Oregon Broker PSI Practice Exam

If a property has a deferral based on farm use, what is a critical step for a buyer?

1. They must hold onto the property for at least five years

2. They must continue farming the land post-purchase

3. They must ensure the seller agrees to transfer the deferral

4. They must file for a new assessment

The correct answer is: They must ensure the seller agrees to transfer the deferral

When a property has a deferral based on its farm use, it typically means that the property has received a tax advantage due to its designation for agricultural purposes. For a buyer, a critical step involves ensuring that the seller agrees to transfer the deferral. This is important because without the proper transfer of the deferral, the buyer may lose the beneficial tax status that comes with that designation, potentially leading to a significant increase in property taxes. If the deferral does not transfer, the new owner could face a higher tax burden that was not anticipated at the time of purchase. Therefore, ensuring the proper arrangements and agreements with the seller is key to preserving those tax benefits post-sale. While it might be important for the buyer to understand additional responsibilities such as maintaining agricultural use or applying for new assessments, the immediate critical aspect revolves around the legal and administrative process of transferring the deferral itself.