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“Home Sweet Home”: The Impact of Urban Growth on Real Estate Property Disclosures in Oregon

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With its lush landscapes and relative affordability, Oregon is rapidly becoming a sought-after place to live. During the pandemic, densely populated and expensive cities like San Francisco, Los Angeles, and Seattle are seeing an exodus of residents as many big-city dwellers flock to other locations for remote work.

As a result, buying and selling real estate in Oregon has skyrocketed in recent years. This interest, combined with rapid development to accommodate the growing population, has meant that Oregon neighborhoods are constantly expanding and changing. It also means that parties to real estate transactions need to be extra careful about how they fill out and review property disclosure forms.

Under Oregon law, a seller must disclose to the buyer any “material defects” known to the seller that would not be readily apparent to a buyer. These material defects are disclosed in a form called “Seller’s Property Disclosure Statement” and require the seller to disclose their personal knowledge of the property, which includes specific information about features like water sources, sewage systems, insulation, leaks, electrical systems, plumbing, drainage, and more. The otherwise straightforward questionnaire ends, however, with a tricky catch-all question: “Are there any other material defects affecting this property or its value that a prospective buyer should know about?”

This last question poses a significant challenge because it invites the seller to provide information not just about the property itself, but about potential outside factors that may impact the property’s value. For example, in developing neighborhoods that are seeing significant growth, there may be future plans to add a noisy freeway, modify school district boundary lines, or add a large-scale apartment complex to a previously sleepy area that could substantially increase foot and car traffic. Although neighborhoods will inevitably evolve over time, many sales disputes can be avoided simply by making sure to disclose information about future developments that may impact the desirability and value of the property. To that end, sellers should err on the side of over-disclosure and include information about upcoming changes to the neighborhood. Given the subjectivity about what qualifies as a “material defect,” disclosures should include arguably positive developments. For example, some might view the installation of a church down the street as a positive attribute and others might not.

But the onus is not just on the sellers. Buyers should also perform their own due diligence by researching a neighborhood before rushing into a sale. To avoid unwelcome surprises, buyers should request and examine public records that may shed light on future neighborhood developments. These public records include: local building permits, zoning applications, zoning restrictions, and other planning actions that can provide insight into future construction, building heights, and commercial use. Most importantly, these public records can set buyers’ expectations and help them find their “home sweet home.”

Taking these steps can help prevent disputes down the road: buyers will feel informed about their purchase, and sellers will reduce their exposure to claims. Ultimately, a win-win.