We can help you streamline deal flow nationwide | Fidelity National Title - Find an office

small_FNT-NCS-Desktop-Banner-Ad[28].png

thumbnail_FNT-NCS-Desktop-Banner-Ad[28].png

fidelity-desktop-banner

thumbnail_FNT-NCS-Mobile-Banner-Ad[89].png

fidelity-mobile-banner

American College of Mortgage Attorneys — Partner with the Best®

Formed in 1974, the American College of Mortgage Attorneys (ACMA) is comprised of over 500 lawyers in North America who are experts in mortgage law.

United States

Oregon

A mortgage of real property does not convey title so as to enable the holder of the mortgage to recover possession of the real property without foreclosure and sale. ORS&nbsp;86.010. Neither a mortgage nor a trust deed is an implied covenant to pay the obligation that the document secures. ORS&nbsp;86.020 and ORS 86.715.

NATURE OF INTEREST CREATED BY MORTGAGE

Mortgages and trust deeds may be used. Trust deeds are instruments of choice because nonjudicial foreclosure is not available with a mortgage. ORS&nbsp;86.010 and ORS&nbsp;86.710.

SECURITY INSTRUMENT USED

Acknowledgment before a notary public and attachment of a notary certificate that complies with ORS&nbsp;194.285 is required to satisfy recording requirements. ORS&nbsp;93.410.

RECORDING REQUIREMENTS

UNUSUAL TREATMENT OF STANDARD PROVISIONS

Pursuant to ORS&nbsp;86.155(2), advances (whether optional or obligatory) made any time after the instrument is recorded will enjoy the same priority as the lien of the trust deed if the words “line of credit instrument,” “line of credit mortgage,” or “line of credit trust deed” are inserted either in capital letters or underscored above the body of the mortgage or trust deed, and a disclosure similar to the following is set forth on the front page of the trust deed: The maximum principal amount to be advanced pursuant to the credit agreement secured by this line of credit instrument is $___________. The maturity date of the credit agreement secured by this line of credit instrument, exclusive of any option to renew or extend such maturity date, is _______________. The maximum principal amount to be advanced pursuant to the credit agreement secured by this line of credit instrument may be exceeded by advances to complete construction pursuant to ORS 86.155(2)(c). It is worth noting that ORS 86.050 provides that protective advances made by a lender are secured by the mortgage, but the statute does not specify what is the priority date for such advances. However, ORS 86.155(2)(b) provides that protective advances have a priority date as of the date of recording of the mortgage, if the mortgage is a “line of credit instrument” as noted above. For clarity, some Oregon practitioners representing lenders will designate the mortgage as a “line of credit instrument” to gain the certainty of priority date for such advances.

SECURING FUTURE ADVANCES

Permitted by statute. ORS&nbsp;86.050. A lender's inclusion of the statutory notice set forth below to the effect that insurance may be placed by the lender upon the collateral in the event the borrower fails to maintain insurance constitutes a complete defense to any borrower challenge to the placement of the insurance. ORS&nbsp;746.201(2). The statute contains the following form of notice, which is required to be in 10-point type:

SECURING ADDITIONAL ADVANCES TO PROTECT THE COLLATERAL, INCLUDING PAYMENT OF TAXES AND INSURANCE

Unless you provide us with evidence of the insurance coverage as required by our contract or loan agreement, we may purchase insurance at your expense to protect our interest. This insurance may, but need not, also protect your interest. If the collateral becomes damaged, the coverage we purchase may not pay any claim you make or any claim made against you. You may later cancel this coverage by providing evidence that you have obtained property coverage elsewhere. You are responsible for the cost of any insurance purchased by us. The cost of this insurance may be added to your contract or loan balance. If the cost is added to your contract or loan balance, the interest rate on the underlying contract or loan will apply to this added amount. The effective date of coverage may be the date your prior coverage lapsed or the date you failed to provide proof of coverage. The coverage we purchase may be considerably more expensive than insurance you can obtain on your own and may not satisfy any need for property damage coverage or any mandatory liability insurance requirements imposed by applicable law.

WARNING

Instruments assigning a mortgage or trust deed must contain both the name and address of the assignee. ORS&nbsp;205.234(1)(g). Such instruments must be executed with the same formalities as required for mortgages and must be recorded in the county mortgage records. ORS&nbsp;86.060.

