What To Do Before Buying Rural Residential Property in Oregon
Living on rural residential property is a dream for many. Whether for investment, lifestyle, or even retirement, rural residential property can be serene and relaxing or exciting and industrious, and everything in between. If you are new to the process of purchasing rural property, or have been looking for a while, there are many unique considerations to be aware of. It can be stressful if you are not aware of essential steps, and can be especially nerve wracking if it is a substantial investment. Here are tips to guide your process, and to assist you in accomplishing your goals.
When buying a residential property in a city or town, you can fairly easily establish the allowed uses of the property, the lot boundaries, and the availability of city water, sewer, and utility services. Purchasing a rural residential property, however, requires a you to look into issues you may have never considered or encountered before, particularly if you are coming from out-of-state or are a first-time purchaser. Oregon’s land use and zoning laws, especially with respect to rural resource lands are generally more restrictive than other states. The overarching land use policy in Oregon is to preserve rural lands for resource use, such as agriculture or forestry, and to curtail urban sprawl or other conflicting uses. It is important to understand what to expect and how to avoid unpleasant surprises so you can more fully enjoy the benefits of country living.
6 Red Flags When Purchasing Rural Real Estate
1. Sale Listings
When you are first looking at a rural property, you may be drawn to it via a property listing that describes the property’s location, acreage, accessibility, and features of the home (if there is one) or other structures on the property. These descriptions generally point out the positive features of the property in an effort to attract buyers. However, sometimes these descriptions, either intentionally or inadvertently, omit essential information regarding the legal or approved uses of the property. The bottom-line is, don’t take everything in the listing description at face value, do your due diligence, and ask lots of questions.
2. Preliminary Title Reports
Once you make an offer on a property, the title company that will likely handle the title insurance and often the escrow/closing will issue a preliminary title report (sometime referred to as the “prelim”). This document provides you with a legal description of the property, the encumbrances that might affect the property, such as easements, unpaid taxes, judgment liens, contractor liens, or other matters. Most are standard reservations and can be resolved through the escrow process, but some, such as a pending lawsuit involving the property, or lack of legal access, can be deal breakers absent the seller’s agreement to remedy the issue prior to closing.
3. Seller’s Disclosure Statement
Under state law, sales of real property that include a dwelling must be accompanied by a Seller’s Disclosure Statement. This document is incorporated into the purchase and sale agreement and is enforceable. It requires the seller to either check “No” or “Yes” or “Unknown” to multiple questions that span everything from leaking roofs, to valid title, to zoning, to septic systems, and boundary disputes. Unfortunately, sellers sometimes fail to fill out the form accurately. Whether deliberate or unintended, this misrepresentation can have significant consequences. Of particular importance is following through whenever an “unknown” box is checked. For example, where the disclosure form asks if the composite siding of the home has been subject to a recall by the manufacturer, or if there is an underground heating oil tank and the owner checks the “unknown” box, it will serve you well to have the siding analyzed by a siding expert and the property inspected by a reputable environmental consultant. Otherwise (and assuming the seller really did not know), if it turns out there is a problem, your remedies for seeking compensation from the owner after you buy the property effectively disappear.
4. Property Boundaries
Many property quarrels and lawsuits revolve around disputed property lines. In order to avoid getting into such a conflict, it is highly advisable to do the following prior to closing and as a condition to allow closing:
Obtain a copy of the last recorded survey of the property from the county planning or surveyor’s office and review it carefully. If no survey exists, and depending on the size or complexity of the property, hire a surveyor to, at minimum, locate the property’s corner points. This is particularly important if any red flags appear such as a fence that does not follow a straight line, or there is a meandering river or creek bank that purportedly describes the property boundary.
Talk to prospective neighbors about where they believe the boundary lines are located and the accuracy of fence locations.
5. Easements
Disputes over access easements constitute a large percentage of real property disputes and litigation, perhaps even more so than property line disagreements. While most easements are recorded with the county deeds and records office, that’s not always the case. Accordingly:
Make sure all easements of record noted in a preliminary title report that benefit or burden the property are located and understood.
