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The Oregon Condo Act defines "negotiation" as:

... any activity preliminary to the execution by either developer or purchaser of a unit sales agreement, including but not limited to advertising, solicitation and promotion of the sale of a unit

Now imagine a scenario where a developer lists a condo for sale for $1M. The market value of it is really $500k, but he thinks he can get $1M. A bank gives him a loan for $900k with a lien against the property. He lists it for sale at $1M, then $915k, but it fails to sell due to a bad downturn. Then he rents it out, then he gets foreclosed on. He deeds it to the bank in lieu of foreclosure.

Can anything he did be considered a step "preliminary to the execution ... of a unit sales agreement?"

I would argue that since no one executed a unit sales agreement, then nothing this developer did could be proven to be actually preliminary to a unit sales agreement. When the developer rented it out, this was a step preliminary to foreclosure; he knew he was doomed and just tried to milk the property for whatever he could before he had to hand it over to the bank.

However, the defense will argue that his advertising the units for sale was, in fact, a "preliminary" step to the execution of a sales agreement, purely because a sale was his reasonable ultimate goal and such steps normally are preliminary to sales.

Who is right? Do particular facts and reality matter at all for what counts as "preliminary"? If not, why is this even part of the law? If facts don't matter then why do we have courts? I'm honestly curious why imagination and hope are enough to avoid violating this statute.

Another example: if a preliminary hearing does not result in trial, can it rightly be considered to have been non-preliminary in fact?

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  • I'm having a hard time understanding what difference it makes. Could you please write a few words about why this might matter?
    – Alexanne Senger
    Commented Dec 13, 2015 at 22:22

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It must rest on intent. If negotiations take place, for example, they must be in contemplation of a sale even if such sale never eventuates.

If it could be proven that one or both of the parties was never had a bona fide intent to sell/buy then it could be argued that the negotiation was not preliminary but not otherwise.

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  • What if it could be proven that there never were two parties — i.e. the original developer never had any potential buyers, even though he did advertise the sale?
    – CommaToast
    Commented Dec 13, 2015 at 18:39
  • Advertising is itself a preliminary step: you would need to prove that the developer had no intention to sell even if the advertisement produced potential buyers.
    – Dale M ♦
    Commented Dec 13, 2015 at 18:44
  • I would argue it's not a preliminary step if the price is too high and you don't have the ability to lower it. In my example the developer advertises the units for $1M and then $915k, but the market value is $500k. He can't sell lower than $900k because of the lien. Therefore he's prevented from taking any steps that are truly preliminary to selling, which is why he got foreclosed on. Also, "negotiation" by common sense always involves two parties; surely the law is not trying to say there can be negotiations that only entail one person? Who are they in negotiation with in that case?
    – CommaToast
    Commented Dec 13, 2015 at 18:48
  • Argue away, I think you'll lose though. If the ad had produced a buyer willing to pay the asking price he would have sold, therefore its preliminary. That it was unlikely to do so is irrelevant.
    – Dale M ♦
    Commented Dec 13, 2015 at 19:33
  • I'm following you, but please answer this. If a preliminary hearing fails to reveal evidence, the judge will dismiss. We call it "preliminary" because the point is to determine if steps can be taken towards actually preparing a case (the dictionary says "preliminary" means "preparatory")—the point is not to determine the DA's true intentions. I would argue the standard for preliminary-ness is whether or not the DA can actually take preliminary actions towards a conviction, based on facts and evidence—not based on his intent. Cases need evidence; don't negotiations need two people?
    – CommaToast
    Commented Dec 13, 2015 at 21:25

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