ASSIGNMENT OF MORTGAGES AND TRUST DEEDS

A trustee of a trust deed must be an attorney who is an active member of the Oregon State Bar; a law practice that includes an attorney who is an active member of the Oregon State Bar; a financial institution or a trust company as defined in ORS&nbsp;706.008 authorized to do business in Oregon; a title insurance company authorized to insure title to real property in Oregon and its affiliates; the United States or any agency thereof; or an escrow agent licensed in Oregon. ORS&nbsp;86.713.

CORPORATE OR INDIVIDUAL

A trustee cannot charge more than 50% of the compensation allowable to an personal representative under ORS&nbsp;116.173 or a minimum charge of $100 for performance of powers and duties of foreclosure by advertisement and sale, and the total compensation must be based upon the amount due on the obligation at the time of the sale. ORS&nbsp;86.809.

COMPENSATION OF TRUSTEE

If the security instrument is a mortgage it can only be foreclosed judicially. ORS&nbsp;88.010. The procedure and effect of a foreclosure sale is the same as that for execution of a judgment for recovery of money, in that the judgment of foreclosure will order the mortgaged property to be sold. ORS&nbsp;88.060 and 88.106. Trust deeds may be judicially foreclosed in the same manner as a mortgage or may be foreclosed nonjudicially by the trustee by advertisement and sale. ORS&nbsp;86.710. With respect to nonjudicial foreclosures, a Notice of Default and Election to Sell is recorded and the sale date is set for approximately 4&frac12; months from the date of the Notice of Default. After recording of the Notice of Default, a Notice of Sale is prepared and served on all parties. The Notice of Sale must be published for 4 successive weeks prior to the sale, with the last publication more than 20&nbsp;days before the sale date. ORS&nbsp;86.774(2).

BRIEF DESCRIPTION OF PROCEDURE

Nonjudicial foreclosure of a trust deed takes approximately 4&frac12; to 6&nbsp;months from recording of the Notice of Default and Election to Sell. Judicial foreclosures most often take 6 to 12&nbsp;months to complete. The timing of the sheriff's sale is largely dependent on the particular county in which the property is situated. Some counties can take up to a year after the writ of execution. If that is the case, the creditor should be careful to extend the time to execute on the writ, which can be done by request to the sheriff as long as the sale is conducted within 150 days of the sheriff receiving the writ. ORS 18.872.

TYPICAL LENGTH OF PROCEDURE

The trustee or sheriff will typically sell the property at auction, and the purchase price must be paid in cash or cash equivalent, except that the beneficiary under the trust deed or mortgage may make a credit bid at the time of sale in any amount up to the full amount due. ORS 18.936 and 86.782. Any person other than the trustee may bid at the sale. ORS&nbsp;86.782. In the absence of fraud, mistake, or unfairness, the mere inadequacy of the purchase price is not sufficient grounds to invalidate a sale unless the purchase price is grossly inadequate and unconscionable. See Teachers' Retirement Fund Ass'n of School Dist. No. 1, Multnomah County v. Pirie, 150 Or. 435 (1935).

FORECLOSURE BID REQUIREMENTS

A mortgagor may redeem property sold at an execution sale. ORS&nbsp;88.106. All real property sold at an execution sale (except a leasehold interest with an unexpired term of less than 2 years) may be redeemed by mortgagor any time within 180 days (and by a junior lienholder within 60 days) after sale by paying the purchase price, taxes paid by purchaser, any amounts that the purchaser paid to satisfy superior liens, and sums paid to prevent waste, plus 9% interest on the purchase price from date of sale and on the amounts paid for taxes, to satisfy superior liens, and to prevent waste. ORS 18.964 and 18.966. There is no right to redemption following nonjudicial foreclosure of a trust deed. ORS&nbsp;86.797. There is, however, a right to cancel the foreclosure and reinstate the trust deed by paying no later than 5 days prior to the date of the foreclosure sale all amounts due, other than such portion as would not be due had there been no default (except that attorney fees and trustee fees for a residential nonjudicial foreclosure are capped at $1,000). ORS&nbsp;86.778.

