Are seller-paid concessions in an Oregon residential real estate transaction confidential information that a real estate licensee cannot share with appraisers?

Plain-English summary

Oregon residential real estate transactions sometimes include "sales concessions" by the seller: discount points, closing-cost assistance, condo fees, payment of HOA dues, builder incentives, down payment help, and so on. These concessions affect the real economic price of the property even though the headline sale price stays the same. Real estate appraisers care because comparable-sale data without concession adjustments can mislead an appraisal. The Appraiser Certification and Licensure Board asked the AG: are these concessions "confidential information" that a real estate licensee cannot disclose to appraisers?

The Attorney General's answer was layered. By default, the concession information meets the broad ORS 696.800(3) definition of "confidential information" because it is communicated by the seller to the licensee in the context of a one-to-four-unit residential transaction. So the licensee's general duty under ORS 696.805, 696.810, and 696.815 is to keep it confidential. However, ORS 696.800(3) carves out two exceptions: information the seller (or buyer) "instructs the licensee to disclose" to the other principal (subsection (3)(a)), and information whose nondisclosure would be fraudulent (subsection (3)(b)). The AG read those two as independent exceptions, joined by the legislature's "several" sense of "and."

That second exception was the key. Sales concessions are typically information the seller wants disclosed to the buyer to facilitate the transaction. Once the seller instructs the licensee to share it with the buyer, the information loses its statutorily confidential status, and from that point the licensee may share it with third parties (like appraisers) without violating any duty under ORS 696.805(3)(f), 696.810(3)(f), or 696.815(2), and without exposing themselves to discipline under ORS 696.301(3). What the opinion did not do was create a duty to disclose. No Oregon law required licensees to volunteer concession information to appraisers; that remained the licensee's choice once confidentiality lifted.

Currency note

This opinion was issued in 2007. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Background and statutory framework

Oregon's real estate disclosure regime in ORS 696.800 to 696.870 sorts brokers and principal brokers into three categories based on agency: seller's agent (ORS 696.805), buyer's agent (ORS 696.810), and disclosed limited agent acting for both (ORS 696.815). Each agent owes general duties to all parties in a transaction (such as a duty to disclose material facts under ORS 696.805(2)(c) and ORS 696.810(2)(c)) and specific duties to their own principal, including the duty to "maintain confidential information from or about" that principal under ORS 696.805(3)(f), 696.810(3)(f), and 696.815(2). Violations are disciplinable under ORS 696.301(3).

ORS 696.800(3) defines "confidential information" broadly as anything the buyer or seller in a one-to-four-unit residential transaction communicates to the licensee about the transaction, including price, terms, financial qualifications, or motivation. Two carve-outs follow. Subsection (3)(a) excludes information the seller or buyer "instructs the licensee or the licensee's agent to disclose about" themselves to the other side. Subsection (3)(b) excludes information whose nondisclosure would be fraudulent.

The interpretive question was whether the "and" connecting (a) and (b) was joint (both must apply) or several (either applies). The opinion drew on Webster's Third (which lists a "several" sense of "and" particularly in legal language) and Garner's modern usage to conclude the legislature meant the several sense. Two reasons reinforced that reading. First, the two exceptions rest on different policy grounds: (a) lets a principal authorize disclosure to facilitate the deal; (b) prevents the licensee from being trapped between the duty of confidentiality and the duty to disclose material facts. Second, a joint reading would force licensees to assess fraud risk before honoring an explicit principal instruction, which makes no practical sense.

The opinion also confirmed what the statutes did not do: nothing in ORS 696.800 to 696.870 imposed any duty to disclose information to appraisers. Once the principal authorized disclosure to the other principal, the licensee had the option to share the information with third parties, but no obligation.

Common questions

Q: If a seller pays the buyer's closing costs, is that "confidential information" in Oregon?
A: As a default, yes, under ORS 696.800(3). The information is communicated by the seller to the licensee in the context of a residential transaction and meets the broad definition.

Q: When does it stop being confidential?
A: When the seller instructs the licensee to disclose it to the buyer (ORS 696.800(3)(a)), or when failing to disclose would amount to fraud (ORS 696.800(3)(b)). Either exception is enough; the AG read the two as independent.

Q: Can the listing agent tell the appraiser about the concession?
A: Yes, after the information has lost its confidential status. The opinion concluded that "not confidential" status is global, not limited to disclosure between the named principals. Once it is non-confidential, the licensee may share with third parties, including appraisers, without violating ORS 696.805(3)(f), 696.810(3)(f), or 696.815(2) and without exposing themselves to discipline under ORS 696.301(3).

