71st OREGON LEGISLATIVE ASSEMBLY--2001 Regular Session
 
NOTE:  Matter within  { +  braces and plus signs + } in an
amended section is new. Matter within  { -  braces and minus
signs - } is existing law to be omitted. New sections are within
 { +  braces and plus signs + } .
 
LC 1015
 
                         House Bill 2185
 
Ordered printed by the Speaker pursuant to House Rule 12.00A (5).
  Presession filed (at the request of Governor John A. Kitzhaber,
  M.D., for Construction Contractors Board)
 
 
                             SUMMARY
 
The following summary is not prepared by the sponsors of the
measure and is not a part of the body thereof subject to
consideration by the Legislative Assembly. It is an editor's
brief statement of the essential features of the measure as
introduced.
 
  Allows Construction Contractors Board to require new surety
bond when payment is made out of bond of licensed contractor.
Allows board to require surety that pays claim out of bond to
continue to be liable for full penal sum of bond under certain
conditions.
 
                        A BILL FOR AN ACT
Relating to construction contractor bonding; amending ORS
  701.085.
Be It Enacted by the People of the State of Oregon:
  SECTION 1. ORS 701.085 is amended to read:
  701.085. (1) A person who wishes to obtain a license as a
contractor or renew a license shall file with the Construction
Contractors Board a surety bond with one or more corporate
sureties authorized to do business in this state in the amount
set forth in subsections (2) to (5) of this section, conditioned
that the applicant, with regard to work subject to this chapter,
will pay claims ordered paid by the board under ORS 701.140.
Bonds filed under this subsection shall remain in effect for at
least one year or until depleted by claims paid under ORS
701.140, unless the surety sooner cancels the bond. At the
discretion of the surety the bond may be continued for an
additional period by continuation certificate.  { + Except as
provided in subsection (6) of this section,  + }the aggregate
liability of the surety under the bond for claims against the
bond shall not exceed the penal sum of the bond no matter how
many years the bond is in force.  { + Except as provided in
subsection (6) of this section,  + }no extension by continuation
certificate, reinstatement, reissue or renewal of the bond shall
increase the liability of the surety.
  (2) A general contractor shall obtain a surety bond in the
amount of $15,000.
  (3) A specialty contractor shall obtain a surety bond in the
amount of $10,000.
  (4) A consultant shall obtain a surety bond in the amount of
$10,000.
  (5) The board may reduce the amount of the surety bond required
by this section to $5,000 for a contractor upon a showing that
the contractor does not perform work as a contractor exceeding
$40,000 in gross annual volume and does not enter into contracts
that exceed $5,000. These contractors shall be designated as
limited contractors.
   { +  (6) The board, by rule, may:
  (a) Require a licensee to obtain a new surety bond if, pursuant
to a board order for payment of a claim described in ORS 701.140,
the surety pays a claim out of the bond of the licensee.  The new
surety bond must be in the amount set forth in subsections (2) to
(5) of this section unless a higher amount is required by a board
condition or rule described in subsection (7) or (8) of this
section. The board may allow a licensee to obtain, instead of a
new bond, a certification that the surety remains liable for the
full penal sum of the bond, notwithstanding payment by the surety
on the claim; or
  (b) Require that a surety be liable up to the full penal sum of
a bond issued to a licensee if:
  (A) The surety does not cancel the bond on or before the 30th
day after the surety has paid a claim out of the bond; and
  (B) A claim is filed more than 30 days after the surety has
paid a claim out of the bond. If multiple claims are filed more
than 30 days after the surety has paid a claim out of the bond,
the surety shall satisfy the multiple claims in the manner
provided under ORS 701.150 as though the surety had issued a new
bond on the 30th day after the surety paid the claim out of the
bond. This paragraph does not extend the term of a bond issued by
a surety. + }
    { - (6) - }  { +  (7) + } If the amount the licensee must pay
against the bond under this section exceeds the amount of the
bond, the board shall suspend the contractor's license until the
amount owed is paid. The board, as a condition of ending the
suspension, may require a contractor requesting reinstatement of
a license to file a bond of an amount up to five times as much as
the amount required ordinarily of a licensee under this section.
    { - (7) - }  { +  (8) + } The board by rule may establish
conditions for applicants or persons licensed under this chapter
under which the applicant or licensee must file a bond of an
amount up to five times as much as the amount required ordinarily
of an applicant or licensee under this section. The board may
reduce the amount of bond it would otherwise require if the
contractor demonstrates satisfactory completion of approved
elective classes on dispute resolution and prevention, basic
accounting and record keeping or such other classes as the board
may prescribe.
    { - (8) - }  { +  (9) + } The bond required under this
section is for the exclusive purpose of payment of final orders
and arbitration awards of the board in accordance with this
chapter.
    { - (9) - }  { +  (10) + } Upon determination of a claim
under ORS 701.140 against a contractor who holds a bond required
under this section, the board shall notify the surety on the bond
of the final order in a manner determined by the board by rule.
The notification shall include a list of all claims upon which a
final order has been issued.
    { - (10) - }  { +  (11) + } No suit or action may be
commenced against a surety on a bond required under this section
until 30 days after the date that the surety is notified by the
board under ORS 701.140 that payment is due on the claim.
    { - (11) - }  { +  (12) + } In any action against a surety on
a bond under this section that is based on the failure of the
surety to pay a claim or on the denial of a claim by the surety,
the court may award:
  (a) Costs;
  (b) Reasonable attorney fees to the prevailing party as part of
the costs; and
  (c) If the surety is ordered to pay a claim on the bond that
the surety arbitrarily and capriciously refused to pay upon order
of the board, twice the amount of damages against the surety as
ordered by the board.
                         ----------