an affirmative representation that he/she knows of no material defects in the property. So
the failure to make this disclosure constituted a breach of contract, for which your buyer would have
recourse. The statute of limitations on a breach of contract is six years.
Additionally, Oregon Common Law is quite clear that a willful omission of material information is
tantamount to fraud, just the same as if the seller lied to the buyer about some aspect of the property.
The statute of limitations on fraud is generally two years from the date the buyer knew or should have
known of the misrepresentation. The OREF Sale Agreement carries with it a right to prevailing attorney
fees if your buyer client is forced to file for arbitration.
Unfortunately, the property disclosure form does not expressly tell those sellers who are exempted from
filling it out, that they cannot lie, cheat and steal. This is a state form that was created by the brainiacs in
the Oregon Legislature. One would think it would be unnecessary to legally inform sellers - perhaps in 16point font - that even if exempted, they must still tell the truth. Perhaps it is.
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