Q: Does Oregon law require the listing agent to tell the appraiser?
A: No. The opinion explicitly declined to find any Oregon-law duty to disclose concessions to appraisers. Disclosure is permitted, not required.

Q: Does this apply to commercial real estate?
A: No. The "confidential information" definition is limited to one-to-four-unit residential transactions.

Q: What about non-disclosure agreements that the parties may sign?
A: The opinion's footnote 2 expressly limited the analysis to ORS 696.800-696.870 and ORS 696.301(3). It did not address contractual confidentiality obligations, which could still bind a licensee independently of the statutory regime.

Q: Why did the appraiser board ask?
A: Appraisers had been getting reluctant answers from listing agents who feared violating confidentiality and being disciplined. The board wanted clarity for its own licensees about whether they could rely on agent-supplied concession information when working with comparable sales.

Citations and references

Statutes:

• ORS 174.020 (statutory construction; pursue legislative intent)
• ORS 696.301(3) (real estate licensee discipline)
• ORS 696.800(3) (definition of "confidential information," with exceptions)
• ORS 696.800(9) (definition of "principal")
• ORS 696.800-696.870 (real estate agent affirmative duties)
• ORS 696.805(2)(c) (duty of seller's agent to disclose material facts)
• ORS 696.805(3)(f) (duty of seller's agent to maintain confidential information)
• ORS 696.810(2)(c) (duty of buyer's agent to disclose material facts)
• ORS 696.810(3)(f) (duty of buyer's agent to maintain confidential information)
• ORS 696.815(2) (duties of disclosed limited agent)

Cases:

• PGE v. Bureau of Labor and Industries, 317 Or 606, 859 P2d 1143 (1993), Oregon statutory-construction methodology

Source

• Landing page: https://www.doj.state.or.us/oregon-department-of-justice/office-of-the-attorney-general/attorney-general-opinions/
• Original PDF: https://www.doj.state.or.us/wp-content/uploads/2007/11/op2007-4.pdf

Original opinion text

HARDY MYERS
Attorney General

PETER D. SHEPHERD
Deputy Attorney General

DEPARTMENT OF JUSTICE
GENERAL COUNSEL DIVISION

November 20, 2007

Bob Keith, Administrator
Appraiser Certification and Licensure Board
3000 Market Street NE
Salem, OR 97301

Re: Opinion Request OP-2007-4

Dear Mr. Keith:

You ask a question arising from the occasional practice of real estate sellers to make sales concessions or allowances to facilitate residential real estate transactions. According to the United States Department of Housing and Urban Development, "[s]ales concessions may be in the form of loan discount points, loan origination fees, interest rate buy downs, closing cost assistance, payment of condominium fees, builder incentives, down payment assistance, monetary gifts or personal property given by the seller or any other party involved in the transaction." [1]

Obviously, sales concessions may influence the price paid for real property. Accordingly, an appraiser wants to know if the seller made any sales concessions in a residential transaction that the appraiser is using as a comparable sale for an appraisal. But information about such concessions is not recorded in public records or in Multiple Listing Service after-market data. You inform us that, while in the past, appraisers obtained pertinent information by simply asking the selling or listing agent whether the seller had made sales concessions, real estate licensees are increasingly reluctant to divulge that information, believing it to be confidential under ORS chapter 696. This development prompts you to inquire about the confidentiality of such information and the related duties of real estate licensees under the pertinent statutes. [2]

QUESTION PRESENTED

Do concessions or allowances made by a seller to a buyer in a residential real estate transaction (i.e., one to four units) qualify as "confidential information" that real estate licensees are prohibited from disclosing under ORS 696.800 through 696.870 and ORS 696.301(3)?

SHORT ANSWER

No, provided the seller in such a residential real estate transaction has instructed their real estate licensee to disclose information about the sales concession to the buyer. Once information loses its confidential status under ORS 696.800 through 696.870, a real estate licensee may disclose that information without violating ORS 696.805, 696.810, or 696.815 and consequently being subject to discipline under ORS 696.301(3). But such a licensee is not required to disclose that information.

