Oregon Real Estate Contracts: Exam Study Guide

Contracts Are a Major Exam Topic

Contract law questions appear throughout the Oregon broker exam — in both the national and state sections. The national section tests universal contract principles (essential elements, offer and acceptance, contingencies, breach). The Oregon state section tests Oregon-specific forms, seller disclosure requirements, and how Oregon handles purchase and sale agreements.

Expect 15–20 questions across both sections that involve some aspect of contracts.

Essential Elements of a Valid Contract

Every enforceable real estate contract must have six essential elements:

1. Offer and acceptance (mutual assent) — both parties must agree to the same terms
2. Consideration — something of value exchanged (money, a promise, property)
3. Legally competent parties — both parties must be of legal age and mentally competent
4. Legal purpose — the contract cannot be for an illegal act
5. Consent — agreement must be free from fraud, misrepresentation, duress, undue influence, or mistake
6. In writing — real estate contracts must be in writing under the Statute of Frauds to be enforceable

The Oregon Purchase and Sale Agreement

Oregon's standard purchase and sale agreement is typically the OREF (Oregon Real Estate Forms) Sale Agreement or similar form. Key provisions include:

Earnest money — a deposit made by the buyer to demonstrate serious intent. In Oregon, earnest money is typically held by the seller's broker in a trust account. If the transaction closes, it is applied to the purchase price. If the buyer backs out without cause, the seller may claim the earnest money as liquidated damages.

Contingencies — conditions that must be satisfied for the contract to close. Common Oregon contingencies:

• Financing contingency — buyer must secure a loan by a specified date
• Inspection contingency — buyer has the right to inspect the property and negotiate repairs
• Appraisal contingency — property must appraise at or above the purchase price
• Sale of buyer's current home contingency

Time is of the essence — Oregon purchase agreements typically include a time-is-of-the-essence clause, meaning deadlines in the contract are strictly enforced.

Counteroffers — A counteroffer rejects the original offer and creates a new offer. The original offeror is free to accept, reject, or counter again. An acceptance with any change is a counteroffer, not an acceptance.

Oregon Seller's Property Disclosure Statement

For residential properties of 1–4 units, Oregon law requires the seller to complete an Oregon Seller's Property Disclosure Statement before or shortly after entering into a purchase agreement.

Key rules: - The seller completes the form — the agent cannot fill it out on the seller's behalf - The seller discloses known defects and material facts about the property's condition - Buyer has the right to rescind the contract within a specified period after receiving the disclosure - Disclosure is not a warranty — the seller is not guaranteeing condition, only disclosing what they know

Common exam question: If a seller deliberately withholds a known material defect from the disclosure, this is fraud, and the buyer may have grounds to rescind and seek damages.

Agency Confirmation in Contracts

Oregon requires that the agency relationship be confirmed in writing before or at the time an offer is written. The purchase agreement typically contains an agency confirmation section identifying who represents the buyer, who represents the seller, and whether any dual agency exists.

Breach and Remedies

When a party breaches a real estate contract, the non-breaching party has several options:

• Accept liquidated damages — keep the earnest money (seller) or recover double earnest money (in some jurisdictions)
• Specific performance — sue to force the breaching party to perform (available for real estate because each property is unique)
• Compensatory damages — sue for actual financial losses caused by the breach
• Rescission — cancel the contract and return parties to their original positions

Oregon courts recognize specific performance as a remedy in real estate contracts because land is considered unique in law.

License Law and Contracts

Oregon brokers must: - Provide copies of all contracts to all parties immediately upon signing - Maintain transaction files for a minimum period as required by OREA - Handle earnest money in a trust account within a specified timeframe - Not give legal advice — brokers use forms; attorneys provide legal interpretation

For full Oregon exam prep including contract practice questions, visit [CARealestate.com/states/oregon](https://carealestate.com/states/oregon).