REDEMPTION PERIOD AND PRICE

The right of redemption cannot be waived, nor can the redemption period be reduced. However, a creditor can acquire redemption rights post-sale, which will allow the creditor to obtain a sheriff's deed prior to the expiration of the applicable redemption period

WAIVER OF REDEMPTION; REDUCTION OF REDEMPTION PERIOD

Deficiency judgments in mortgage foreclosures are authorized except in cases of certain purchase money mortgages. ORS&nbsp;88.010 and 88.103. Deficiency judgments against grantors and guarantors are allowed with respect to judicial foreclosures of non-residential trust deeds. ORS&nbsp;86.797(3). No deficiency judgment against a grantor or guarantor will be allowed if a trust deed is foreclosed nonjudicially. ORS&nbsp;86.797(2).

DEFICIENCIES

Subordinate leaseholds are terminated by foreclosure whether or not tenants are served with the foreclosure documents. See State By and Through Director of Veterans' Affairs v. Martin, 135 Or.App. 416 (1995). This case was based on ORS 23.590 which was renumbered and then repealed leading some to conclude that subordinate leaseholds are terminated by foreclosure if the tenants are served with the foreclosure documents. If the beneficiary under the trust deed desires to preserve a lease, then the tenant should not be served with the foreclosure documents and an announcement would be made at the sale to the effect that the sale is subject to the tenant's interest.

EFFECT OF FORECLOSURE UPON LEASES

Nonjudicial foreclosure of a trust deed has the effect of precluding the beneficiary from subsequently enforcing any obligation secured by the trust deed. ORS&nbsp;86.797(2). This will include enforcement of an environmental indemnity made in the trust deed or on a separate indemnity agreement if the indemnity is secured by the trust deed. Many lenders take an unsecured environmental indemnity from the borrower and any guarantor to avoid this potential outcome. Judicial foreclosure of a nonresidential trust deed and judicial foreclosure of a mortgage do not prevent enforcement after foreclosure of obligations secured by such a trust deed or mortgage. In reliance on this right, some lenders do secure environmental indemnities by trust deeds and mortgages.

EFFECT OF FORECLOSURE ON ENVIRONMENTAL INDEMNITIES

In cases where MERS is designated as a beneficiary, there can be an issue with title in the event of a nonjudicial foreclosure. Creditors should check with a title company regarding the insurability of such foreclosures and consider proceeding judicially or have the trust deed assigned to the proper trust deed beneficiary.

CHANGES IN PROCESS RESULTING FROM FORECLOSURE LITIGATION

Mortgagees and trust deed beneficiaries must first go through the resolution conference procedures outlined in ORS 86.726, unless they qualify for an exemption. A certificate of compliance is a necessary prerequisite to any foreclosure of a residential trust deed or mortgage. ORS 86.752. The resolution conference procedures can add significant time to the foreclosure process, depending on the circumstances.

SPECIAL RULES FOR RESIDENTIAL MORTGAGES AND TRUST DEEDS.

There is no statutory interest limitation with respect to loans secured by a first lien on real property or made to finance the acquisition of real property and secured by any lien on that property. ORS&nbsp;82.025(3). However, an excessive interest rate may be subject to challenge as unconscionable.

USURY CEILING

Exemptions from applications of the usury statute are provided to, among others, financial institutions and lenders approved by HUD. ORS&nbsp;82.025.

USURY EXEMPTIONS

The federal preemption of state usury limitations has not been overridden by the Oregon legislature.

FEDERAL PREEMPTION

Financing statements covering personal property owned by a debtor located (as location is determined in the Oregon UCC) in the state of Oregon are filed with the Secretary of State. Financing statements covering fixtures are filed in the real property records of the county where the subject property is situated. ORS&nbsp;79.0501.

LOCATIONS FOR FILING

SECURITY INSTRUMENT AS FIXTURE FILING

UNUSUAL PROVISIONS OR REQUIREMENTS

STATUTES TO BE WAIVED

Consistent with majority of jurisdictions. Nonjudicial foreclosure of a trust deed precludes pursuit of guarantors after foreclosure. ORS&nbsp;86.797.

SPECIAL PROBLEMS IN ENFORCEMENT OF GUARANTY

ORS&nbsp;41.580(1)(h) requires that agreements or commitments to lend money for commercial purposes be in writing and be signed by the lender in order to be enforceable. This statute also requires that the lender include the following notice in the loan documents or in a separate notice signed by the borrower, which shall be underlined or in at least 10-point bold type, and that a copy of the notice be given to the borrower: Under Oregon law, most agreements, promises, and commitments made by us concerning loans and other credit extensions that are not for personal, family, or household purposes or secured solely by the borrower's residence must be in writing, express consideration, and be signed by us to be enforceable.

