DOCUMENTATION OF REAL ESTATE TRANSACTIONS Table of Contents 1 Earnest Money Agreement; Letter of Intent ...................................................................... Paul D. Schultz 2 Purchase and Sale Agreement ................................ Christopher T. Matthews Susan B. Cude 3 Right of First Refusal ........................................................ Mark A. Manulik 4 Option to Purchase Real Property ...................................... Mark A. Manulik 5 Contract of Sale ............................................................ Eugene A. Frassetto Andrew I. Davis 6 Mortgage, Assignment of Rents, Security Agreement, and Fixture Filing .............................................................. Jonathon L. Goodling 7 Commercial Trust Deed, Assignment of Rents, Security Agreement, and Fixture Filing .............................................................. Jonathon L. Goodling 8 Residential Trust Deed, Assignment of Rents, Security Agreement, and Fixture Filing .............................................................. Jonathon L. Goodling 9 Commercial Lease ............................................................... Thomas R. Page 10 Ground Lease ...................................................................... Eugene L. Grant 11 Residential Lease .......................................................... David A. Hilgemann 12 Agricultural Lease ......................................................... Paul R. J. Connolly 13 Like-Kind Exchange ......................................................... Ronald A. Shellan 14 Lawyers’ Opinions in Oregon Real Estate Transactions ......................................... David P. Weiner, Editor 15 Lease Assignment and Sublease ............................. Christopher M. Walters Timothy M. Parks
Transcript
DOCUMENTATION OF
REAL ESTATE TRANSACTIONS
Table of Contents
1 Earnest Money Agreement; Letter of Intent......................................................................Paul D. Schultz
2 Purchase and Sale Agreement................................Christopher T. MatthewsSusan B. Cude
3 Right of First Refusal........................................................Mark A. Manulik
4 Option to Purchase Real Property......................................Mark A. Manulik
5 Contract of Sale............................................................Eugene A. FrassettoAndrew I. Davis
6 Mortgage, Assignment of Rents, Security Agreement, and Fixture Filing ..............................................................Jonathon L. Goodling
7 Commercial Trust Deed, Assignment of Rents, Security Agreement, and Fixture Filing ..............................................................Jonathon L. Goodling
8 Residential Trust Deed, Assignment of Rents, Security Agreement, and Fixture Filing ..............................................................Jonathon L. Goodling
9 Commercial Lease...............................................................Thomas R. Page
10 Ground Lease......................................................................Eugene L. Grant
11 Residential Lease..........................................................David A. Hilgemann
12 Agricultural Lease.........................................................Paul R. J. Connolly
13 Like-Kind Exchange .........................................................Ronald A. Shellan
14 Lawyers’ Opinions in Oregon Real Estate Transactions.........................................David P. Weiner, Editor
15 Lease Assignment and Sublease .............................Christopher M. WaltersTimothy M. Parks
FUNDAMENTALS OFREAL ESTATE TRANSACTIONS
Table of Contents
1 The Lawyer in a Real Estate Transaction
(1992 ed & 2001 supp)........................................................Stanley M. SamuelsRandall B. Bateman
(2001 supp).......................................................................Chresten J. Gram
2 Ethical Considerations in Real Estate Transactions
(1992 ed)...........................................................................Allen E. Gardner(2001 supp)............................................................................Peter R. Jarvis
3 Financial Aspects ofReal Estate Investment
(1992 ed)...............................................................................Arlie Hutchens(2001 supp).....................................................................Laura L. Takasumi
4 Escrows and Closing(1992 ed & 2001 supp)................................................................Don G. Carter(2001 supp)............................................................Jonathan M. Radmacher
5 Title Insurance(1992 ed & 2001 supp).............................................................Dean P. Gisvold
David R. Aldrich
6 Securities Issues inReal Estate Transactions
(1992 ed)..........................................................................Gregg I. EskenaziRobert T. Currey-Wilson
(2001 supp)........................................................................James G. Harlan
7 Foreign Investment inUnited States Real Estate
(1992 ed).........................................................................Michael R. ChellisStephen M. Seidel
(2001 supp)....................................................................Gregory W. Engrav
8 Warranties in Real Estate Sales(1992 ed & 2001 supp)..........................................................Stan N. Rotenberg(2001 supp)..............................................................................Kelly Meltzer
Fundamentals of Real Estate Transactions (continued)
9 Bankruptcy Issues for Real Estate Practitioners
(1992 ed)...........................................................................Kevin D. PadrickDavid W. Hercher
10 Environmental Liability and Real Estate Transactions
(1992 ed).....................................................................................Jan L. Betz(2001 supp)..............................................................................Steven F. Hill
Hong N. Huynh
11 Water Rights and Transactions(2001 ed)........................................................................William H. Holmes
David E. FilippiJennie L. Bricker
PRINCIPLES OF OREGONREAL ESTATE LAW
Table of Contents
1 Estates in Land(1995 ed)................................................................................Don K. Lloyd(1999 supp).........................................................................Jeffrey S. Davis
2 Concurrent Estates(1995 ed & 1999 supp)...........................................................Jean M. DeFond
3 Easements(1995 ed & 1999 supp)..........................................................Mark A. Manulik(1995 ed)..........................................................................Gary A. Maguire(1999 supp)....................................................................Gregory D. Fullem
4 Covenants, Conditions, and Restrictions(1995 ed & 1999 supp)...........................................................Eugene L. Grant
