The Posting Begins for Oregon Real Estate Deskbook

Excerpted from Oregon Real Estate Deskbook (OSB Legal Pubs 2014, in progress), chapter 6 Recording and Priorities.

By Chas Cleveland Abbe,
state underwriting counsel, Fidelity National Title Group, Portland.

To learn more about recording and priorities, go to BarBooks™, where you can also see what other chapters of this new book have been posted.

§6.5 OREGON’S RECORDING LAW

Oregon’s basic race-notice recording law is stated in ORS 93.640. Stripped of document types other than “conveyance,” ORS 93.640(1) states:

Every conveyance . . . affecting the title of real property within this state which is not recorded as provided by law is void as against any subsequent purchaser in good faith and for a valuable consideration of the same real property, or any portion thereof, whose conveyance . . . is first filed for record, and as against the heirs and assigns of such subsequent purchaser.

This phrasing protects (1) a subsequent purchaser (2) in good faith (3) for valuable consideration (4) who records first. The Oregon Supreme Court has grafted lack of notice onto the good-faith requirement. Thus, a subsequent purchaser or encumbrancer must take its interest “in good faith for value and without notice of the outstanding interests.” High v. Davis, 283 Or 315, 332–33, 584 P2d 725 (1978) (emphasis added). This was not always true. See § 6.10-1 (purchaser status, good faith, and valuable consideration).

The word conveyance in ORS 93.640(1) is construed broadly to include any document in the form of a conveyance, such as a mortgage, and is not limited to documents that transfer legal title. Watson v. Dundee Mortgage & Trust Inv. Co., 12 Or 474, 8 P 548 (1885). Nevertheless, ORS 93.640(1) expressly refers to the following: “conveyance, deed, land sale contract, assignment of all or any portion of a seller’s or purchaser’s interest in a land sale contract or other agreement or memorandum thereof affecting the title.” This phraseology “includes mortgages, trust deeds, and assignments for security purposes or assignments solely of proceeds, given by purchasers or sellers under land sale contract.” ORS 93.640(1). “Memorandum” is defined in ORS 93.640(1) and ORS 93.710(3).

The same race-notice language applies to an assignment of a sheriff’s certificate of sale of real property on execution or mortgage foreclosure if the assignment is not recorded within five days after its execution. ORS 93.640(2), ORS 93.530.

Other statutes omit the good-faith and valuable consideration language of ORS 93.640. In large measure, these statutes simply expand or clarify the roster of documents eligible for recording. For example, ORS 93.710(1) sets forth several additional recordable documents and notes that recordation of these documents constitutes notice to third persons of the rights of the parties irrespective of whether the party granted such interest is in possession of the real property. That said, the bona fide purchaser doctrine developed under ORS 93.640 is favored in the case law.

Under ORS 93.806, recordation of “[a]ny instrument creating a lien on unpaid rents and profits of real property . . . constitutes notice to third persons, and shall otherwise have the same effect as recordation pursuant to ORS 93.710.” This statute goes on to state that an instrument recorded under ORS 93.710 (as well as one recorded under ORS 93.806) “shall not be voidable by and shall not be subordinate to the rights of . . . [a] subsequent bona fide purchaser of real property.”

Recordation of a judgment affecting land “is notice to all persons” of the judgment and proceedings through which the judgment was recorded. ORS 93.730. A notice of pendency of an action creates notice at recording: “From the time of recording the notice, and from that time only, the pendency of the suit is notice, to purchasers and encumbrancers, of the rights and equities in the premises of the party filing the notice.” ORS 93.740. The recorded notice will cut off those persons whose interests are unrecorded and unknown, as well as those persons whose interests arise after recording of the notice. To support a notice of pendency, the action must be filed in court, and the subject of the action “must be an actual interest in real property, not merely a speculative future one.” Doughty v. Birkholtz, 156 Or App 89, 95, 964 P2d 1108 (1998) (recorded notice was wrongful when only pending proceeding was an administrative claim before the Construction Contractors Board); see Vukanovich v. Kine, 251 Or App 807, 285 P3d 733 (2012), rev den, 353 Or 203 (2013) (recorded notice was wrongful when a breach of contract claim for membership interest in a limited liability company that owned property did not “involve, affect, or bring into question any interest in the [real] property” identified in the notice); see generally § 6.8-1.

For judgment liens, ORS 18.165 establishes special rules that supersede previous statutes and case law. ORS 18.165 states:

    (1)     If a judgment with lien effect under ORS 18.150, 18.152 or 18.158 is entered or recorded in a county before a conveyance, or a memorandum of a conveyance, of real property of the debtor is recorded in that county, the conveyance of the judgment debtor’s interest is void as against the lien of the judgment unless:

    (a)     The grantee under the conveyance is a purchaser in good faith for a valuable consideration, the conveyance is delivered and accepted before the judgment is entered or recorded in the county where the property is located and the conveyance or memorandum of the conveyance is recorded within 20 days after delivery and acceptance of the conveyance, excluding Saturdays and legal holidays under ORS 187.010 and 187.020;

    (b)     The judgment creditor has actual notice, record notice or inquiry notice of a conveyance of the debtor’s interest to a grantee when the judgment is entered or recorded in the county;

    (c)     The conveyance by the debtor is a fulfillment deed entitled to priority over the judgment under ORS 93.645; or

    (d)     The conveyance is a mortgage, trust deed or other security instrument given by the debtor to secure financing for the purchase by the debtor of the real property described in the conveyance.

