Oregon State Bar Bulletin NOVEMBER 2012
'Magic Words,' or Too Much?
By Dean S. Kaufman
In 1970, as an eager young staff attorney at Lane County Legal Aid, I noticed that a number of our clients were coming in for help after the 30-day period for responding to a summons had elapsed, often after a default judgment had been entered against them. When asked why they had waited so long, they frequently said they didn’t understand the language of the summons and didn’t know that they were under a deadline to respond after being served. Full of fervor for “ “law reform,” our legal aid office joined with the Marion-Polk and Multnomah County Legal Aid offices and successfully lobbied the Legislature to enact the “NOTICE TO DEFENDANTS: READ THESE PAPERS CAREFULLY!” notice, which is now required in all summonses pursuant to ORCP 7C(3).
During the recent housing bubble, I closed a number of loans for one of the big national lenders, which subsequently declared bankruptcy and has been accused of predatory lending. I was struck, time and again, at how oblivious the borrowers were to the content of the paperwork they were robotically signing as I presented it to them. I would try and explain each document briefly: “This is your Truth in Lending disclosure, this is your flood insurance disclosure...”, etc. This was invariably met with blank stares and a rush to scribble signatures on the huge stack of paperwork necessary to close the loan. The only question typically asked was: “How much are my monthly payments?”
Although a little consumer protection disclosure, such as the notice on summonses, can be a good thing, a lot is not, and is, in fact, counterproductive. Back in the good old days when you bought your home, you signed a note and mortgage or trust deed. It was possible to take the time at closing to read the documents carefully and ask questions. Now, it would literally take the better part of a day to read each word in each document a buyer must sign to buy a house. It doesn’t happen, of course. The entire system would grind to a halt, and escrow fees would be astronomical, if the closer had to sit through a careful and considered reading at each closing.
In our efforts to help and protect buyers and borrowers, by requiring multiple disclosures and never considering the cumulative effect of piling statute upon statute in our effort to address each “problem,” we have effectively negated whatever value each individual “disclosure” might have. If you add to this the pile of paperwork lenders’ lawyers have drafted to “protect” the lenders against claims by borrowers’ attorneys, you have the current nightmare.
This problem is replicated over and over again in Oregon law. The original “Notice to Tenants” when their landlord is being foreclosed upon, which has morphed repeatedly as the Legislature tries to improve the language, is now so long and convoluted that it is probably about as effective as the disclosures to residential borrowers. The land use disclaimer in ORS 93.040(1) starts with the informative language (In all caps, of course, to make it more understandable!):
“BEFORE SIGNING OR ACCEPTING THIS INSTRUMENT, THE PERSON TRANSFERRING FEE TITLE SHOULD INQUIRE ABOUT THE PERSON’S RIGHTS, IF ANY, UNDER ORS 195.300, 195.301 and 195.305 TO 195.336 AND SECTIONS 5 TO 11, CHAPTER 424, OREGON LAWS 2007, AND SECTIONS 2 TO 9 AND 17, CHAPTER 855, OREGON LAWS 2009, AND SECTIONS 2 TO 7, CHAPTER 8, OREGON LAWS 2010.”
Quick, how many of you know, off the top of your head, what the references are or what they mean? Luckily, at a typical closing, the average consumer has access to not only ORS, but the Oregon Session laws for 2007, 2009 and 2010!
The statute, initially enacted in 1983, was amended in 1985, 1989, 1993, 1995, 2005, 2007, 2009 and 2010. Each amendment has no doubt improved the degree of consumer protection for our citizens.
Don’t get me started on how many trees we have sacrificed to warn consumers not to use their microwave to dry their dog or cat. Recently I asked my wife to check the owner’s manual to learn how to fold down the rear seats in our new Outback. Before finding the description of the appropriate lever, she read the helpful language warning that one shouldn’t fold the seat down while the seat was occupied! If the Legislature wants to go green, keep Oregon’s forests intact and, incidentally, drive the plaintiffs’ bar to distraction, it should pass a statute relieving manufacturers of tort liability for failure to warn people to use common sense.
The road to hell is indeed paved with good intentions. The real question is how long will our lawmakers continue to ignore what are now the hardly “unintended” consequences of their efforts to be helpful?
ABOUT THE AUTHOR
Dean Kaufman practices primarily real estate and business law with Cox & Associates in Eugene.
© 2012 Dean Kaufman