5 Statute of Frauds(1995 ed & 1999 supp)...........................................................Alan K. Brickley
6 Conveyances(1995 ed & 1999 supp).............................................Donald A. Gallagher, Jr.
7 Description of Land(1995 ed & 1999 supp)...........................................................Thomas R. Page
8 Recording and Priorities(1995 ed & 1999 supp).......................................................C. Cleveland Abbe
9 Marketable Title(1995 ed & 1999 supp)......................................................Michael G. Magnus
10 Highway Access(1995 ed).........................................................................Sandra Campbell(1999 supp).....................................................................Linda M. Bolduan
Joseph W. West
11 Fixtures(1995 ed).........................................................................Janet M. Gravdal(1999 supp).....................................................................Milton C. Lankton
2002 Rev
REAL ESTATE DISPUTESCONTENTS
1 Remedies of Purchaser for Breach of a Land Sale Contract
(1993 ed & 2002 supp) . . . . . . . . . . . . . . . . . . . Charles R. Markley
PAUL B. HEATHERMAN, B.S., Humboldt State University (1985); J.D.,Willamette University (1993); member of the Oregon State Bar since 1993;partner, Babb Heatherman LLP, Bend.
KEVIN J. MCCARTY, B.S., J.D., Willamette University (1986, 1989);member of the Oregon State Bar since 1989; sole practitioner, Bend.
*The authors thank the Honorable Michael Marcus for his accomplishmentswith the original version of this chapter.
The case citations in this chapter were checked for overrulings and reversals through March2002. The ORS citations were checked through 2001.
I. INTRODUCTIONA. (§3.1) Scope of Chapter B. (§3.2) Coverage of the Oregon Residential
Landlord and Tenant ActC. (§3.3) Exclusions D. (§3.4) Tenancies Subject to ORLTAE. (§3.5) Commercial and Other Tenancies
II. EVALUATION OF REMEDIESA. (§3.6) Forcible Entry and Detainer ActionsB. (§3.7) Actions for DamagesC. (§3.8) Miscellaneous Actions
3-22002 ed
III. FORCIBLE ENTRY AND DETAINER A. (§3.9) Nature and PurposeB. (§3.10) JurisdictionC. (§3.11) VenueD. Notice Preceding an FED Action
1. (§3.12) Notice in General2. (§3.13) Service of Notice in General3. (§3.14) Notice of Termination of Periodic
Tenancy Without CauseE. Termination for Nonpayment of Rent
F. (§3.17) Termination of Residential Tenancy forPersonal Injury, Property Damage, orOutrageous Conduct
G. (§3.18) Termination of Residential Tenancy forUnlawful Occupancy
H. Termination for Cause1. (§3.19) Residential Tenancies2. (§3.20) Nonresidential Tenancies
I. Pleadings in FED Actions1. (§3.21) Complaint2. (§3.22) Joinder of FED with Action for Rent3. (§3.23) Answer
J. Commencement of Action and Trial1. (§3.24) Filing Fees2. (§3.25) Service of Process3. (§3.26) Representation4. (§3.27) First Appearance5. (§3.28) Continuance6. (§3.29) Trial
K. General Defenses to FED Actions1. (§3.30) Defenses Available in Residential and
VI. EXECUTION OF JUDGMENTA. (§3.65) Execution by the SheriffB. (§3.66) Abandoned Property Remedies
VII. REVIEWA. (§3.67) Undertaking on AppealB. (§3.68) Writ of ReviewC. (§3.69) Mootness
VIII. MANUFACTURED HOMESA. (§3.70) DefinitionsB. (§3.71) Legal Distinctions to Other
Residential Tenancies
I. INTRODUCTION
A. (§3.1) Scope of ChapterThis chapter discusses the law relating to disputes between
landlords and tenants in both residential and commercial tenancies. Thelaw governing residential landlords and tenants is set forth in ORSchapter 90, the Residential Landlord and Tenant Act (ORLTA) (seeORS 90.105). This ORS chapter was heavily amended in 1999, so use
Residential Landlord-Tenant Disputes / §3.3
3-52002 ed
caution when reading older cases that refer to these statutes. The mostcommon landlord-tenant action is an action for forcible entry anddetainer (“FED action”), which is governed by ORS 105.105–105.165and is discussed at length in §§3.9–3.57, infra.
NOTE: The words nonresidential and commercial are usedinterchangeably in this chapter. This chapter cites frequently to theUniform Residential Landlord and Tenant Act, promulgated in1972 by the National Conference of Commissioners on UniformState Laws. See www.law.upenn.edu/bll/ulc/fnact99/1970s/urlta72.htm.This chapter is not intended as an in-depth analysis of mobile(manufactured) home tenancies to which ORS 90.505–90.875apply.
See also chapter 13, infra, which discusses commercial leasedisputes and remedies.
B. (§3.2) Coverage of the Oregon ResidentialLandlord and Tenant Act
In many situations, ORLTA prescribes a different result than wouldoccur in tenancies not covered by ORLTA. For example, the common-law principle of waiver as it relates to accepting late rent is riddled withseveral fact-specific exceptions under ORS 90.415. It is thereforeimportant to be familiar with the scope of ORLTA’s application.Generally, the provisions of ORLTA apply to persons entitled under anoral or a written rental agreement to occupy a structure or a portion ofa structure used as a home, residence, or sleeping place by one personwho maintains a household, or by two or more persons who maintain acommon household. ORS 90.100(8). A “roomer” under ORS 90.100(33)need not occupy a dwelling or room to the exclusion of others. Torbeckv. Chamberlain, 138 Or App 446, 451–452, 910 P2d 389 (1996).
