Editor's Note: Earlier this year MHCO passed significant changes to Oregon's abandonment law in the Oregon Legislature. To assist MHCO Members with these changes, MHCO has developed three new forms as a result of the new abandonment law: The new forms are: MHCO Form 31A "Declaration of Intent"; MHCO Form 31B "Declaration of Compliance"; and MHCO Form 31C "Declaration of Sale". Attorneys Phil Querin and Mark Busch provided input as well as the Oregon Department of Revenue. Below is Phil Querin's explanation of the changes to Oregon's abandonment law. Further clarification will be provided in the 2016 MHCO Management Training Seminars and future "Question and Answer" sessions with Phil Querin.
Current Oregon Law. ORS 90.675(14) provides that following the public or private sale of an abandoned home, a landlord may deduct from the proceeds of the sale the reasonable or actual costs of notice, storage and sale and the unpaid rent. If any funds remain, the landlord is required to remit the excess proceeds to the county tax collector to the extent of any unpaid property taxes and assessments owed.1
However, if one of the following circumstances apply, the county tax collector is required to cancel all unpaid property taxes and assessments:
The landlord destroys or disposes of the home after a determination from the assessor that its current market value is $8,000 or less;
The sale was held, but there was no buyer of the home;
There is a buyer of the home; its current market value is $8,000 or less; but the
proceeds of sale are insufficient to satisfy the unpaid property taxes and assessments owed after distribution of the proceeds for the landlord’s actual cost of notice, storage and sale and unpaid rent; or
The landlord buys the home at the sale; its current market value is more than $8,000; the proceeds of sale are insufficient to satisfy the unpaid property taxes and assessments; and, the landlord disposes of the home.
New Oregon Law. No. 4 above has been stricken,2 and the following rules (found at ORS 90.675(14)(d) and (e) and (15) of HB 3016,) will apply. On January 1, 2016, if the landlord follows these new laws, the tax collector and Department of Revenue (collectively “tax collector”) will be required to cancel unpaid taxes in the following additional circumstances:
1. The landlord sells the home to a buyer who intends to occupy it in the community in which it is currently located, after:
a. Purchasing it at the abandonment sale; or
b. Acquiring it as a result of a written agreement with the tenant or tenant’s
personal representative, etc. in accordance with ORS 90.675(23)(a) [currently (22)(a)].
1 If there are remaining funds after that, the balance is paid in the following order to any lienholder to the extent of any unpaid balance owed on the lien and the remainder to the tenant, together with an itemized accounting.
2 Currently in ORS 90.675(d)(A), (B), and (C). Note that HB 3016 also added the following text to No. 2: “...and the landlord disposes of the property.”
2. The following additional conditions must be met:
There is a lien on the home for unpaid property taxes and special assessments owed to a county or to the Department of Revenue;
The landlord must prepare and sign and affidavit or declaration (hereinafter “Affidavit of Compliance”) in the form set forth on MHCO Form 31A, with the county tax collector or the Department of Revenue (hereinafter, “tax collector”). Upon filing this Affidavit of Compliance, the county tax collector will provide title to the home for the landlord to give to a buyer at the time of the sale.
After the sale, the landlord must file a second Affidavit of Compliance in the form set forth on MHCO Form 31B, with the tax collector. It must be accompanied by:
i. Payment of the amount remaining from the sale proceeds after the deduction of the landlord’s claims and costs, up to the amount of the unpaid taxes or tax lien. The landlord may retain the amount of the sale proceeds that exceed the amount of the unpaid taxes or tax lien;
Payment of any county warrant fees; and
A third Affidavit of Compliance, this time from the buyer, in the form set
forth on MHCO Form 31C, stating his/her intent to occupy the property in the community. Thereupon, the tax collector shall cancel all any remaining unpaid taxes or tax liens on the property.
Effect of New Law. The new law will permit landlords to sell abandoned homes with unpaid property taxes to persons who will reside in them at the community in which they are currently located. To the extent that the net sale proceeds (after deduction of the landlord’s statutory claims and costs) are insufficient to pay the former resident’s unpaid property taxes, the shortfall will be waived by the tax collector. If the sale proceeds cover more than the landlord’s statutory claims and costs, and all of the unpaid taxes, the landlord may retain any excess.