DISCUSSION

ORS 696.800 through 696.870 establish the obligations or "affirmative duties" of real estate brokers or principal real estate brokers. Those obligations depend on the nature of the relationship between the broker and the client, which the statutes separate into three categories: (1) seller's agent; (2) buyer's agent; and (3) an agent working under a disclosed limited agency agreement that allows the agent to represent both the buyer and seller. ORS 696.805, 696.810, 696.815. An agent owes certain duties to all principals and principals' agents involved in the real estate transaction. ORS 696.805(2). "Principal" is defined as "the person who has permitted or directed an agent to act on the principal's behalf. In a real property transaction, this generally means the buyer or the seller." ORS 696.800(9). The Real Estate Commissioner may reprimand, or suspend or revoke the real estate license of, any real estate licensee who has "[d]isregarded or violated any provision of * * * 696.800 to 696.870 * * *." ORS 696.301(3).

An agent owes other duties solely to their own principal. One such obligation is the duty "to maintain confidential information from or about the [principal] except under subpoena or court order, even after termination of the agency relationship[.]" ORS 696.805(3)(f) (seller's agent's duty to seller) and ORS 696.810(3)(f) (buyer's agent's duty to buyer); see also ORS 696.815(2)(a), (b), and (c)(C) (agent working under disclosed limited agency agreement's duty to both buyer and seller).

ORS 696.800(3) defines "confidential information" for the purpose of those duties:

(3) "Confidential information" means information communicated to a real estate licensee or the licensee's agent by the buyer or seller of one to four residential units regarding the real property transaction, including but not limited to price, terms, financial qualifications or motivation to buy or sell. * * *.

Thus, for information to be "confidential" under ORS 696.800 to 696.870, it must: (1) be communicated to the licensee or the licensees' agent by the buyer or seller; (2) be in the context of a real property transaction involving one to four residential units; and, (3) concern the transaction.

Applying this definition to your question, information regarding whether the seller made concessions or allowances in a real estate transaction unquestionably is information about the real estate transaction. In a brokered transaction, sellers usually will communicate sales concession information to their real estate licensee or licensee's agent. Thus, if the transaction involves one to four residential units, sales concession information usually will meet ORS 696.800(3)'s general definition of "confidential information," subject to any relevant exceptions.

Subsections (3)(a) and (3)(b) of ORS 696.800 expressly exclude two types of information from the general rule:

• • • "Confidential information" does not mean information that:

(a) The buyer instructs the licensee or the licensee's agent to disclose about the buyer to the seller or the seller instructs the licensee or the licensee's agent to disclose about the seller to the buyer; and

(b) The licensee or the licensee's agent knows or should know failure to disclose would constitute fraudulent representation.

ORS 696.800(3) (emphasis added).

A threshold question arises from the legislature's use of "and" at the end of subsection (3)(a). That is, must information meet the criteria in both subsection (3)(a) and in subsection (3)(b) in order to be excluded from "confidential information" or is such information excluded if it meets just one of these two tests? In other words, is "and" used in ORS 696.800(3) in its "joint" or in its "several" sense?

Under the established template for statutory interpretation, PGE v. Bureau of Labor and Industries, 317 Or 606, 610-612, 859 P2d 1143 (1993), we seek to discern the intent of the legislature. Id., 317 Or at 610; see also ORS 174.020 ("In the construction of a statute, a court shall pursue the intention of the legislature if possible"). The first step in the PGE method is to examine the text of the statute in context. PGE, 317 Or at 610. As an aid to statutory interpretation, Oregon courts consider rules of construction that bear directly on how to read the text, including statutory rules. Id. One relevant rule is that words of common usage typically should be given their plain, natural, and ordinary meaning. Id., 317 Or at 611. If, after consideration of the text and context of a statute, the intent of the legislature is clear, the analysis is complete.

The Oregon Supreme Court commonly uses WEBSTER'S THIRD NEW INTERNATIONAL DICTIONARY to determine the "plain, natural, and ordinary meaning" of words. WEBSTER'S explains the various uses of "and" in part as follows:

[it] can be "used as a function word to express * * * (3) logical or semantic modification of one notion by another as when * * * two elements are joined so that the second logically qualifies the first * * * [or] (6) reference to either or both of two alternatives * * * especially in legal language when also plainly intended to mean or .

WEBSTER'S THIRD NEW INTERNATIONAL DICTIONARY at 80 (unabridged 2002) (emphasis added). Another dictionary states this concept more directly: "Authorities agree that and has a several sense as well as a joint sense." B. Garner, A DICTIONARY OF MODERN ENGLISH USAGE at 624 (2d edition 1995) (emphasis in original).