STATUTE OF FRAUDS

Subject to various exceptions listed in ORS&nbsp;88.120, a lawsuit to foreclose a mortgage must commence within 10&nbsp;years after the mortgage debt's maturity date (ORS&nbsp;88.110). Unless the maturity date is stated in the mortgage, the date of execution of the mortgage is presumed to be the maturity. Accordingly, it is prudent to always disclose the maturity in the mortgage. There is a 6-year limitation applicable to a suit on a contract. ORS&nbsp;12.080. Notwithstanding the 10-year limitation period in which to foreclose a mortgage, prudence would dictate compliance with the 6-year limitation period.

STATUTE OF LIMITATION PERIOD

A mortgage must be discharged of record by recording a certificate executed by the mortgagee that states that the mortgage has been paid or otherwise discharged. ORS&nbsp;86.100. Trust deeds are released by recording of a deed of reconveyance executed by the trustee, a request for which must be delivered to the trustee by the beneficiary within 30 days after payment of the debt secured by the property. Most trustees will require that the beneficiary also deliver the original trust deed and promissory note or other instrument secured thereby in order to establish ownership of the debt. The deed of reconveyance must be recorded within 30 days after receipt by the trustee of the request for reconveyance. ORS&nbsp;86.720.

REQUIREMENTS FOR RELEASE OF LIEN

Homestead exemptions do not apply to mortgages or trust deeds. ORS&nbsp;18.406.

HOMESTEAD ISSUES

Oregon is not a community property state (other than property vesting between 1943 and 1948, which may be considered community property).

COMMUNITY PROPERTY

MORTGAGE TAX

DOCUMENTARY STAMP TAX

None applicable to mortgages or trust deeds; however, real estate conveyance tax ($1 per $1,000 of selling price) imposed by Washington County on conveyances.

TRANSFER TAX

Contractual choice of law provisions will be enforced with certain specific exceptions. ORS&nbsp;15.350(1). The choice of law must be express or clearly demonstrated from the terms of the contract. In a standard-form contract drafted primarily by only one of the parties, any choice of law must be express and conspicuous. ORS&nbsp;15.350(2). The law chosen by the parties does not apply to the extent that its application would: (a)&nbsp;require a party to perform an act prohibited by the law of the state where the act is to be performed under the contract; (b)&nbsp;prohibit a party from performing an act required by the law of the state where it is to be performed under the contract; or (c)&nbsp;contravene an established fundamental policy embodied in the law that would otherwise govern the issue in dispute under ORS&nbsp;15.360. ORS 15355(1). An established policy is fundamental only if the policy reflects objectives or gives effect to essential public or societal institutions beyond the allocation of rights and obligations of parties to a contract at issue. ORS&nbsp;15.355(2).

ENFORCEABILITY OF CHOICE OF LAW PROVISIONS

The court may appoint a receiver in a foreclosure suit if the property or its rents or profits are in danger of being lost or materially injured or impaired or when necessary to secure justice to the parties. ORS 37.060(1). In determining whether to appoint a receiver, a court may consider contractual provisions providing for appointment, but the court is not bound by such provisions. ORS 37.060(2). A receiver may collect rents while a foreclosure is pending. ORS 37.110. A receiver may also transfer and sell property free and clear of liens. ORS 37.250(2). A receiver may only sell residential property, however, in cases of waste, destruction, obstruction, or other good cause shown. ORS 37.250(8). Lenders are entitled to credit bid at a sale by a receiver. ORS 37.060(4). A trustee under a trust deed may bring an action to appoint a receiver upon compliance with the procedural requirements of ORCP&nbsp;79 and&nbsp;80. ORS&nbsp;86.752.

RECEIVER AVAILABLE

No unusual limitations with respect to commercial transactions.

