ORS 86.797
Effect of sale

  • actions for deficiency
  • restrictions


If, under ORS 86.705 (Definitions for ORS 86.705 to 86.815) to 86.815 (Time within which foreclosure must be commenced), a trustee sells property covered by a trust deed, the trustee’s sale forecloses and terminates the interest in the property that belongs to a person to which notice of the sale was given under ORS 86.764 (Notice of sale for certain persons) and 86.774 (Service and publication of notice) or to a person that claims an interest by, through or under the person to which notice was given. A person whose interest the trustee’s sale foreclosed and terminated may not redeem the property from the purchaser at the trustee’s sale. A failure to give notice to a person entitled to notice does not affect the validity of the sale as to persons that were notified.


Except in accordance with subsection (4) of this section, an action for a deficiency may not be brought after a trustee’s sale under ORS 86.705 (Definitions for ORS 86.705 to 86.815) to 86.815 (Time within which foreclosure must be commenced) or after a judicial foreclosure of a residential trust deed, and a judgment to foreclose a residential trust deed under ORS 88.010 (Foreclosure of lien by suit) may not include a money award for the amount of the debt against the grantor, the grantor’s successor in interest or another person obligated on:


The note, bond or other obligation secured by the trust deed for the property that was subject to the trustee’s sale or the judicial foreclosure; or


Any other note, bond or other obligation secured by a residential trust deed for, or mortgage on, the property that was subject to the trustee’s sale or the judicial foreclosure when the debt, of which the note, bond or other obligation is evidence:


Was created on the same day as, and used as part of the same purchase or repurchase transaction as, the note, bond or other obligation secured by the foreclosed residential trust deed; and


Is owed to or was originated by the beneficiary or an affiliate of the beneficiary in the residential trust deed that was subject to the trustee’s sale or the foreclosure.


Notwithstanding ORS 88.103 (Sale of real property after mortgage foreclosure), if a judicial foreclosure of a trust deed that is not a residential trust deed results in a judgment that includes a money award, the judgment must provide that execution may issue for the amount by which the unpaid balance of the money award exceeds the net sale proceeds that are payable to the judgment creditor from the sale of the property that is subject to the foreclosure if:


The net sale proceeds are insufficient to satisfy the money award; and


The plaintiff requests the provision in the complaint.


This section does not preclude:


An action that forecloses, judicially or nonjudicially:


Other property covered by the trust deed that is the subject of the foreclosure; or


Another trust deed, mortgage, security agreement, consensual or nonconsensual security interest or lien that covers other real or personal property that is also used as security for the note, bond or other obligation that is secured by the trust deed for the property that was sold.


An action against a guarantor for a deficiency that remains after a judicial foreclosure.


A guarantor of an obligation secured by a residential trust deed may not recover a deficiency from the grantor or a successor in interest of the grantor. [Formerly 86.770; 2015 c.291 §3]

Source: Section 86.797 — Effect of sale; actions for deficiency; restrictions, https://www.­oregonlegislature.­gov/bills_laws/ors/ors086.­html.

Notes of Decisions

Prohibition against further action to collect deficiency following foreclosure sale does not prevent plaintiff from seeking other relief in same action seeking foreclosure. Siuslaw Valley Bank v. Canfield Assoc. Ore. Ltd., 64 Or App 198, 667 P2d 1035 (1983)

Portion of judgment for attorney fees, costs and disbursements that was not satisfied from proceeds of judicial foreclosure and sheriff’s sale is “deficiency judgment” and forbidden by this section. Cottage Grove Apartment Investors v. Brandenfels, 69 Or App 192, 684 P2d 1235 (1984)

Trust deed foreclosed was commercial despite apartment on premises because residence was incidental to storage business and residence exemption was intended to apply to individuals only. Oregon Bank v. Hawkins, 71 Or App 791, 693 P2d 1321 (1984)

Beneficiary under “commercial” trust deed can get deficiency judgment after foreclosing trust deed by judicial proceeding, regardless of whether it is purchase money trust deed. FDIC v. Burdell, 92 Or App 389, 759 P2d 282 (1988), aff’d 307 Or 285, 766 P2d 1032 (1988)

Election of remedy of non-judicial foreclosure occurs only upon sale and because plaintiff abandoned its non-judicial foreclosure proceeding before sale, no election of remedies occurred. Barclaysamerican/Financial Inc. v. Boone, 95 Or App 347, 768 P2d 439 (1989), on reconsideration 96 Or App 635, 773 P2d 1338 (1989)

Trust deed anti-deficiency provision in this section does not initially preclude action being brought on note secured by trust deed. Beckhuson v. Frank, 97 Or App 347, 775 P2d 923 (1989), Sup Ct review denied

When two trust deeds describe same property as security, trust deed beneficiary may foreclose non-judicially on one deed to obtain title to property and then bring action on other note. Urbach v. Monchamp Corp. 110 Or App 275, 821 P2d 1116 (1991), Sup Ct review denied

State anti-deficiency law is not preempted by federal Department of Veterans Affairs regulations so long as state law provides method for secretary of Department to exercise right of indemnity and receive full measure of protection without displacing state law. Connelly v. Derwinski, 961 F2d 129 (1992)