    (2)     For the purpose of subsection (1)(a) of this section, a memorandum of conveyance must contain the date of the instrument being memorialized, the names of the parties, a legal description of the real property involved and a description of the nature of the interest created. The memorandum must be signed by the person from whom the interest is intended to pass, and be acknowledged or proved in the manner provided for the acknowledgment or proof of deeds.

    (3)     As used in this section:

    (a)     “Conveyance” means a deed, a land sale contract, an assignment of all or any portion of a seller’s or purchaser’s interest in a land sale contract or any other agreement affecting the title of real property within this state, including a trust deed, a mortgage, an assignment for security purposes or an assignment solely of proceeds, given by a purchaser or seller under a land sale contract or given by a person with title to the real property.

    (b)     “Grantee” means:

    (A)     The person deemed to be the mortgagee under a trust deed pursuant to ORS 86.715; and

    (B)     Any other person to whom the interest that is the subject of a conveyance is intended to pass.

Various instruments not covered by the above provisions of ORS chapter 93 gain benefits or effect from recording. The following is a partial list of such instruments and the corresponding statutes. Additional instruments can be found in ORS 205.246 and the listing of involuntary liens can be found in § 6.9-3. Note that the law may accord special priorities to the liens associated with some of these instruments.

Instrument Citation
1 Writ of execution on real property ORS 18.870
2 Fixture filing and certain other UCC filings ORS 79.0501, ORS 205.246(1)(a)
3 Mortgage discharge ORS 86.120
4 Trust deed notice of default and other non-judicial foreclosure documents ORS 86.705 to 86.815
5 Correction of error for withdrawing a trust deed reconveyance or a trust deed trustee’s deed ORS 86.722, ORS 205.246(1)(z)
6 Subdivision or partition plat ORS 92.140, ORS 205.246(1)(u)
7 Order of vacation ORS 92.234, ORS 271.150, ORS 368.356
8 Request for notice to real property manager ORS 93.265
9 Department of Human Services or Oregon Health Authority request for notice of transfer or encumbrance ORS 93.268, ORS 411.694, ORS 416.350, ORS 205.246(1)(w)
10 Power of attorney ORS 93.670, ORS 696.030
11 Patents, judgments, official grants of land ORS 93.680
12 Documents, orders, decrees of the United States District Court ORS 93.760
13 Bankruptcy petitions, orders, and decrees ORS 93.770, ORS 205.246(1)(x)
14 Transfer on death deed; instrument revoking transfer on death deed ORS 93.948–93.979
15 Death certificate ORS 205.130(2)(c), ORS 432.124
16 Rerecording to correct a previously recorded instrument ORS 205.244
17 Written warranty agreement for new commercial or residential structure ORS 701.605, ORS 205.246(1)(y)
18 Affordable housing covenant ORS 456.280
19 Notice or order by the State Forester requiring reforestation of specific lands ORS 527.710, ORS 527.680, ORS 93.710(2)
20 Notice of designation of substantial damage to residential structure by flooding; notice of remedy of substantial damage ORS 105.780, ORS 205.246(1)(bb)–(cc)

Recordation has no effect unless the recordation is specifically required or authorized by statute. ORS 87.920 states that “except where filing of the document is specifically required or authorized by statute, no document filed for recording . . . shall create a lien or encumbrance upon or affect the title to the real or personal property of any person or constitute actual or constructive notice to any person of the information contained therein.” ORS 87.920 is not limited to ORS chapter 87 liens. The statute was enacted into law by the legislative assembly but was not added to or made a part of ORS chapter 87 or any series therein by legislative action. See ORS Preface, viii (2001).

Because the recording statutes are applied liberally, the impact of ORS 87.920 is unclear. The statute probably has a bearing on types of documents well outside the bounds of the recording statutes, for example, a notice of pendency of action recorded when no action is filed or a claim of lien for a lien not recognized under Oregon law. See § 6.7-1 (types of documents that may be recorded); § 6.8-1 (effect of recording).

Practice Tip: The differences between ORS 93.640 and ORS 93.710 and similar sections demonstrate the importance of prompt recording. The use of an escrow agent and the purchase of title insurance are two important means by which grantees and lenders may protect themselves against subsequent adverse claimants who win the race to the recorder. With an escrow, release of the consideration may be conditioned on title insurance coverage to the date of recording. With title insurance, a party may obtain indemnification against matters missed in a check of the recorder’s records.

A covenant for a private transfer fee is barred from recording, and a requirement for such a fee is void. Certain exemptions apply. ORS 93.269.

Certain discriminatory restrictions are barred from a conveyance or a contract to convey and are “void and unenforceable.” An affected owner may petition the circuit court to remove the provision from the title. ORS 93.270, ORS 93.272.

 

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