For the manufactured home and floating home provisions ofORLTA, see §3.70, infra.
C. (§3.3) Exclusions The following types of living situations are excluded from ORLTA
“unless created to avoid the application” of ORLTA:
(1) Residence at a public or private institution if the residence isincidental to detention, or to medical, geriatric, educational, counseling,religious, or similar service. However, ORLTA covers “residence in off-campus nondormitory housing.” ORS 90.110(1).
§3.3 / Residential Landlord-Tenant Disputes
3-62002 ed
(2) Occupancy under a contract of sale if the occupant is thepurchaser or a person who succeeds to the interest of the purchaser.ORS 90.110(2). Thus, ORLTA applies to occupancy under a lease-option agreement before the option is exercised because a lease-optionagreement is generally considered to be a residential rental agreementunless and until the option to purchase is exercised. See Rockwell v.Nelson, 157 Or App 269, 274, 970 P2d 666 (1998), rev. denied, 328 Or365 (1999). Note that a contract purchaser’s tenant does not “succeed”to the purchaser’s interest, and is not excluded from ORLTA. In thatsituation, both the seller and the buyer are considered landlords withinthe meaning of ORS 90.100(19) if the seller retains title.
(3) Occupancy by a member of a fraternal or social organizationin the portion of the structure operated for the benefit of theorganization. ORS 90.110(3).
(4) Transient occupancy in a hotel or motel. ORS 90.110(4). Thisexclusion is strictly constrained by ORS 90.100(41), which ensures thatORLTA applies to residential hotel and motel occupancies. Tax andlicensing designations are not dispositive. See City of Portland v.Carriage Inn, 67 Or App 44, 676 P2d 943 (1984). The exclusion isavailable only if (a) rent is charged daily and is not collected more thansix days in advance, (b) maid and linen service is offered at least everytwo days, and (c) occupancy does not exceed 30 days. ORS 90.100(41).
(5) Occupancy of an employee of a landlord whose right tooccupancy is conditional on employment in and about the premises.ORS 90.110(7). Note, however, that ORS 91.120 requires 24 hours’written notice (or longer if so provided by an employment agreement)for eviction of such an employee. If the employee does not move afternotice, the landlord or the employer may evict only through the FEDprocess.
(6) Occupancy by a condominium unit owner or a holder of aproprietary lease in a cooperative. ORS 90.110(8).
(7) Occupancy under a rental agreement covering premises usedby the occupant primarily for agricultural purposes. ORS 90.110(9).This provision should not exclude farmworker housing when theworker’s duties are not performed on the premises as defined inORS 90.100(28). See also 36 Op Att’y Gen 332 (Or 1973).
(8) Additional exclusions include vacation occupancies (ORS90.100(42)) and squatters (ORS 90.100(36)).
REGULATION AND TAXATIONOF REAL ESTATE
Table of Contents
1 Ad Valorem Taxes(1995 ed)..............................................................................John H. Gadon(1999 supp)................................................................Christopher Robinson
2 Special Assessments(1995 ed & 1999 supp)........................................................Adrianne Brockman
3 Dedication of Private Land to Public Use(1995 ed)............................................................................Kathy A. Lincoln(1995 ed & 1999 supp)...........................................................Gerald G. Watson
4 Vacation and Abandonment(1995 ed & 1999 supp).....................................................Marilyn Moylan Wall
5 Partitions and Subdivisions(1995 ed & 1999 supp)..................................................................Dan R. Olsen(1999 supp).............................................................................Shelley Fuller
6 Real Estate Licensees(1995 ed & 1999 supp)...............................................................Gile R. Downes
7 Development and Sale of Condominiums(1995 ed & 1999 supp).....................................................P. Stephen Russell III
J. David Bennett
8 Timesharing(1995 ed & 1999 supp)...............................................................A. Richard Vial(1995 ed).......................................................................Thomas M. Johnson
9 Representing Homeowner Associations(1995 ed & 1999 supp)........................................................Karna R. Gustafson(1995 ed)............................................................................J. David Bennett
P. Stephen Russell III
10 Development and Sale of Planned Unit Developments and Planned Communities
(1995 ed & 1999 supp).............................................................J. David Bennett(1995 ed)..................................................................... Karna R. Gustafson
2002 Rev
REAL ESTATE DISPUTESCONTENTS
1 Remedies of Purchaser for Breach of a Land Sale Contract
(1993 ed & 2002 supp) . . . . . . . . . . . . . . . . . . . Charles R. Markley
PAUL B. HEATHERMAN, B.S., Humboldt State University (1985); J.D.,Willamette University (1993); member of the Oregon State Bar since 1993;partner, Babb Heatherman LLP, Bend.
KEVIN J. MCCARTY, B.S., J.D., Willamette University (1986, 1989);member of the Oregon State Bar since 1989; sole practitioner, Bend.
*The authors thank the Honorable Michael Marcus for his accomplishmentswith the original version of this chapter.
The case citations in this chapter were checked for overrulings and reversals through March2002. The ORS citations were checked through 2001.