Plaintiffs, who signed deed of trust with defendant creditor and who defaulted on mortgage, could not challenge properly noticed trustee’s sale of home 19 months after date of sale because plaintiff’s interest in home was foreclosed and terminated at sale. Mikityuk v. Northwest Trustee Services, Inc., 952 F. Supp. 2d 958 (D. Or. 2013); Roisland v. Flagstar Bank, FSB, 989 F. Supp. 2d 1095 (D. Or. 2013)

Where real property used as security for loan obligation was sold at trustee’s sale but sale was not conducted by trustee, this section does not bar property owner from post-sale challenge because this section applies only to validly conducted trustee sales. Wolf v. GMAC Mortgage, LLC, 276 Or App 541, 370 P3d 1254 (2016); Fed. Home Loan Mortg. Corp. v. Smith, 287 Or App 42, 400 P3d 1009 (2017). But see DiGregorio v. Bayview Loan Servicing, LLC, 281 Or App 484, 381 P3d 961 (2016)

Where grantor of trust deed had notice that property was being sold at trustee’s sale under Oregon Trust Deed Act, this section precludes post-sale challenge on sole ground that trustee’s notice of sale did not correctly identify beneficiary of trust deed. DiGregorio v. Bayview Loan Servicing, LLC, 281 Or App 484, 381 P3d 961 (2016), Sup Ct review denied

This section does not mandate strict compliance with every provision of Oregon Trust Deed Act for trustee’s sale to be valid and before person’s property interests may be terminated by trustee’s sale; thus, purported failure to identify beneficiary of trust deed in notice of sale did not render this section inapplicable and trustee’s sale invalid. DiGregorio v. Bayview Loan Servicing, LLC, 281 Or App 484, 381 P3d 961 (2016), Sup Ct review denied

This section does not allow post-sale challenges based on violation of each and every technical provision of Oregon Trust Deed Act; thus, where only defect in foreclosure process was that notice of non-judicial foreclosure sale failed to identify proper beneficiary, this section barred borrower’s claim that trustee’s sale was void. Woods v. United States Bank N.A., 831 F3d 1159 (9th Cir. 2016)

Law Review Citations

69 OLR 880 (1990)

Nature of mortgagee’s interest
Covenant to pay money not implied
Absolute deed as a mortgage
Improvements on mortgaged lands
Payment of taxes and other charges by mortgagee
Assignment of mortgage
Record of assignment not notice to mortgagor
Acts not affecting priority of lien of credit instrument
Discharge of mortgage
Discharge of record by owner and holder of mortgage note who is not the mortgagee of record
Discharge of mortgage on real property
Discharge by foreign executors, administrators, conservators and guardians
Liability of mortgagee for failure to discharge mortgage
Loan agreements and promissory notes to state maximum prepayment privilege penalty
Priority of line of credit instrument as to certain advances
Action for residual debt after short sale of residential property
Definitions for ORS 86.160 to 86.185
Late charge
Prohibited mortgage provisions
ORS 86.160 to 86.185 not applicable to certain mortgagees
ORS 86.160 to 86.185 not applicable to certain loans
Definitions for ORS 86.205 to 86.275
Types of lender security protection provisions allowed
Application of ORS 86.210 and 86.245 to real estate loan agreements
Limit on amount required in security protection escrow account
Interest on security protection deposits
Service charge prohibited where interest required
Arrangements where security protection provisions not required
Payment of taxes where security protection provision required
Effect of lender violation of ORS 86.205 to 86.275
ORS 86.205 to 86.275 inapplicable to certain loan agreements
Secretary of State to furnish statement of mortgages filed before September 1, 1963
Discharge of mortgage recorded with county recording officer
Discharge of mortgage filed with Secretary of State
Discharge, assignment and foreclosure of mortgages on chattels registered and licensed by Department of Transportation
Power of financial institutions, fiduciaries and others to make loans secured by property insured by Federal Housing Administration
Investment of funds of financial institutions, fiduciaries and others in bonds and mortgages accepted by Federal Housing Administration, debentures issued thereby, and obligations of national mortgage associations
Eligibility of securities described in ORS 86.620 as security for deposits, investment or reserve of securities
Applicability of other laws requiring security or regulating loans and investments
Definitions for ORS 86.705 to 86.815
Additional definitions for ORS 86.726, 86.729, 86.732, 86.736, 86.741, 86.744 and 86.748
Trust deeds authorized to secure performance of obligation
Qualifications of trustee
Trust deed deemed to be mortgage on real property
Reconveyance upon performance
Correction of error concerning status or effect of trust deed
Resolution conference for foreclosure
Scheduling and notice for resolution conference
Attendance at resolution conference
Certificate of compliance
Attorney General duties and powers
Foreclosure Avoidance Fund
Determination of ineligibility for foreclosure avoidance measure
Foreclosure by advertisement and sale
Notice to grantor
Failure to give notice to grantor
Notice of sale for certain persons
Failure to give notice of sale
Contents of notice of sale
Service and publication of notice
Discontinuance of foreclosure proceedings after cure of default
Sale of property
Request for information from trustee
Information provided by trustee
Disposition of proceeds of sale
Effect of sale
Contents of trustee’s deed to purchaser
Recitals in trustee’s deed and certain affidavits as prima facie or conclusive evidence
Requests for copies of notice of default or notice of sale
Compensation of trustee
Impermissible conditions for approving short sale or sale of note
Time within which foreclosure must be commenced
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