ANY PROHIBITION OR SPECIAL RULES REGARDING LOAN APPLICATION, LOAN FEES OR COMMITMENT FEES

If the lender is an out-of-state bank, an extranational institution, or foreign association, the home state of which is not Oregon, and if the lender is not otherwise conducting a banking business in Oregon, then, without being authorized to transact a banking business or a savings and loan business in Oregon, the lender may take, acquire, hold, and enforce notes secured by mortgages or trust deeds and make commitments to purchase such notes. ORS 713.300. The out-of-state bank, extranational institution, or foreign association may foreclose mortgages or trust deeds in the Oregon courts, acquire the mortgaged property, or hold, own, and operate the property for a period not exceeding 5&nbsp;years, and dispose of the property. The activities authorized under ORS&nbsp;713.300 by an out-of-state bank, extranational institution, or foreign association will not constitute transacting business in Oregon for purposes of ORS&nbsp;Chapter&nbsp;60 (dealing with registration of foreign corporations). As a general rule, to conduct such activities, the out-of-state lender must file an application with the Oregon Department of Consumer and Business Services and the Oregon Corporation Division and appoint a local registered agent for the service of process. This filing requirement does not apply to an out-of-state bank or extranational institution that has obtained a certificate of authority to transact a banking business in Oregon under ORS&nbsp;713.020. An out-of-state bank, extranational institution, or foreign association that indirectly engages in these activities because of its beneficial interest in a pool of notes secured by mortgages or trust deeds is not required to register and appoint a local registered agent. In Oregon, foreign life insurance companies that make mortgage loans but do not conduct a life insurance business in Oregon nevertheless must designate the Director of the Department of Consumer and Business Services as their attorneys for service of process and must pay an initial filing fee and an annual license fee. See ORS&nbsp;731.380(2). Subject to certain exceptions, including exceptions exempting certain otherwise-regulated financial institutions, a mortgage banker or mortgage broker must be licensed by the Department of Consumer and Business Services to engage in residential mortgage transactions in the state of Oregon.

LENDER QUALIFICATION AND/OR LICENSURE

Agreements to modify a loan, to forbear with respect to repayment of a loan, and to release any guarantor or cosigner must be in writing and signed by the lender to be enforceable. See discussion under Statute of Frauds above.

MODIFICATIONS OF MORTGAGE LOANS

Under Oregon law, the State can investigate and clean up contamination resulting from the release of hazardous substances at a property or facility when the responsible person fails to do so. ORS&nbsp;465.260. The remediation costs that are incurred by the State, as well as penalties and punitive damages, are a lien on both real and personal property owned by a responsible person. ORS&nbsp;465.335. Oregon has identical law regarding the unlawful disposal or spilling of hazardous wastes or substances at facilities that generate, treat, store, or dispose of such regulated wastes or substances (ORS&nbsp;466.205) and spills from storage tanks. ORS&nbsp;466.770. Under these statutory provisions, the State's environmental lien may attach to all the property owned by the responsible person, not merely the contaminated property. In order to attach, the State must record the lien against the real property in the county in which the real property is located and must file the lien on personal property with the Secretary of State. The lien attaches and becomes enforceable when it is recorded or filed. The priority of such lien dates from the time of recording or filing. ORS 465.335 and 466.835

ENVIRONMENTAL LIEN LAW ISSUES

Manufactured structures are treated as personal property unless they are: (a) situated on land owned by the structure owner and the owner has converted the structure to real property status pursuant to ORS 446.626; (b) the structure owner is the holder of a recorded leasehold estate of 20 years or more and the lease specifically permits the structure owner to record the structure under ORS 446.626; or (c) the structure owner is a member of a manufactured dwelling park non-profit cooperative formed under ORS 62.800 to 62.815 that owns the land on which the structure is located. With respect to manufactured structures that are treated as personal property and that were purchased from the manufacturer prior to May&nbsp;1, 2005, the manufactured structure is deemed to be a “vehicle” under Oregon law and the exclusive means for perfecting a security interest in the manufactured structure is by notation of the security interest on the certificate of title. ORS 446.621. With respect to manufactured structures that are treated as personal property and that were purchased from the manufacturer after May&nbsp;1, 2005, the Department of Consumer and Business Services must note the security interests on the ownership documents and in the records maintained by the Department for manufactured structures, and such manufactured structures are subject to assessment and taxation as personal property. ORS&nbsp;446.571. Unless one is in the business of selling manufactured structures, the exclusive means for perfecting a security interest in a manufactured structure that has an ownership document issued by the Department of Consumer and Business Services is by application for and notation of the security interest in the manufactured structure ownership document records of the Department of Consumer and Business Services. ORS&nbsp;446.611.

