Oregon
How It Works
Oregon counties place tax liens on delinquent properties and may seek judicial foreclosure after three years of nonpayment. Owners have two years after foreclosure to redeem these properties. After the redemption period expires, the county may keep a property or sell it. The counties retain any windfall profits.
The Impact
Homeowners caught up in this process lose, on average, 93% of their equity. For the 158 homes in our dataset, homeowners lost a total of $31 million.
Why It Matters
In Oregon:
- 75% of homes were forcibly seized for tax debts less than the price of a 10-year-old Ford F-150.
- On average, homeowners lost $237,000 in savings beyond the debt owed—or four years’ worth of income.
- Governments were able to keep $11 million more than what was owed to them.
When Brande Johnson passed away in December 2007, her five- or six-year-old daughter, Tarresa, inherited a 50% interest in a plot of land in Deschutes County, Oregon.
Over the next several years, no one paid the property tax bills. Most children are not aware of such obligations and do not have the means to pay them. Tarresa, barely a teenager, ended up owing the county $2,101.43 by 2012, when Deschutes County filed for tax foreclosure over the delinquent debt. After the redemption period ended on October 2, 2014, the county received a tax deed for Tarresa’s property.1
In May 2019, the county sold the property at auction for $89,000. Tarresa’s bill for delinquent taxes and fees had grown to $4,172.54 by then. The county collected $84,827.46 more than the tax debt from selling the property. However, rather than returning this surplus amount to the owners after subtracting its selling expenses, Deschutes County used the windfall to fund public projects.2
Oregon law allows counties to seize real estate for unpaid taxes, sell it, and keep all the proceeds—no matter how small the owner’s tax liability. Property owners can lose a lifetime of equity savings over a very small debt.
Oregon allows this home equity theft even though the Fifth Amendment of the U.S. Constitution prohibits it. While the government reserves the right to collect what citizens owe in property taxes, it should never keep more than what is due. Deschutes County should not have pocketed a profit. It should have returned the excess proceeds from selling the estate to Tarresa and the other owner after settling their debts.
Resources
End Home Equity Theft Model Policy
Download data
Legal Appendix
State Summaries
Demand Letter to Governor
Oregon Home Equity Theft Laws
Does the state commonly protect owners’ equity?
- Analysis
-
No. Property is deeded free and clear to the government after foreclosure. Resell to private parties conveys a fee simple title.
- Citation
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Or. Rev. Stat. § 312.270.
Are there any exceptions to that rule?
- Analysis
-
No.
- Citation
-
N/A
Does the government sell tax liens, or does it sell property outright, and what procedures does it use for the sale?
- Analysis
-
The government forecloses on its own tax liens, which grants it absolute title, free and clear from encumbrances once the redemption period has expired.
- Citation
-
Or. Rev. Stat. § 312.270.
What interest and penalties accrue for delinquent taxes, and who collects them?
- Analysis
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The legislative assembly reviews every other year. The interest rate is currently 1.33% per month or fraction of a month. Taxes are paid in thirds: November 15, February 15, and May 15. Interest starts accruing on the portion that remains unpaid for each date. A 5% penalty is applied to the redemption amount upon redemption.
- Citation
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Or. Rev. Stat. §§ 311.506, 311.505(2), 312.120(2).
What is the redemption period—the length of time to pay the debt prior to permanently losing title?
- Analysis
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Foreclosure proceedings may be initiated three years after the tax delinquency. The right to redeem survives two years after the date of the foreclosure judgment. The redemption period is only 30 days if the property is abandoned.
- Citation
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Or. Rev. Stat. §§ 312.010, 312.120(1)−(2), 312.122(1)(b).
If equity is stolen, who profits?
- Analysis
-
The county.
- Citation
-
Or. Rev. Stat. § 312.270.
How much time does the previous owner have to claim the surplus proceeds, and what are the procedures for claiming them?
- Analysis
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N/A
- Citation
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N/A
What types of foreclosures are used in the state?
- Analysis
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Judicial.
- Citation
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Or. Rev. Stat. § 312.060.
What types of notice does the state require?
- Analysis
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(1) Notice of overdue taxes, (2) notice of foreclosure proceedings, and (3) notice of imminent expiration of redemption period.
- Citation
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Or. Rev. Stat. §§ 311.510(1)−(2), 312.040, 312.190.
1 Complaint, Tarresa Hutchinson and Timothy Waterman v. Baker County et al., Circuit Court of the State of Oregon for Deschutes County, June 23, 2020.
2 Complaint, Tarresa Hutchinson and Timothy Waterman v. Baker County et al., Circuit Court of the State of Oregon for Deschutes County, June 23, 2020.