If there is a visible roadway, path, or shared driveway that leads across the property to a neighboring property that is not identified or described the preliminary title report, it is critical that you make inquiries either directly or through your realtor to the adjacent property owner to establish whether they use the roadway/driveway, and if so, under what authority. They may pull out a written (“express”) easement that was never recorded. Alternatively, the neighbor may acknowledge their use of the roadway is based on permission by the seller, which can be withdrawn. However, as soon as the prospective buyer is made aware of the unrecorded easement prior to closing, then they are likely going to be bound by its terms. Therefore, you need to know the scope of the use. For example, is the roadway at issue the primary access for the neighboring property or is it only used for less intensive incidental use, such as occasional access for farm equipment or hunting? Then decide whether you can live with that intrusion or not.
If there is an easement, establish who is responsible for easement maintenance. Under Oregon law, if there is no written maintenance agreement, the parties are obliged to contribute to maintenance and repair proportionate to the amount they use or degrade the roadway. But it is preferable to tailor a maintenance agreement to fit your specific situation whenever possible.
6. Property & House Inspections
It is almost always in your best interest to have the dwelling inspected by a qualified home inspector. A listing description for a property might say it is served by a domestic well, but neglects to mention the water has low output, or has high iron or arsenic levels, or is shared with a neighboring property. Such issues can usually be resolved, for example, using a treatment system or entering into joint use agreement, but need to be recognized and addressed up front. Likewise, septic systems are by definition underground and thus hard to assess their functionality. Therefore:
Obtain qualified pest/dry rot and whole house inspections for all significant structures.
Ensure well water is tested for nitrates, bacteria, salt, and arsenic.
Ensure the well produces at least five gallons per minute for four hours during the summer.
Have the septic system inspected to ensure it is properly functioning and there is a replacement drain field or sufficient room on the property for a replacement drain field.
7. Land Use
Many prospective buyers assume that whatever structures or uses of the property that are present when they look at a property are permitted and legal. For example, a property may be advertised as including a house and an accessory dwelling unit. But sometimes the additional dwelling is simply a converted outbuilding that was never permitted for residential use. More times than I can count, I have been asked to remedy a compliance order from the county sent to a new property owner who has moved a relative or tenant into an accessory dwelling unit that is not permitted under state or local land use laws. While there are exceptions, there is often little that can be done to fix that particular problem.
Moreover, don’t assume that you can legally operate any type of business on the rural property. While most counties have fairly lenient rules for running low profile home occupation businesses, such as bookkeeping, pottery, firearm repair, or other low intensive uses, larger scale operations that employ more than five persons and are not primarily contained in the home or an adjacent permitted accessory structure are difficult to get permitted. It pays to discuss any prospective use with a land use attorney or county planner before buying or initiating such a business on the property.
Land Use Compliance Checklist
1. Confer with the county land planning department that all existing or proposed uses and structures on property are allowed for that zoning.
2. Understand that adjacent farm or forest uses are generally insulated from nuisance or trespass claims as a matter of state law.
3. Contact the county Sheriff’s office and county land use enforcement officer to see if adjacent properties have been cited or reported for any non-conforming or illegal activities (such as non-conforming land uses, unpermitted dog kennels, illegal cannabis farms, wildlife poaching, etc.).
4. Establish that the property is within a defined rural fire protection district.
The recommendations provided may seem burdensome, but they can save you money and time, as well as help avoid unnecessary litigation and risk. The key to a successful purchase is to ask lots of questions, carefully review relevant documents, retain a knowledgeable and proactive real estate broker, obtain a survey and property inspections, confer with county land use planning staff, and seek the advice of a land use or real estate attorney if necessary.
If you have concerns or questions regarding purchasing real property or dealing with land use and property related issues once you are an owner, including consultation, litigation, and negotiation, Liam would love to meet with you. Our firm regularly assists clients in such matters. Book a consultation with us today!
The information provided here does not constitute legal advice. Hutchinson Cox makes neither express nor implied warranties regarding the use of this material. The reader should always seek competent legal advice as the facts of every case vary.