MANUFACTURED STRUCTURES

In Oregon, construction liens relate back to the date of commencement of construction of the relevant improvements for purposes of establishing priority and usually are senior to previously recorded construction financing encumbrances. ORS&nbsp;87.025(1), (2), and&nbsp;(7). A construction lien remains inchoate at the time of commencement of construction; when perfection is attained by filing a claim of lien that satisfies the statutory requirements set forth in ORS&nbsp;87.035, the date of commencement of the improvement serves as the effective date of the lien. The “commencement of the improvement” is defined as “the first actual preparation or construction upon the site or the first delivery to the site of the materials of such substantial character as to notify interested persons that preparation or construction upon the site has begun or is about to begin.” ORS&nbsp;87.005(1). Perfected construction liens generally enjoy equal priority. See, e.g., ORS&nbsp;87.025(7), 87.060(6). A construction lien must be filed within 75 days after the claimant ceases to provide labor, equipment or materials or 75&nbsp;days after completion of construction, whichever is the earlier to occur. ORS&nbsp;87.035(1). Completion of construction occurs when: (i)&nbsp;the improvement is substantially completed; (ii)&nbsp;a completion notice is posted and recorded; or (iii)&nbsp;the work is abandoned. ORS&nbsp;87.045(1). Consequently, it may be prudent to post and record a completion notice under ORS&nbsp;87.045(2) to fix the statutory time period for assertion of construction liens. A completion notice may be posted and recorded by any original contractor, the owner or a mortgagee when all original contractors have substantially performed their work. ORS&nbsp;87.045(2). By issuing a completion notice under ORS 87.045, an owner indicates that construction is sufficiently complete and liens may be filed. However, the owner does not necessarily “accept” anything, much less take control of and take responsibility for the construction. Furthermore, although an owner's issuance of a completion notice indicates that the owner believes, at least for purposes of issuing the notice, that all of the original contractors have “substantially performed their contracts,” it is not necessarily an acceptance of the construction as sufficiently complete for its intended use or occupancy. Perfected construction liens on improvements have priority over liens, mortgages and other encumbrances that were unrecorded when construction of the improvements commenced as well as mortgages granted to secure construction financing whether or not such construction financing mortgages were recorded when construction commenced. ORS&nbsp;87.025(1) and&nbsp;(2). To enforce such a construction lien, the improvement may be sold separately from the underlying land. ORS&nbsp;87.025(2). A construction lien for repairs or alterations to an improvement will not take priority over a pre-existing mortgage or trust deed on the subject improvement unless the loan underlying the preexisting mortgage or trust deed provided financing for the repairs or alterations. ORS&nbsp;87.025(6). A construction lien for the supply of materials does not have priority over a recorded mortgage or trust deed unless the lien claimant gives the mortgagee timely notice of the right to claim a lien. ORS&nbsp;87.025(3). Other notices are required to perfect certain construction liens. See, e.g., ORS&nbsp;87.021. Under Oregon law, architects, landscape architects, land surveyors and registered engineers who prepare plans, drawings or specifications for use in the construction of improvements or landscaping have construction lien rights. ORS 87.010(5) and (6).

CONSTRUCTION LIENS

General. Oregon title insurers are regulated by the Insurance Division of Oregon (the “Division”) pursuant to provisions of the Insurance Code and regulations adopted thereunder. The Division regulates, among other matters, the forms utilized by title insurers and the rates charged for title insurance and endorsements. The statutory and regulatory scheme established in Oregon is comprehensive and strict. As a result, Oregon title insurers issue fewer endorsements and are more constrained in terms of their ability to provide anomalous title insurance policies than title insurers in other states where the regulatory agencies do not play a major role. All title insurers issuing policies in Oregon are members of Oregon Title Insurance Rating Organization (“OTIRO”). OTIRO develops forms and before those forms may be used, the forms must be approved for use by the Division. Oregon title insurance policies are issued in standardized forms that have been developed by industry groups such as the American Land Title Association (“ALTA”) and the Oregon Land Title Association (“OLTA”). The 2006&nbsp;ALTA Policy forms and (as of June 24, 2022) the 2021 ALTA policy forms are the only forms currently approved by the Division for use in Oregon. Because of this standardization, coverages and fees offered by Oregon title insurance companies are uniform. Requests for special coverage beyond what is contained in the standardized forms can be effected by endorsement. If a potential insured party wishes to utilize a non-standard endorsement, a copy of the proposed endorsement must be submitted to OTIRO for comment and the Commissioner for approval. However, the prospects for getting approval are slim, as only a couple of special endorsements have been approved in the past 25&nbsp;years or so. Form Usually Required by Lenders. Title policies can be issued with standard coverage or extended coverage. Lenders generally require extended coverage. Extended coverage means that the 5 general exceptions to title that appear on all standard coverage policies are removed. Removal of these exceptions, which deal with such issues as adverse possession and matters that a survey would disclose, requires an affidavit, payment of an additional premium, and in most cases delivery of a survey to the title insurer. Endorsements: In order to modify or amend insurance policies, title insurers in Oregon may issue endorsements to the policy. A number of ALTA endorsement forms have been adopted for use in Oregon. OTIRO has a uniform numbering system to aid in identifying the endorsements, and many are identified by their traditional ALTA identification numbers. Some of the endorsements most commonly requested by lenders and provided by title insurers with respect to mortgagee's policies of title insurance in Oregon are:

MORTGAGEE'S TITLE INSURANCE

(OTIRO No.&nbsp;217-06 (direct access), 217.1-06 (indirect access by easement), or 80 (land abuts existing street)). All of the above endorsements specifically identify the physically opened public street to which the insured property has access. Both the ALTA&nbsp;2006 policy and the ALTA 2021 policy merely state that there is access to an unidentified street or roadway abutting the property. OTIRO No.&nbsp;217-06 provides additional assurances that the property abuts a named public street, that the street is publicly maintained, that there is both vehicular and pedestrian access onto the named street and that the insured has the right to use existing curb cuts or entries. OTIRO No.&nbsp;217.1-06 provides assurances that the property has access to a public street by way of an insured easement and that there is both vehicular and pedestrian access onto the named public street, that the named street is publicly maintained and that the insured has the right to use existing curb cuts or entries along the portion of the street abutting the easement. OTIRO No.&nbsp;80 is used when the land physically abuts a named street, but the title insurer is unable to insure that there is both vehicular and pedestrian access onto the named street or that the insured has the right to use existing curb cuts or entries.

Access and Entry Endorsement

(OTIRO Nos.&nbsp;51, 51.1 and 51.2). All of these endorsements increase the amount of the policy. OTIRO No. 51 is used when there have been no changes in the record and OTIRO No.&nbsp;51.1 is used when there are specific new matters set forth in the endorsement. OTIRO No. 51.2 insures the priority of additional advances, except for matters shown in the original policy and any new matters specifically set forth in the endorsement, but is only available on an extended coverage policy.

Additional Advance Endorsement

(OTIRO No.&nbsp;70). This endorsement insures that there are no statutory construction liens of record at the time the endorsement is issued, but does not eliminate the standard construction lien exception for construction liens that exist but are not yet of record that appears in Schedule “B,” Part&nbsp;I of all standard coverage mortgagee policies. Except as discussed below on “early issue” policies, the standard construction lien exception will be removed by an insurer only upon termination of the statutory 75-day construction lien period following completion of construction. Insured parties may seek an “early-issue” policy, which does not contain the standard construction lien exception. The cost for such coverage is very expensive and insurers may require indemnities from the owner and also may require additional security in order to issue an early issue policy. Incremental construction lien coverage is also now available in Oregon.&nbsp; Under incremental coverage, an OTIRO 232-06 endorsement is issued with the policy, and with each advance an OTIRO 233-06 endorsement is issued increasing the coverage (in other states these are known as ALTA 32 and ALTA 33.)&nbsp; These endorsements only provide insurance in an amount equal to the sum of all advances made through the date of the issuance of the 233 endorsement .&nbsp;&nbsp; Because of the greater risk assumed by the title company, the cost is substantially more than the cost of an &nbsp;OTIRO No. 70.&nbsp; &nbsp;Oregon construction lenders almost never require early-issue policies, and only occasionally require incremental coverage. Instead, they obtain construction lien releases and OTIRO No. 70 construction lien endorsement prior to making disbursements and obtain an OTIRO No. 66 endorsement removing the standard construction lien exception from the policy upon expiration of the 75-day statutory construction lien period.&nbsp; It is typical to not disburse retainage until the standard construction lien exception is removed.

