Key Takeaways
- Oregon follows the Statute of Frauds requiring real estate contracts to be in writing
- Valid contracts require offer, acceptance, consideration, legal capacity, and lawful purpose
- Earnest money must be deposited into the principal broker's clients' trust account
- Oregon real estate contracts commonly use standardized forms from Oregon REALTORS
- Contingencies must be clearly specified with deadlines in the contract
Oregon Contract Requirements
Oregon real estate contracts must meet specific legal requirements to be valid and enforceable.
Statute of Frauds
Under Oregon's Statute of Frauds, contracts for the sale of real property must be:
- In writing
- Signed by the party to be charged (or their authorized agent)
Key Point: Oral agreements to sell real estate are generally unenforceable in Oregon.
Essential Elements of a Valid Contract
| Element | Description |
|---|---|
| Offer | Clear proposal with definite terms |
| Acceptance | Unequivocal agreement to the offer's terms |
| Consideration | Something of value exchanged (usually money) |
| Legal capacity | Parties must be competent to contract |
| Lawful purpose | Contract cannot be for illegal purposes |
| In writing | Required for real estate contracts |
Common Contract Forms
Oregon real estate professionals typically use:
| Form | Use |
|---|---|
| Oregon Real Estate Sale Agreement | Standard purchase agreement |
| Residential Sale Agreement | Residential property transactions |
| Commercial Sale Agreement | Business property transactions |
| Listing Agreement | Seller representation |
| Buyer Representation Agreement | Buyer representation |
| Property Management Agreement | Property management services |
Note: Oregon REALTORS provides standardized forms used by many licensees.
Earnest Money
Earnest money (also called a good faith deposit) shows the buyer's serious intent:
Handling Requirements
| Requirement | Details |
|---|---|
| Deposit timeline | As specified in contract |
| Where deposited | Principal broker's clients' trust account |
| Who holds | Principal broker (not broker) |
| Disbursement | Per contract terms or mutual agreement |
Important: Only principal brokers can maintain clients' trust accounts in Oregon.
Common Contract Contingencies
Contingencies allow parties to exit the contract if certain conditions aren't met:
Financing Contingency
| Element | Details |
|---|---|
| Purpose | Buyer can cancel if financing not obtained |
| Deadline | Must apply for loan within specified days |
| Documentation | May require denial letter from lender |
Inspection Contingency
| Element | Details |
|---|---|
| Purpose | Buyer can inspect property and negotiate repairs |
| Timeline | Inspection period specified in contract |
| Options | Accept, negotiate repairs, or cancel |
Appraisal Contingency
| Element | Details |
|---|---|
| Purpose | Protects buyer if property appraises below price |
| Options | Seller reduce price, buyer pay difference, or cancel |
Home Sale Contingency
| Element | Details |
|---|---|
| Purpose | Buyer must sell current home first |
| Timeline | Specified deadline for sale |
| Kick-out clause | Seller may continue marketing |
Termination of Contracts
Contracts may be terminated by:
| Method | Description |
|---|---|
| Performance | Both parties fulfill obligations |
| Mutual agreement | Both parties agree to cancel |
| Contingency not met | Condition specified in contract fails |
| Breach | One party fails to perform |
| Impossibility | Performance becomes impossible |
Time is of the Essence
Many Oregon real estate contracts include a "time is of the essence" clause:
- Deadlines are strict and legally binding
- Missing a deadline may constitute breach
- Extensions require written agreement
Exam Tip: Understand the difference between an executory contract (not yet performed) and an executed contract (fully performed).
Under Oregon's Statute of Frauds, which statement is TRUE about real estate contracts?
Where should earnest money be deposited in an Oregon real estate transaction?