Glossary of Real Estate Terms (Oregon) – O
Offer – Under real estate law, an offer made in writing and indicating the willingness by a prospective buyer to purchase the property of another. If an offer is accepted on the same terms and that acceptance is communicated to the one making the offer, it is said that there is a “meeting of the minds” and a legally binding contract is formed. The person making the offer is known as the “offeror” and the one to whom the offer is made in known as the “offeree.” [PCQ Note: The mere listing or advertising of a property with or without a real estate agent is not an “offer” that can be accepted by a buyer to create a binding contract. The listing or advertising of property for sale is deemed only an invitation for buyers to submit offers. Thus, an owner of listed property is entitled to reject a full price offer. The major exception is for auctions held “without reserve” meaning that the auctioneer seller must sell for the highest auction price received regardless of amount. In essence, the auctioneer is actually making an “offer” to the audience, who, by their “bid” “accept” the offer].
Option – The right to purchase one’s property (usually) at a given price within an agreed upon period of time. Options (or a memorandum thereof) should be recorded so that the owner of the property does not convey the interest to a third party, who will not be bound under the terms of the option agreement. Options can be quite detailed setting forth not only the option period, but the method for exercising the right to purchase, and once exercised, the timing for the sale to close. Options must be supported by separate consideration, and are different from earnest money agreements primarily because the option money is not refundable and the right of purchase can last much longer than that usually set forth in an earnest money agreement. Earnest money agreements are rarely recorded, while options frequently are.
Oregon Association of Realtors® (“OAR”) – The statewide Realtor® organization to which all Oregon Realtors® belong. It is headquartered in Salem, Oregon.
Oregon Real Estate Forms, LLC (“OREF”) – The statewide real estate provider of Realtor® forms. It is a for-profit corporation (as opposed to non-profit) and is owned jointly by the Portland Metropolitan Association of Realtors® (50%), the Eugene Association of Realtors® (30%) and the Oregon Association of Realtors® (20%). (See, http://www.orefonline.com)
Origination Fee – The charge for processing a loan. It includes preparation of the loan documents, submitting and evaluating the application, verifying the borrower’s credit, and coordinating and arranging other related activities, such as the appraisal, etc. It is frequently expressed in “points” with one point equaling one percent of the loan amount.
Owner Financing – A home sale in which the seller agrees to “carry-back” or “take back” a promissory note secured by a trust deed (or mortgage) from the buyer of the subject property. The debt may be for all or part of the purchase price. Owner financing is most common when the buyer cannot qualify for a loan from a bank, or cannot come up with all of the down payment. For example, in the case of an 80% bank loan, a buyer with only 10% down may try to get the owner to “finance” the additional 10%, by taking back a note and trust deed for that amount. (The owner does not actually pay cash to the bank on behalf of the buyer at closing.) Some lenders holding a first trust deed or mortgage may prohibit this, as they want to have the buyer fully invested up to the entire 20%.
Ownership – This generally refers to one’s entire right, title and interest in real or personal property. One has full “ownership” even though they may owe money on the property. Ownership should not be confused with “equity.” When ownership is transferred, the documentation of such transfer is through the delivery and recording of a deed, if real property, and a bill of sale, if personal property.
Owner’s Policy of Title Insurance – The policy issued to the purchaser-owner of real property guaranteeing to them that they have marketable title, free and clear of any objectionable liens or encumbrances. An owner’s policy will include a list of exceptions to this guarantee for many standard items recorded against the property such as deed restrictions, utility easements, and current, but unpaid property taxes. And since the title insurance company does not physically inspect (nor survey) the property – they just review the public records – the owner’s policy also excludes those matters an inspection or survey would reveal, thus leaving it to the buyer and buyer’s experts to perform these on-site functions. The “preliminary” title report is issued at the start of the transaction, shortly after escrow is opened. It is not “insurance” and is preliminary only. The owner’s policy is issued at the end of the transaction, shortly after closing (“settlement”). It not only informs the buyer-owner of the status of record title, but it also insures them that there are no undisclosed title defects, subject only to the standard and special exceptions. In Oregon, it is customary for the seller to pay for the buyer’s owner’s policy.