Construction Lien Endorsement

(OTIRO No.&nbsp;219-06 (multiple parcels), 219.1-06 (single parcel) and 219.2-06 (specified parcels)). If the encumbered property consists of multiple parcels, OTIRO No. 219-06 insures that the parcels are contiguous and there are no “gaps, strips or gores” separating them. The single parcel endorsement insures that the land is contiguous to some other parcel other than the parcel that is the subject of the insurance and that there are no “gaps, strips or gores” between the shared boundary line. The specified parcels endorsement insures that the land is contiguous to specified parcels.

Contiguity Endorsement

(OTIRO No.&nbsp;87). Brings the date of the policy forward to a specified date; provided that the new date is within one year of the date of the original policy, that there has been no change in ownership of the property, and that no additional financing has been placed of record. A date down endorsement issued after such one-year period does not change the effective date of the policy but provides assurance that no encumbrances are of record as of the date of the endorsement, except as disclosed in the policy and in the endorsement.

Date Down Endorsement

(OTIRO No.&nbsp;214-06). This endorsement insures that advances made after the date of recording will enjoy a priority date as of the date of recording. It also permits repayment of the loan and readvancement of loan funds under a revolving loan agreement without effect on the amount of title policy coverage. This endorsement should be obtained on all construction loans and revolving loans.

Future Advance Endorsement

Endorsements.&nbsp; The ALTA 26-Subdivision endorsement is not available in Oregon. The ALTA 18-Tax Parcel endorsements are available but do not insure that the property is a legal lot.

Legal Lot

(OTIRO Nos. 211-06 (modification), 211.1-06 (modification with subordination), and 211.2.06 (modification with additional amount of insurance)). These endorsements insure that modifications made to the insured lien after the date of the policy were duly authorized and do not render the lien subordinate to liens or encumbrances except those shown in the original policy and those listed in the endorsement.

Modification Endorsement

(OTIRO No.&nbsp;209.6.1-06). This endorsement protects against certain rights included in covenants that are not covered by the prior endorsements, including the enforcement of private assessments (due and payable at the date of the policy), options to purchase, and rights of first refusal.

Private Rights

(OTIRO No. 209.7-06 for land under development and OTIRO No. 209.10-06 for current violations); Covenants, Conditions and Restrictions (OTIRO No. 209.3-06 for current violations and OTIRO No. 209.8-06 for land under development). These two endorsements are the most common endorsements ordered by lenders in Oregon. They are designed to be used in conjunction with extended coverage mortgagee's policies to protect the insured against loss for certain matters that do not appear of record at the time of issuance of the policy (e.g., violations of covenants, conditions and restrictions). Title companies generally require an inspection of the property and/or review of a survey prior to the issuance of these endorsements. Construction lenders should provide the title insurer with a foundation survey and obtain a Foundation Endorsement (OTIRO No.&nbsp;64) once the foundation is in place, because the assurances in these endorsements pertaining to encroachments will not apply to a building that is not in place at the time these endorsements are issued.

Restrictions, Encroachments, Minerals - Land under Development

(OTIRO Nos. 225-06 (same as survey) and 225.1-06 (same as portion of survey)). These endorsements insure that the land described in the title insurance policy is the same as the property described in the referenced survey.

Survey Endorsement

(OTIRO No.&nbsp;203-06 (unimproved land), 203.1-06 (improved land) and 203.2-06 (land under development)). The first, used with respect to unimproved property, insures that the property in question is in a particular zoning designation and that certain specified uses are allowed with that designation. The second, used with respect to improved property, insures against violations of zoning restrictions dealing with area, setback, height of a structure, and parking. The third is used when property is under development. OTIRO Nos. 203, 203.1, 203.2, and 203.3 may also be applicable. LEGAL OPINIONS &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Legal opinion letters issued by Oregon law firms typically follow or rely upon the Model Opinion promulgated by Oregon State Bar, as contained in the 2022 Report on Legal Opinions in Oregon Real Estate Transactions by the Real Estate and Land Use Section of the Oregon State Bar, Standing committee on Opinion Letters. &nbsp;

Oregon

Mortgage Law Summary

Continue reading the
Mortgage Law Summary for Oregon

Oregon

Mortgage Law Summary

Continue reading theMortgage Law Summary for Oregon

Continue reading the
Mortgage Law Summary for Oregon