I. INTRODUCTIONA. (§3.1) Scope of Chapter B. (§3.2) Coverage of the Oregon Residential
Landlord and Tenant ActC. (§3.3) Exclusions D. (§3.4) Tenancies Subject to ORLTAE. (§3.5) Commercial and Other Tenancies
II. EVALUATION OF REMEDIESA. (§3.6) Forcible Entry and Detainer ActionsB. (§3.7) Actions for DamagesC. (§3.8) Miscellaneous Actions
3-22002 ed
III. FORCIBLE ENTRY AND DETAINER A. (§3.9) Nature and PurposeB. (§3.10) JurisdictionC. (§3.11) VenueD. Notice Preceding an FED Action
1. (§3.12) Notice in General2. (§3.13) Service of Notice in General3. (§3.14) Notice of Termination of Periodic
Tenancy Without CauseE. Termination for Nonpayment of Rent
F. (§3.17) Termination of Residential Tenancy forPersonal Injury, Property Damage, orOutrageous Conduct
G. (§3.18) Termination of Residential Tenancy forUnlawful Occupancy
H. Termination for Cause1. (§3.19) Residential Tenancies2. (§3.20) Nonresidential Tenancies
I. Pleadings in FED Actions1. (§3.21) Complaint2. (§3.22) Joinder of FED with Action for Rent3. (§3.23) Answer
J. Commencement of Action and Trial1. (§3.24) Filing Fees2. (§3.25) Service of Process3. (§3.26) Representation4. (§3.27) First Appearance5. (§3.28) Continuance6. (§3.29) Trial
K. General Defenses to FED Actions1. (§3.30) Defenses Available in Residential and
VI. EXECUTION OF JUDGMENTA. (§3.65) Execution by the SheriffB. (§3.66) Abandoned Property Remedies
VII. REVIEWA. (§3.67) Undertaking on AppealB. (§3.68) Writ of ReviewC. (§3.69) Mootness
VIII. MANUFACTURED HOMESA. (§3.70) DefinitionsB. (§3.71) Legal Distinctions to Other
Residential Tenancies
I. INTRODUCTION
A. (§3.1) Scope of ChapterThis chapter discusses the law relating to disputes between
landlords and tenants in both residential and commercial tenancies. Thelaw governing residential landlords and tenants is set forth in ORSchapter 90, the Residential Landlord and Tenant Act (ORLTA) (seeORS 90.105). This ORS chapter was heavily amended in 1999, so use
Residential Landlord-Tenant Disputes / §3.3
3-52002 ed
caution when reading older cases that refer to these statutes. The mostcommon landlord-tenant action is an action for forcible entry anddetainer (“FED action”), which is governed by ORS 105.105–105.165and is discussed at length in §§3.9–3.57, infra.
NOTE: The words nonresidential and commercial are usedinterchangeably in this chapter. This chapter cites frequently to theUniform Residential Landlord and Tenant Act, promulgated in1972 by the National Conference of Commissioners on UniformState Laws. See www.law.upenn.edu/bll/ulc/fnact99/1970s/urlta72.htm.This chapter is not intended as an in-depth analysis of mobile(manufactured) home tenancies to which ORS 90.505–90.875apply.
See also chapter 13, infra, which discusses commercial leasedisputes and remedies.
B. (§3.2) Coverage of the Oregon ResidentialLandlord and Tenant Act
In many situations, ORLTA prescribes a different result than wouldoccur in tenancies not covered by ORLTA. For example, the common-law principle of waiver as it relates to accepting late rent is riddled withseveral fact-specific exceptions under ORS 90.415. It is thereforeimportant to be familiar with the scope of ORLTA’s application.Generally, the provisions of ORLTA apply to persons entitled under anoral or a written rental agreement to occupy a structure or a portion ofa structure used as a home, residence, or sleeping place by one personwho maintains a household, or by two or more persons who maintain acommon household. ORS 90.100(8). A “roomer” under ORS 90.100(33)need not occupy a dwelling or room to the exclusion of others. Torbeckv. Chamberlain, 138 Or App 446, 451–452, 910 P2d 389 (1996).
For the manufactured home and floating home provisions ofORLTA, see §3.70, infra.
C. (§3.3) Exclusions The following types of living situations are excluded from ORLTA
“unless created to avoid the application” of ORLTA:
(1) Residence at a public or private institution if the residence isincidental to detention, or to medical, geriatric, educational, counseling,religious, or similar service. However, ORLTA covers “residence in off-campus nondormitory housing.” ORS 90.110(1).
§3.3 / Residential Landlord-Tenant Disputes
3-62002 ed
(2) Occupancy under a contract of sale if the occupant is thepurchaser or a person who succeeds to the interest of the purchaser.ORS 90.110(2). Thus, ORLTA applies to occupancy under a lease-option agreement before the option is exercised because a lease-optionagreement is generally considered to be a residential rental agreementunless and until the option to purchase is exercised. See Rockwell v.Nelson, 157 Or App 269, 274, 970 P2d 666 (1998), rev. denied, 328 Or365 (1999). Note that a contract purchaser’s tenant does not “succeed”to the purchaser’s interest, and is not excluded from ORLTA. In thatsituation, both the seller and the buyer are considered landlords withinthe meaning of ORS 90.100(19) if the seller retains title.
(3) Occupancy by a member of a fraternal or social organizationin the portion of the structure operated for the benefit of theorganization. ORS 90.110(3).