In the context of ORS 696.800, we conclude for two reasons that the legislature intended "and" to mean its several sense; i.e., information that falls within either subsections (3)(a) or (3)(b), but not necessarily both, is not "confidential." First, subsections (3)(a) and (3)(b) are based on different grounds for allowing disclosure, and there is no relationship between the two that would justify joining them together. Subsection (3)(a) allows a real estate licensee to facilitate a real estate transaction on behalf of his or her principal by disclosing information that the principal directs him or her to disclose. In the absence of subsection (3)(a), licensees would be duty-bound to withhold that information and be unable to facilitate the transaction. Subsection (3)(b) addresses a completely different basis for allowing disclosure. A real estate licensee is obligated to "disclose material facts known by [the agent] and not apparent or readily ascertainable to a party" to all principals and principals' agents involved in a real estate transaction. ORS 696.805(2)(c) (seller's agent's duty); ORS 696.810(2)(c) (buyer's agent's duty); ORS 696.815(2) (an agent acting under a disclosed limited agency agreement owes the duties to the buyer and seller specified by ORS 696.805 and 696.810). Subsection (3)(b) appears to be enacted to prevent licensees from confronting conflicting obligations, the duty to keep information confidential and the duty to disclose material facts.

Second, construing (3)(a) and (3)(b) in the joint sense would put licensees in the difficult situation of first having to determine whether withholding information would "constitute fraudulent representation" before they could disclose information that their principals instructed, and clearly wanted, them to disclose to the other party. There is no reason to construe the statute in that manner.

Having concluded that subsections (3)(a) and (3)(b) are independent grounds for information to be non-confidential, we consider whether information that a seller made concessions fits within subsection (3)(a). That subsection defines "not confidential" information to include information that the seller instructs the licensee or the licensee's agent to disclose about the seller to the buyer (or vice versa). Sales concession information is exactly the type of information that principals are likely to direct their licensees to disclose to the other principals in order to facilitate a sales transaction. But whether that disclosure actually occurred is, of course, a factual determination to be made by the real estate licensee in each case before disclosing the information to third parties. As to whether the information can be disclosed to third parties, the statute provides that information that the principal instructs the licensee to disclose to the other principal (either the buyer or seller) is "not confidential"; it contains no language limiting that non-confidential status only to the party to whom the principal authorized disclosure.

If sales concession information in a particular case qualifies as "not confidential" under ORS 696.800(3), then real estate licensees are relieved from their statutory obligations as to such information, because they have a statutory duty to withhold only "confidential information" as defined by ORS 696.800(3). But simply because a real estate agent may disclose information about sales concessions does not mean that they must. However legitimate an appraiser's need for that information may be, no Oregon law requires real estate licensees to disclose such information to appraisers. Under ORS 696.800 through 696.870, agents owe duties only to the persons involved in the real estate transaction. The duty to disclose information in those statutes extends only to the parties and agents involved in the real estate transaction and only to certain information. We can find no other source of Oregon law that would require an agent to disclose the existence and details of sales concessions to appraisers.

CONCLUSION

The existence and details of proposed sales concessions qualify as "confidential information" under ORS 696.800 for the purposes of a real estate licensee's duty under ORS 696.800 to 696.870 to maintain confidential information until a seller instructs his licensee to disclose that information to the buyer. Once a real estate licensee has been instructed to disclose the information to the other party to the transaction, the information loses its confidential status under ORS 696.800 through 696.870, and a real estate licensee does not violate ORS 696.805(3)(f), ORS 696.810(3)(f), or ORS 696.815(2) and ORS 696.301(3) if the licensee discloses the information to an appraiser. Although real estate licensees in those circumstances are not precluded by ORS 696.800 through 696.870 from disclosing sales concession information to appraisers seeking to use the information in comparable sales analysis, no law requires them to disclose it.

Sincerely,

Donald C. Arnold
Chief Counsel
General Counsel Division

DCA:WGF:AEA:JTM:mcg/GEN313682

[1] U.S. Dept. of Housing and Urban Development, Mortgagee Letter 2005-02, Subject: Seller Concessions and Verification of Sales, January 4, 2005.

[2] This letter addresses only the question whether a real estate licensee has an affirmative duty to keep sales concession information confidential under ORS 696.800 through 696.870 and ORS 696.301(3). It does not address or consider whether other potential sources of a confidentiality obligation, such as a non-disclosure agreement, might require a licensee to keep that information confidential.