Oregon

Oregon Condominium Conversions

Definitions

  1. “Declarant” means a person who records a declaration under ORS 100.100
  2. “Declaration” means the instrument described in ORS 100.100 by which the condominium is created and as modified by any amendment recorded in accordance with ORS 100.135 or supplemental declaration recorded in accordance with ORS 100.120.
  3. “General common elements,” unless otherwise provided in a declaration, means all portions of the condominium that are not part of a unit or a limited common element
  4. “Sale” includes every disposition or transfer of a condominium unit, or an interest or estate therein, by a developer, including the offering of the property as a prize or gift when a monetary charge or consideration for whatever purpose is required by the developer

Statutory Framework - The Oregon Condominium Act (ORS Chapter 100) governs:

    • Formation
    • Operation
    • Sales
  1. Ownership Interests - Most condominiums consist of two types of real property: units and common elements. Each type is governed by substantially different rules regarding ownership, use, operation, and responsibility for maintenance, repair, and replacement.
  2. Units - The unit consists of the cubic air space created by the horizontal and vertical boundaries described in a condominium declaration. It is a separate parcel of real property capable of being platted, conveyed, and encumbered like any traditional parcel of real property.
  3. Common Elements - Generally, the balance of the property covered by a condominium plat not constituting units is called common elements. While units may be individually conveyed and encumbered, common elements, as their name suggests, are owned in common by all unit owners as tenants in common. Under the Oregon Condominium Act, common elements may not be conveyed, encumbered, or subjected to lien or attachment except under special circumstances. See ORS 100.440.
  4. General vs. Limited Common Elements - Common elements are further divided into two types: general common elements and limited common elements, which are distinguished from each other on the basis of right of use. A general common element is one that all unit owners are entitled to use on a nonexclusive, theoretically equal, basis, while use of a limited common element is restricted to less than all of the units (and typically to only one). See ORS 100.005(7), (16), (18). Some typical examples of limited common elements in residential condominium developments are decks, patios, assigned parking spaces, and courtyards. Limited common elements must be designated as such on the condominium plat, and their assignment to units and the description of use rights and limitations must be set forth in the condominium declaration and bylaws.
  5. Formation - To submit any property to the provisions of the Oregon Condo­minium Act (Condominium Act), the declarant must record a condominium declaration, bylaws, and plat in the office of the recorder of the county in which the property is located. ORS 100.100(1), ORS 100.115(1), ORS 100.410(1)
  6. Declaration - The required contents of any condominium declaration are set forth in ORS 100.105. In summary, for other than staged or flexible condominiums, the declaration must include a description of the property being submitted to unit ownership, a statement of the interest in the property, the name of the condominium project, the unit designation, a statement that each unit’s location is shown on the plat, a description of the boundaries and area of each unit, a description of the general common elements, and an allocation to each unit of an undivided interest in the common elements and the method used to establish that allocation. ORS 100.105(1).
  7. Bylaws - The Oregon Condominium Act (Condominium Act) requires the declarant to adopt on behalf of the association of unit owners the initial bylaws governing the administration of the condominium. ORS 100.410(1).
  8. Plat - A plat must be prepared and recorded simultaneously with the condominium declaration. ORS 100.115(1). The plat must comply with the requirements of ORS 92.050, ORS 92.060(1)–(2), ORS 92.080, and ORS 92.120 (requirements for surveying, preparing, filing, and recording plats). The plat must show the location of all buildings and public roads; show the designation, location, dimensions, and area of each unit, including the vertical and horizontal boundaries of each unit and the common elements to which each unit has access; identify and show, to the extent feasible, the location and dimensions of all limited common elements described in the declaration; and include a statement of a registered engineer, architect, or surveyor certifying that the plat fully and accurately depicts the boundaries of the units of the buildings and that construction of the units and buildings as depicted on the plat has been completed. ORS 100.115(1)(a)–(d).

Approvals

    1. Oregon Real Estate Agency - The Oregon Real Estate Agency carries out the provisions of the Condominium Act. See ORS 696.490(2) (appropriating funds for that purpose). The agency will review for substance and form both the original executed condominium declaration and bylaws, and copies of the condominium plat. The agency will also require the submission of a subdivision guaranty, a form of title insurance in favor of the agency, covering the property covered by the declaration.
    2. City or County - Depending on whether the property is located in a city or in an unincorporated county, the local government surveyor, tax collector, and tax assessor must review and approve the condominium declaration and plat. The city or county surveyor may be required to execute the plat.

Disclosure Statement

    • General Description
    • Sale Agreements
    • Warranties
    • Common Expenses, Assessment and Budget
    • Operation and Management
    • Declarant / Developer Rights
    • Governing Documents

Reserves & Reserve Studies

    1. The Oregon Condominium Act requires all new condominiums to establish a reserve fund. The amount of reserves is based on a reserve study.  The reserve study should be prepared by a qualified individual and identify all property and components with a useful life of 1-30 years.  Reserves are only required for property or components which the Association is obligated to maintain, repair, or replace. 