(4) Transient occupancy in a hotel or motel. ORS 90.110(4). Thisexclusion is strictly constrained by ORS 90.100(41), which ensures thatORLTA applies to residential hotel and motel occupancies. Tax andlicensing designations are not dispositive. See City of Portland v.Carriage Inn, 67 Or App 44, 676 P2d 943 (1984). The exclusion isavailable only if (a) rent is charged daily and is not collected more thansix days in advance, (b) maid and linen service is offered at least everytwo days, and (c) occupancy does not exceed 30 days. ORS 90.100(41).
(5) Occupancy of an employee of a landlord whose right tooccupancy is conditional on employment in and about the premises.ORS 90.110(7). Note, however, that ORS 91.120 requires 24 hours’written notice (or longer if so provided by an employment agreement)for eviction of such an employee. If the employee does not move afternotice, the landlord or the employer may evict only through the FEDprocess.
(6) Occupancy by a condominium unit owner or a holder of aproprietary lease in a cooperative. ORS 90.110(8).
(7) Occupancy under a rental agreement covering premises usedby the occupant primarily for agricultural purposes. ORS 90.110(9).This provision should not exclude farmworker housing when theworker’s duties are not performed on the premises as defined inORS 90.100(28). See also 36 Op Att’y Gen 332 (Or 1973).
(8) Additional exclusions include vacation occupancies (ORS90.100(42)) and squatters (ORS 90.100(36)).
Regulation and Taxation of Real Estate (continued)
11 Regulations Affecting Real Estate Loans and Sales
(1995 ed & 1999 supp)...............................................................John A. Lusky
12 Mobile Homes(1995 ed)....................................................................Michael C. Robinson(1999 supp).............................................................Dennis M. Paterson III
13 Building Codes(1995 ed)................................................................................ Bill Manlove(1999 supp)......................................................................Benjamin Walters
14 Americans with Disabilities Act Requirements for Public Accommodations
(1995 ed).......................................................................Keith W. Wingfield(1999 supp)..........................................................................Robert W. Pike
I. INTRODUCTION
TRACY J. WHITE*7ADVERSE POSSESSION
AND PRESCRIPTION
TRACY J. WHITE, A.B., Harvard University (1987); J.D., Stanford University(1990); member of the Oregon State Bar since 1990; associate, Stoel RivesBoley Jones & Grey, Portland.
*The author wishes to acknowledge the contributions of John L. DuBay, KirkR. Hall, Robert S. Ball, David P. Miller, Alan K. Brickley, and SandraCampbell for their work on previous CLE chapters from which much of thischapter is derived. The author also thanks Stephen L. Griffith for his adviceand encouragement in the writing of this chapter.
The case citations in this chapter were checked for overrulings and reversals through thefollowing Shepard’s volume:
Oregon Citations . . . . . . . . . . . . . . . . . Vol 85, No 5The citations to ORS were checked through 1991.
A. (§7.1) Adverse PossessionB. (§7.2) Prescription
II. ELEMENTSA. Possession
1. (§7.3) Actual Possession2. (§7.4) Constructive Possession
B. Open and Notorious Possession1. (§7.5) Generally2. (§7.6) By Cotenants
C. (§7.7) ExclusivenessD. Hostility
1. (§7.8) Generally
7-1
2. (§7.9) Claim of Right or Color of Title3. (§7.10) Presumption of Adversity for
E. Continuity1. (§7.13) Generally2. (§7.14) Tacking Successive Possessions3. (§7.15) Extinguishing Easements Through
Prescriptive or Changed UseF. (§7.16) The Statutory Period
III. (§7.17) ADVERSE POSSESSION AND PRESCRIPTIONBY THE STATE AND PUBLIC
IV. PROCEDUREA. (§7.18) RemediesB. (§7.19) Pleadings
FORM7-1 Complaint to Quiet Title Under ORS 105.620
I. INTRODUCTION
A. (§7.1) Adverse Possession
Title to real property may be established without an express grantor transfer of title if all elements of adverse possession are present. Theownership rights obtained by adverse possession are “of a status equal todeeded title.” Evans v. Hogue, 296 Or 745, 752, 681 P2d 1133 (1984).
The right is a fundamental one, rooted in the common law andalways recognized by the courts in Oregon. At common law, a partycould obtain title by adverse possession by showing by clear andconvincing (or positive) evidence of (1) actual possession that has been(2) open and notorious, (3) exclusive, (4) hostile, (5) continuous, and(6) for the statutory period of 10 years, (7) under color of title or claimof right. Lee v. Hansen, 282 Or 371, 375, 578 P2d 784 (1978); Knappv. Daily, 96 Or App 327, 330, 772 P2d 1363 (1989).
7-2
Adverse Possession; Prescription / §7.1
These elements were codified and elaborated on in 1989 at ORS105.620. This statute provides that in order to acquire title by adversepossession, a person must show by clear and convincing evidence that:
(a) The person and the predecessors in interest of the person havemaintained actual, open, notorious, exclusive, hostile and continuouspossession of the property for a period of 10 years; [and]
(b) At the time the person claiming by adverse possession or theperson’s predecessors in interest, first entered into possession of theproperty, the person entering into possession had the honest belief thatthe person was the actual owner of the property and that belief:
(A) By the person and the person’s predecessor in interest,continued throughout the vesting period;
(B) Had an objective basis; and
(C) Was reasonable under the particular circumstances.
