The governing statutes are ORS 105.462 to 105.490. ORS 105.464 sets forth a form of disclosure statement that, subject to limited exceptions, all sellers of Oregon residential property must complete. The disclosure statement consists of 50+ questions about the property being offered for sale. The representations are not warranties; they are based upon the seller’s best knowledge.
A buyer has five business days from seller’s delivery of the disclosure statement to revoke his/her offer by delivering a signed written statement of revocation to the seller. Buyers may waive the right of revocation.
Upon timely exercise of the right of revocation, the buyer has an absolute right to a return of the earnest money deposit. In other words, escrow must return the funds to the buyer, even if the seller objects.
The following sellers/properties are exempted from the disclosure law: (a) New construction that has never been occupied; (b) Sales by a financial institutions (or by foreclosure or deed-in-lieu of foreclosure); (c) Sales/transfers by a governmental agency; or (d) Sales by receivers, personal representatives, trustees, conservators, or guardians – if appointed by a court.
Tip: Buyers should be careful in how they exercise the right of revocation. First, it must be timely delivered to the seller. Second, it should not say more than that the seller is exercising their right of revocation. I recommend citing the statute, ORS 105.475. If the buyer gives a “reason,” e.g. there is asbestos in the construction materials, it creates the impression that he/she is trying to cancel the transaction based upon a contractual contingency, e.g. the inspection contingency. Termination under a contingency gives the buyer the right to demand that escrow return the deposit, but if the seller objects, escrow cannot comply. With the exception of a buyer’s unilateral right to demand a return of the deposit following a timely exercise of the right of revocation, escrow only acts upon joint instructions from the seller and buyer.
Out of an abundance of caution, the notice of revocation should also be timely delivered to the title company and the seller’s real estate agent. When timely exercised, the title company is required to disburse the deposit back to the buyer, notwithstanding the seller’s objections.