Conversions 

  1. A conversion condominium is a condominium in which there is a building, improvement, or structure that was occupied before any sales activity and that is at least partly residential in nature. ORS 100.005(10). The legal requirements for nonconversion condominiums apply with equal force to conversion condominiums.
  2. Notice to Tenants - The declarant must give each tenant a notice of conversion at least 30 days before the declarant presents an offer to sell the unit to the tenant. ORS 100.305(3). The notice of conversion must include the following information:
      • A statement that the declarant intends to create a conversion condominium;
      • General information relating to the nature of condominium ownership;
      • A statement that the notice does not constitute a notice to terminate the tenancy;
      • A statement regarding whether the tenant’s unit will be substantially altered;
      • A statement regarding whether the declarant intends to offer the unit for sale and, if so, a description of the tenant’s rights under ORS 100.310(1) to (3); a good-faith estimate of the approximate price range for which the unit will be offered for sale to the tenant; a good-faith estimate of the monthly operational, maintenance, and other common expenses or assessments attributable to the unit; a statement that financial assistance may be available from a local governing body, the Housing and Community Services Department, or a regional housing center; and a statement that the landlord may not terminate the tenancy without cause if the termination would take effect; and
      • A statutory notice about restrictions on rent increases.
      • The notice must be hand-delivered to the tenant’s dwelling unit or sent to the tenant at the unit’s address by certified mail, return receipt requested. ORS 100.305(1)(f).

Right of First Refusal - Before the declarant sells any unit to a third party in a conversion condominium without substantial renovation of the unit, the declarant must first offer to sell the unit to the tenant who occupies it. The terms of the offer are specified by statute. The offer terminates 60 days after the tenant receives it or upon the tenant’s earlier written rejection of the offer, and it must be accompanied by all of the applicable disclosure statements issued by the Real Estate Commissioner as required by the Oregon Condominium Act.

Timing - The Oregon Condominium Act provides that the notice of conver­sion must be given to a tenant at least 30 days before the declarant presents the right of first refusal to the tenant. ORS 100.305(3). In addition, the notice of conversion must be given at least 120 days before the conversion condominium declaration is recorded. ORS 100.305(1).

Regulation of Sales - Unlike condominium statutes in other states, the Oregon Condo­minium Act relates only to the sale (or resale) of units by developers and not to casual resales of single units by individual owners. The act defines a developer as a declarant or any person who purchases an interest in a condominium from a declarant, successor declarant, or subsequent developer for the primary purpose of resale. ORS 100.005(13).

Real Estate Contract Checklist

Real estate contracts can be complicated documents. Here's a checklist to make sure the necessary terms and conditions are covered in the contract.

  1. Date
  2. Seller Information
  3. Buyer Information
  4. Real Property Legal Description (not just address)
  5. Personal Property Included or Excluded
  6. Title to Convey
  7. Title Exceptions
  8. Purchase Price
  9. Down Payment
  10. Interest Rate
  11. Installment Periods
  12. Date of First and Last Installment
  13. Late Charge
  14. Prepayment Penalty
  15. Portion of Purchase Price to Allocate Toward Personal vs. Real Property
  16. Prior Encumbrances
  17. Insurance Requirements
  18. Zoning of Property
  19. Exhibits
  20. Possession Dates
  21. Default Provisions

2017 Legislative Update

Oregon and Washington law makers are in session. There are several proposed house and senate bills which impact condominium and homeowner associations. Here's a brief summary, along with links to review the language of the proposed legislation.

Oregon

SB 470 - Would prohibit CC&Rs, Bylaws, or Articles of Incorporation from prohibiting or restricting certified family child care homes. Read bill.

HB 2722 - In the event of a drought or water shortage, a condominium association may not require owners to irrigate landscaped areas. Read bill.

HB 3056 - Associations often file lawsuits against delinquent owners. If the association receives a court judgment, this bill clarifies that the judgment does not operate to release or extinguish the lien on the owner’s property. Read bill.

HB 3057 - This bill adds criteria for a board of directors to use when updating or reviewing the association’s reserve study. In addition, the proposed legislation changes the timeframe for financial reviews from 180 days to 300 days. Read bill.

HB 3094 - The current laws governing the restatement of governing documents is vague. This bill clarifies the meaning of “restatement” and establishes requirements for the board to follow when preparing and recording a restatement. Read bill. 

Washington

SB 5134- This bill will give homeowners an objective timeframe of 45 days notice to be heard by the board of directors before the association may impose or collect charges for late payments of assessments. Read Bill.

SB 5250- Often times, it is very difficult for associations to obtain the required amount of votes to amend the bylaws due to non-participation. This law provides an alternative process for acquiring and counting votes to amend condominium bylaws.  Read Bill.

 

 

Financial Review Requirements for Oregon Planned Communities

The following outlines the requirements for financial reviews in Oregon Planned Communities.  The requirements are found in ORS 94.670.

 Annual assessments less than 75k  Community Created after 1-1-2004  Annual Assessments more than 75k
  • Review required only if association receives petition signed by majority of owners
  • Review required only if association receives petition signed by majority of owners
  • Requires review of financial statement
  • Must occur within 180 days after the end of the fiscal year
  • Review must be done by an independent CPA
  • May skip review if 60% of the owners agree