ORS 105.620(1). “A person maintains ‘hostile possession’ of property ifthe possession is under claim of right or with color of title.” ORS105.620(2).
The statute applies to “all claims for recorded title or for therecovery of possession of real property for which the interest vested andfor which the claim is filed after January 1, 1990.” 1989 Or Lawsch 1069, §4, as amended by 1991 Or Laws ch 109, §3. This effectivedeadline was added to the statute by the 1991 Legislature to avoiddepriving those whose adverse possession interest had vested under thecommon law before 1990 from being deprived of their cause of action.Thus, only claims vesting after January 1, 1990, are subject to the statute.Claims vesting before 1990 are still subject to the common-law rules.For that reason, this chapter discusses those rules even when they mightseem to be overruled by the 1989 statute.
NOTE: ORS 105.005, which deals with trespass actions, wasalso amended. The amendments provide that in an action broughtby a landowner to recover possession or to recover damages alone,a trespasser will not be liable for double or treble damages underORS 105.810 or 105.815, or for the value of the use or occupationof the land, if the person had “the honest and objectively reasonablebelief that the person was the actual legal owner of the land.” ORS105.005. This change thus protects those who are unable to acquireland under the statutory adverse possession rules from liability forcertain damages as long as they acted in good faith.
7-3
§7.2 / Adverse Possession; Prescription
B. (§7.2) Prescription
Adverse use can ripen into an easement by prescription. Aneasement is a limited, nonpossessory interest in the land of another. Cf.ORS 105.170(1) (for purposes of defining maintenance obligations, aneasement is “a nonpossessory interest in the land of another which entitlesthe holders of an interest in the easement to a private right of way,embodying the right to pass across another’s land”). “A right acquiredby prescription is as good as one acquired by deed or grant.” Firebaughv. Boring, 288 Or 607, 611 n 2, 607 P2d 155 (1980).
Oregon does not recognize negative easements by prescription, thatis, the right to restrict a landowner from exercising the general rights ofownership. Austin v. Bloch, 165 Or 116, 120-121, 105 P2d 868 (1940)(disallowing claim for prescriptive easement for light across neighbor’sproperty, which would prevent neighbor from constructing building onproperty).
The basic requirements for obtaining a prescriptive easement are thesame as those for obtaining title by adverse possession at common law.Feldman v. Knapp, 196 Or 453, 476, 250 P2d 92 (1952). However,easements by prescription are not favored by the law. Wood v.Woodcock, 276 Or 49, 56, 554 P2d 151 (1976).
NOTE: It is not clear if ORS 105.620 will affect prescriptionclaims since the wording of the statute refers to adverse possessionand does not mention claims of prescription. However, given thatthe legal requirements for the two doctrines have tended to paralleleach other, there would be a strong argument that the statute mayapply to prescription, at least by analogy.
Because of the similarities between the requirements for adversepossession and prescription, this chapter primarily discusses the subjectof adverse possession, with the differences regarding prescription pointedout as necessary.
II. ELEMENTS
A. Possession
1. (§7.3) Actual Possession
It is axiomatic that adverse possession is founded on possession bythe claimant. When there is no claim under color of title, the boundariesof any land acquired by adverse possession are limited by the actualoccupancy or use of the land by the claimant. Almond v. Anderegg, 276
7-4
Adverse Possession; Prescription / §7.3
Or 1041, 1045, 557 P2d 220 (1976) (citing Grant v. Oregon NavigationCo., 49 Or 324, 90 P 178, as modified, 90 P 1099 (1907)).
The kind of occupancy or use of land that will satisfy the possessionrequirement varies with the nature of the land. The acts of possessionrequired in regard to a lot within a city are different from those requiredin regard to pastureland. The test applied is the use an ordinary ownerwould make of the property, taking into account the nature of the land.Lee v. Hansen, 282 Or 371, 376, 578 P2d 784 (1978); Schoeller v.Kulawiak, 118 Or App 524, 528, 848 P2d 619 (1993) (quoting Lee v.Hansen, supra).
When possession is to be proved by pasturing livestock, a fencedenclosure containing animals may not be adequate proof of actualpossession. Proof that the livestock actually used the parcel in disputemay be necessary. Miller v. Bushnell, 275 Or 45, 48-49, 549 P2d 655(1976); Woolfolk v. Isler, 37 Or App 687, 691-692, 588 P2d 632 (1978).Pasturing cattle on enclosed land may be sufficient actual possession,even though the cattle are taken off the property during the portion of theyear when the land is subject to flooding. Springer v. Durrette, 217 Or196, 200-201, 342 P2d 132 (1959); Annot, Grazing of Livestock orGathering of Natural Crop as Fulfilling Traditional Elements of AdversePossession, 48 ALR3D 818 (1973). However, mere occasional use, suchas casually passing back and forth or occasionally cutting wood forpersonal use, is not sufficient. Talbot v. Cook, 57 Or 535, 540, 112 P709 (1911).
Prescription is based on use rather than possession. SutherlinSchool District #130 v. Herrera, 120 Or App 86, 89-90, ___ P2d ___(1993). The permissible use of a prescriptive easement is limited by thegeneral pattern of continued use that gave rise to the easement.Firebaugh v. Boring, 288 Or 607, 611, 607 P2d 155 (1980). This usemay vary from time to time as long as the maximum limits of the typeof use and area used for the easement are established. Arrien v.Levanger, 263 Or 363, 368, 502 P2d 573 (1972). Thus, the fact that theamount of flooding from the claimant’s reservoir onto a neighbor’s landvaried from year to year did not make the easement for flooding tooindefinite. Arrien v. Levanger, supra.
