Chapter 427 Oregon Laws 2001

AN ACT

HB 2728

Relating to claims against construction contractor bond; creating new provisions; and amending ORS 701.150.

Be It Enacted by the People of the State of Oregon:

SECTION 1. ORS 701.150 is amended to read:

701.150. (1) If a final Construction Contractors Board order is not paid by the licensee, the board shall notify the surety on the bond.

(2) An order of the board that determines a claim under ORS 701.140 and 701.145 that becomes final by operation of law or on appeal and remains unpaid 10 days after the period of time allowed in this section has expired is an order in favor of the claimant against the person and may be recorded with the county clerk in any county of this state.

(3) Upon receipt, the clerk shall record the order in the County Clerk Lien Record. In addition to any other remedy provided by law, recording an order in the County Clerk Lien Record pursuant to the provisions of this section has the effect provided for in ORS 205.125 and 205.126, and the order may be enforced as provided in ORS 205.125 and 205.126.

(4) Determinations by the board or judgments against the surety bond of a contractor shall be satisfied in the following priority in any 90-day period. A 90-day period shall begin on the date the first claim is filed with the board. A subsequent 90-day period shall begin on the date the first claim is filed with the board after the close of each preceding 90-day period. Within a 90-day period:

(a) Determinations and judgments as a result of claims against a contractor by the owner of a residential structure shall have payment priority to the full extent of the bond over all other types of claims.

(b) If the claims described in paragraph (a) of this subsection do not exhaust the bond, then amounts due as a result of all other types of residential structure claims filed within that 90-day period may be satisfied from the bond, except that the total amount paid from any one bond to nonowner claimants shall not exceed [$2,000] $3,000.

(c) If judgments and determinations involving residential structures do not exhaust the bond, the judgments and determinations involving nonresidential claims shall be satisfied in the following order, except that the total amount paid from any one bond to nonowner claimants shall not exceed [$2,000] $3,000:

(A) Labor, including employee benefits.

(B) [Claims for breach of contract by a party to the construction contract] All other claims involving nonresidential structures except court costs, interest and attorney fees.

(C) Any court costs, interest and attorney fees the plaintiff may be entitled to recover. The total cost paid from any one bond for court costs, interest and attorney fees shall not exceed $2,000.

(d) If the total claims filed with the board against a general contractor or a specialty contractor within 90 days after the board receives notice of the first claim against the contractor exceed the amount of the bond available for such claims, the bond shall be apportioned as the board determines, subject to the priorities established under this section.

(e) If the total amounts due as a result of claims filed with the board within 90 days after the first claim is filed do not exceed the amount of the bond available for such claims, all amounts due as a result of claims filed within the 90-day period shall have priority over all claims subsequently filed until the amount of the bond available for such claims is exhausted[, but not later than one year after whichever occurs first:]

[(A) The date of expiration of the license in force at the time the work was completed or abandoned; or]

[(B) Cancellation by the surety of the license in force at the time the work was completed or abandoned].

(5) Notwithstanding subsection (4) of this section, a bond is not subject to a claim filed more than one year after the earlier of:

(a) The date of expiration or cancellation of the certificate of registration in force at the time the work that is the subject of the claim was completed or abandoned; or

(b) The date the bond was canceled by the surety.

SECTION 1a. If House Bill 2189 becomes law, section 1 of this 2001 Act (amending ORS 701.150) is repealed and ORS 701.150, as amended by section 16, chapter 197, Oregon Laws 2001 (Enrolled House Bill 2189), is amended to read:

701.150. (1) If a Construction Contractors Board final order is not paid by the contractor, the board shall notify the surety on the bond. The surety may not pay a claim until the surety receives notice from the board that the claim is ready for payment.

(2) If an order of the board that determines a claim under ORS 701.145 becomes final by operation of law or on appeal and remains unpaid 10 days after the date the order becomes final, the claimant may file the order with the county clerk in any county of this state.

(4) Payments from the surety bond of a contractor pursuant to board order and notice are satisfied in the following priority in any 90-day period. A 90-day period begins on the date the first claim is filed with the board. Subsequent 90-day periods begin on the date the first claim is filed with the board after the close of the preceding 90-day period. Within a 90-day period:

(a) Board orders as a result of claims against a contractor by the owner of a residential or small commercial structure have payment priority to the full extent of the bond over all other types of claims.

(b) If the claims described in paragraph (a) of this subsection do not exhaust the bond, then amounts due as a result of all other types of residential or small commercial structure claims filed within that 90-day period may be satisfied from the bond, except that the total amount paid from any one bond to nonowner claimants may not exceed [$2,000] $3,000.

(c) If payments involving residential and small commercial structures do not exhaust the bond, board orders and notice involving large commercial structure claims are satisfied in the following priority, except that the total amount paid from any one bond to nonowner claimants may not exceed [$2,000] $3,000:

(A) Labor, including employee benefits.

(B) [Claims for breach of contract by a party to the construction contract] All other claims involving large commercial structures except costs, interest and attorney fees.

(d) If the total claims filed with the board against a contractor within 90 days after the board receives notice of the first claim against the contractor exceed the amount of the bond available for those claims, the bond shall be apportioned as the board determines, subject to the priorities established under this section.

(e) If the total amounts due as a result of claims filed with the board within 90 days after the first claim is filed do not exceed the amount of the bond available for those claims, all amounts due as a result of claims filed within the 90-day period shall have priority over all claims subsequently filed until the amount of the bond available for the payment of claims is exhausted.

(5) Notwithstanding subsection (4) of this section, a bond is not subject to payment for a claim that is filed more than 14 months after the earlier of:

(a) The expiration or cancellation date of the license that was in force when the work that is the subject of the claim was completed or abandoned; or

(b) The date that the surety canceled the bond.

(6) The total amount paid from any one bond for costs, interest and attorney fees may not exceed [$2,000] $3,000.

SECTION 2. The amendments to ORS 701.150 by section 1 of this 2001 Act shall not apply to a determination by the Construction Contractors Board, an arbitration award or a judgment against the surety bond of a contractor if:

(1) The determination, award or judgment resulted from a claim filed with the board prior to the effective date of this 2001 Act; or

(2) The board notified the surety under ORS 701.145 prior to the effective date of this 2001 Act that payment was due from the bond that is available for satisfaction of the determination, award or judgment.

SECTION 3. If House Bill 2189 becomes law, section 2 of this 2001 Act is amended to read:

Sec. 2. The amendments to ORS 701.150 by section [1] 1a of this 2001 Act shall not apply to a determination by the Construction Contractors Board, an arbitration award or a judgment against the surety bond of a contractor if:

(1) The determination, award or judgment resulted from a claim filed with the board prior to the effective date of this 2001 Act; or

Approved by the Governor June 18, 2001

Filed in the office of Secretary of State June 18, 2001

Effective date January 1, 2002

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