Oregon Homebuyer Protection Act – Protection From Construction Liens

The Homebuyer Protection Act protects residential property buyers against construction liens

By Jeff Sorg, OnlineEd Blog

new construction house(October 29, 2015) – Oregon’s Homebuyer Protection Act, or HPA, applies to 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; 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; and 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.

The purpose of the HPA is to protect buyers of these types of properties from from liens recorded after a sale closes. In order to protect buyers, the seller of these types of properties must deliver to the buyer a from that specifies the types of protection available to the seller to offer the buyer, along with which of these types of protection the seller is offering to the buyer. These types of protection a seller may offer to a buyer are the following:

  1. Purchase owner’s extended coverage title insurance for the buyer that does NOT except filed or unfiled claims of lien. A standard title insurance or lender’s title insurance policy may not be sufficient.  This policy is to protect the buyer against recorded and unrecorded construction liens existing as of the date of closing;
  2. Retain 25% of the home’s sale price in escrow, along with written instructions signed by the seller and buyer instructing escrow to pay any claims of lien not paid by the seller filed after the date of sale;
  3. Issue a bond or letter of credit equal to at least 25% of the home’s sale price. A Construction Contractors Board bond that is required to license the contractor is not sufficient;
  4. Obtain written lien waivers from every lien claimant who claims liens of $5,000 or more and provide copies of these waivers to the buyer. The Oregon CCB recommends consulting with your lawyer to find out if the waivers presented are in their proper form to offer protection;
  5. Wait to close the sale until at least 75 days after all construction is completed; or
  6. Get the buyer to sign a waiver of right to protection under the HPA.

Noncompliance with the HPA is a Class A Violation.  An Oregon licensed contractor who fails to comply the the Act could be subject to suspension or revocation of license, civil penalties, or a combination of both.

The Homebuyer Protection Act is codified in ORS 87.007. Compliance with the HPA is the sole responsibility of the seller and real estate licensees are not liable for failure of a seller to comply with the act, while acting in their professional capacity as an agent for a buyer or seller. Real estate licensees should not engage in the practice of law by offering advice as to which option of protection is best for the seller to provide or buyer to receive.

Disclaimer: This posting is for informational purposes only and is not intended as or does not constitute legal advice. You should not act upon any information contained in this posting without consulting an attorney for advice regarding your particular situation.


For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers, visit www.OnlineEd.com.

 All information contained in this posting is deemed correct as of the date of publication, but is not guaranteed by the author and may have been obtained by third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

This entry was posted in Mortgage, Real Estate and tagged , , , , , , , , , on by .

About Jeff Sorg

Jeff Sorg is a co-founder of OnlineEd®, an online real estate, mortgage broker, and vocational school founded in 1997, where he also serves as Chief Executive Officer, and School Director. Sorg holds vocational and post-secondary school instructor licenses in several states and has authored numerous real estate continuing education and pre-licensing courses and has been awarded the International Distance Education Certification Center's CDEi Designation for distance education. Memberships include ARELLO (Association of Real Estate License Law Officials), the National Association of REALTORS®, Oregon Association of REALTORS®, and Portland Metro Association of REALTORS®. Awards and service include REALTOR® Emeritus in the National Association, Life Member award in Portland Metro Association and Chairperson of the Oregon Real Estate Forms Committee. OnlineEd® provides real estate, mortgage broker, insurance, and contractor pre-license, post-license, continuing education, career enhancement, and professional development and designation courses over the Internet.