Changes in the use of a prescriptive easement are permitted only ifthe changes are consistent with the historical pattern of use.
[I]n determining whether a particular use of a prescriptive easement ispermissible, a comparison should be made between (A) the use by whichthe easement was created, and (B) the proposed use considering thesefactors: (1) the relative burdens upon the servient tenement; (2) the
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nature and character of the uses of the easement; and (3) the purposesachieved through the uses of the easement.
Firebaugh v. Boring, supra, 288 Or at 618; see also Annot, Scope ofPrescriptive Easement for Access (Easement of Way), 79 ALR4TH 604(1990). This approach allows proper consideration of the “‘needs whichresult from a normal evolution in the use of a dominant tenement.’”Firebaugh v. Boring, supra (quoting 5 RESTATEMENT OF PROPERTY §479(1944)). Thus, when a prescriptive easement was originally establishedto allow access to a reservoir, and was later used to allow access to ahouse built on the reservoir, the easement did not terminate because thenature and character of the use (vehicle traffic on a daily basis) and theburden of the use did not change, and the purpose of the new use was anormal evolution in the use of the property. Firebaugh v. Boring, supra,288 Or at 618-619.
2. (§7.4) Constructive Possession
When a claim of adverse possession is founded on color of title, theboundaries of land subject to acquisition may extend beyond the landactually used or occupied under the theory of constructive possession.Joy v. Stump, 14 Or 361, 364, 12 P 929 (1887); see §7.9, infra, for adiscussion of what constitutes color of title. When the possession isunder color of title, actually made of record, in which the boundaries aredefined, possession of part of the land may be sufficient evidence ofconstructive possession of the entire tract so defined. In Oregon, the ruleis evidentiary only and must be considered as controlled by the principalrequirement that any kind of possession is really a form of notice thatsomeone is making a claim to title. Bradtl v. Sharkey, 58 Or 153, 156-157, 113 P 653 (1911).
Thus, the constructive possession theory was not sufficient when theland described in the deed was an occasionally used, unfenced woodlotlocated four miles from the occupied parcel, Wheeler v. Taylor, 32 Or421, 436, 52 P 183 (1898), or when the unoccupied portion was unfencedbrush and timberland with no improvements and the occupier did nothingat all to give notice of the fact that the occupier’s deed overlapped theneighboring owner’s property, Bradtl v. Sharkey, supra, 58 Or at 156-158.
When separate and distinct parcels are described in the same deed,an entry on one or more parcels under color of title is not sufficient toestablish constructive adverse possession of all parcels. Constructiveadverse possession “is applicable only when the land described in thedeed is recognized in the community as a single, defined lot.” Nyman v.City of Eugene, 286 Or 47, 64, 593 P2d 515 (1979).
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In the case of prescription, it seems unlikely that there could be anyparallel concept of “constructive use” due to prescription’s focus on theactual use of the property in determining the rights obtained.
B. Open and Notorious Possession
1. (§7.5) Generally
Adverse possession rights cannot be acquired secretively. Theoccupation must leave no doubt in the mind of the true owner of theexistence of the adverse claimant and of the claimant’s purpose to keepthe true owner out of the land. Since the requirement is that the claimantexercise the type of possession for which the true owner has a cause ofaction for ouster, there must be activity sufficient to give notice to theowner of the need for such a remedy. In Reeves v. Porta, 173 Or 147,155, 144 P2d 493 (1944), the court stated: “[T]he acts of the allegedoccupant must be so open and exclusive as to leave no inquiry as to hisintention, so notorious that the owner may be presumed to haveknowledge that the occupancy is adverse.”
Notice need not be manifested in any particular way. Actual noticeof nonpermissive occupancy is always sufficient but seldom encountered.Consequently, the claimant must show that the claimant used or occupiedthe land in such a way that the real owner is presumed to have notice ofoccupancy. The acts of the claimant must be sufficient to apprise thecommunity of the extent of the claimant’s occupancy, and to put anowner of ordinary prudence on inquiry, if the owner were to visit theproperty, that someone else is making such use of the property that theowner would have a legal remedy against it.
For example, when ornamental trees were planted on a line thoughtby the claimant to be the boundary, the requirement of notoriety was notmet because the land in general was covered with brush, trees, andundergrowth, making the ornamental trees indistinguishable from thenatural growth. Olson v. Williams, 266 Or 592, 593-594, 514 P2d 552(1973). Similarly, a person who plants trees on another’s land with theintent to harvest them when they mature, without more, does not establishexclusive and notorious possession of the land when the record ownersbelieve that they own to the deeded line and regularly come on thedisputed strip. Kitzerow v. Reinhardt, 74 Or App 582, 586-587, 704 P2d132 (1985).
The mere existence of an overgrown building foundation is notsufficient notice to the true owner of a party’s adverse claim. Bartell v.Hollingshead, 47 Or App 145, 150, 617 P2d 688 (1980). Likewise, a
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pipe with a flag in it is not in itself a sufficiently obvious boundarymarker to put the true owner on notice of an adverse claim. Corson v.Williford, 44 Or App 145, 150, 605 P2d 1194 (1980).
A higher standard of notice to the owner applies to a party whocontinues in possession after termination of a prior possessory estate, suchas a tenant holding over after a lease expires. Such a person is deemeda tenant at sufferance under ORS 91.040. A tenant at sufferance cannotadversely possess against the true owner without manifesting by words orconduct the hostile nature of the possession. Rise v. Steckel, 59 Or App675, 686-687, 652 P2d 364, rev. denied, 294 Or 212 (1982).
NOTE: Under ORS 105.620(1)(b), it would appear to be a raresituation when a tenant at sufferance could give sufficient noticewhile still maintaining an honest belief of ownership.
2. (§7.6) By Cotenants
A peculiar situation arises in the case of adverse possession betweencotenants. The general rule is that possession by one cotenant ispossession by all. The cotenant out of possession is entitled to assumethat the cotenant in possession is holding the property for both. Thus, atcommon law, a cotenant in possession may oust another cotenant only ifan intention to do so is made clear as evidenced by distinctly hostile acts.Smith v. Tremaine, 221 Or 33, 36, 350 P2d 180 (1960). In other words,before the statutory period of limitations for adverse possession begins torun, the cotenant in possession must give actual notice to the othercotenants of an intention to hold possession exclusively. Nedry v.Morgan, 284 Or 65, 68, 584 P2d 1381 (1978).
NOTE: See the Note in §7.5, supra. The requirement in ORS105.620(1)(b) of an honest belief of ownership seems to make itdifficult for a cotenant to legitimately give actual notice of an intentto oust the other cotenants.
An exception to this rule applies if one cotenant executes a deedpurporting to convey the whole title to a third party. In that case, thegrantee has the benefit of “presumptive ouster” and, if all the otherelements are present, the statutory period begins to run without specificnotice of ouster to the other cotenants. The grantee’s possession ispresumed to be notice to the other tenants, who then have the duty ofdetermining the nature of the grantee’s possession. Nedry v. Morgan,supra, 284 Or at 69.
As a statutory alternative to the common-law procedure describedabove, a cotenant can establish adverse possession under ORS 105.615:
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Unless otherwise agreed or provided in a granting document, a tenant incommon of real property may acquire fee simple title to the real propertyby adverse possession as against all other cotenants if the tenant incommon or the tenant in common’s predecessor in interest has been inpossession of the real property, exclusive of all other cotenants, for anuninterrupted period of 20 years or more and has paid all taxes assessedagainst such property while in possession. Notice of the exclusivepossession need not be given to the other cotenants by the cotenant inpossession.
This statute appears to be an alternative to the common-law formularather than to displace it. See Letter from Eugene L. Grant, Chair of theReal Estate and Land Use Section of the Oregon State Bar, May 9, 1989,Exhibit C to the May 9, 1989, hearing before the Senate JudiciaryCommittee regarding HB 3195. See also Miller v. Miller, 101 Or App371, 375-376, 790 P2d 1184 (1990) (considering adverse possession claimfirst under common law and then under statute).
The last sentence of ORS 105.615 was added in 1989 in the sameact that adopted ORS 105.620 to make it clear that when a cotenantpursues an action under this statute, the cotenant need not show notice.Cf. Willson v. Hessong, 38 Or App 269, 272, 589 P2d 1194 (1979) (nonotice required under former ORS 105.615). Additionally, the modifiedstatute was rephrased to allow a cotenant to acquire title to the propertythrough the statute, rather than just to bring a quiet title action. Thestatute thus eliminates the requirement stated in Nedry v. Morgan, supra,284 Or at 74 n 5, that a cotenant bringing an action under ORS 105.615would have to show all the elements of adverse possession, in additionto meeting the requirements of the statute. See Letter from Eugene L.Grant, supra. ORS 105.615 therefore appears to stand independently ofORS 105.620. The same effective date applies to the modifications toORS 105.615. See §7.1, supra.
It is not clear whether ORS 105.615 has any application wherecotenants are holders of an easement.
C. (§7.7) Exclusiveness
The requirement of exclusive possession is met by proof ofoccupancy by the claimant characteristic of exclusive ownership.Sertic v. Roberts, 171 Or 121, 130, 136 P2d 248 (1943). Just as anowner does not exercise every right to exclude others, so a claimant doesnot have to absolutely prohibit every use by others. The degree ofexclusion that an owner of the property would exercise is the test.Russell v. Gullett, 285 Or 63, 67, 589 P2d 729 (1979).
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For example, cattle are known to break fences, and the fact that aneighbor’s cattle occasionally do so and graze on the property underdispute does not negate exclusive possession. Terry v. Timmons, 282 Or363, 368-369, 578 P2d 405 (1978); Norgard v. Busher, 220 Or 297, 308-309, 349 P2d 490 (1960). Although the neighborly act of letting othersoccasionally use property does not affect a claim of exclusivity, Russell v.Gullett, supra, the element is not satisfied if there is joint or equal use ofthe same property by the claimant and others, Werner v. Brown, 44 OrApp 319, 324-325, 605 P2d 1352, rev. denied, 289 Or 71 (1980).
For prescription, exclusivity means only that the claimant’s right touse the land is not dependent on anyone else’s right. Feldman v. Knapp,196 Or 453, 474, 250 P2d 92 (1952). The landowner and others mayalso use the property without detracting from the claimant’s rights.Feldman v. Knapp, supra.
