72nd OREGON LEGISLATIVE ASSEMBLY--2003 Regular Session
Enrolled
Senate Bill 909
Sponsored by Senator MINNIS; Representatives CLOSE, KNOPP (at the
request of Oregon Building Industry Association)
CHAPTER ................
AN ACT
Relating to residential construction claims.
Be It Enacted by the People of the State of Oregon:
SECTION 1. { + As used in sections 1 to 8 of this 2003 Act:
(1) 'Contractor' means a person that performed services for the
construction, alteration or repair of a residence.
(2) 'Defect' means a deficiency, an inadequacy or an
insufficiency arising out of or relating to the construction,
alteration or repair of a residence. 'Defect' includes a
deficiency, an inadequacy or an insufficiency in a system,
component or material incorporated into a residence.
(3) 'Owner' means a person that possesses an interest in a
residence or in land that is a residential site or has entered
into a contract for the purchase of an interest in the residence
or land. 'Owner' includes:
(a) A homeowners association as defined in ORS 94.550;
(b) A managing entity as defined in ORS 94.803;
(c) An owners' association as described in ORS 94.858;
(d) An association of unit owners as defined in ORS 100.005;
and
(e) Any other entity that possesses an interest in a residence
or represents owners of a residence.
(4) 'Remediation' means the repair or replacement of some or
all of the defects described in an owner's notice of defect sent
under section 2 of this 2003 Act.
(5) 'Residence' means:
(a) A residential structure as defined in ORS 701.005;
(b) Common property as defined in ORS 94.550; and
(c) A common element as defined in ORS 100.005.
(6) 'Secondary notice' means a copy of an owner's notice of
defect that a contractor, subcontractor or supplier sends to
another contractor, subcontractor or supplier that may be
responsible for a defect.
(7) 'Subcontractor' means any person that performed services
for the construction, alteration or repair of a residence at the
request or direction of a contractor.
(8) 'Supplier' means any person that furnished or manufactured
the systems, components or materials incorporated into a
residence as part of the construction, alteration or repair of
the residence. + }
SECTION 2. { + (1) An owner may not compel arbitration or
commence a court action against a contractor, subcontractor or
Enrolled Senate Bill 909 (SB 909-INTRO) Page 1
supplier to assert a claim arising out of or related to any
defect in the construction, alteration or repair of a residence
or in any system, component or material incorporated into a
residence located in this state unless the owner has sent that
contractor, subcontractor or supplier a notice of defect as
provided in this section and has complied with section 4 of this
2003 Act.
(2) An owner must send a notice of defect by registered mail,
return receipt requested. If a notice of defect is sent to a
contractor or subcontractor, the owner must send the notice to
the last known address for the contractor or subcontractor as
shown in the records of the Construction Contractors Board. If a
notice of defect is sent to a supplier, the owner must send the
notice to the Oregon business address of the supplier or, if
none, to the registered agent of the supplier.
(3) A notice of defect sent by an owner must include:
(a) The name and mailing address of the owner or the owner's
legal representative, if any;
(b) A statement that the owner may seek to compel arbitration
or bring a court action against the contractor, subcontractor or
supplier;
(c) The address and location of the affected residence;
(d) A description of:
(A) Each defect;
(B) The remediation the owner believes is necessary; and
(C) Any incidental damage not curable by remediation as
described in subparagraph (B) of this paragraph; and
(e) Any report or other document evidencing the existence of
the defects and any incidental damage. + }
SECTION 3. { + (1) A contractor, subcontractor or supplier
that receives a notice of defect sent under section 2 of this
2003 Act shall, not later than 14 days after receiving the notice
of defect, send a secondary notice to any other known contractor,
subcontractor or supplier that may be responsible for some or all
of the defects described in the notice of defect. The contractor,
subcontractor or supplier must send the secondary notice by
registered mail, return receipt requested, to an address
described in section 2 (2) of this 2003 Act. The secondary notice
must be accompanied by a statement describing the basis for
contending that the other contractor, subcontractor or supplier
may be responsible for some or all of the defects.
(2) A contractor, subcontractor or supplier that receives a
notice of defect or secondary notice may send the owner a written
request to conduct a visual examination of the residence. The
written request must be sent not later than 14 days after the
requesting contractor, subcontractor or supplier receives a
notice of defect or secondary notice. The written request to
conduct a visual examination of the residence must state the
estimated time required for the visual examination.
(3) A contractor, subcontractor or supplier that receives a
notice of defect or secondary notice may send the owner a written
request to inspect the residence. The written request must be
sent not later than 14 days after the requesting contractor,
subcontractor or supplier conducted a visual examination of the
residence. The written request to inspect the residence must
state the nature and scope of the inspection, whether any testing
is to be performed and the estimated time required for the
inspection. The recipient of a secondary notice that requests to
inspect the residence shall send a copy of the request to the
sender of the secondary notice.
Enrolled Senate Bill 909 (SB 909-INTRO) Page 2
(4) A contractor, subcontractor or supplier that sends a
secondary notice and intends to hold the recipient of the
secondary notice liable for a defect described in a notice of
defect shall coordinate the scheduling of any inspection with the
owner and all recipients of a secondary notice from the
contractor, subcontractor or supplier. The contractor,
subcontractor or supplier shall deliver a copy of any written
request to inspect the residence to each recipient of the
secondary notice in time to provide the recipient with an
opportunity to attend the requested inspection and to participate
in any remediation. The sender of a secondary notice shall give
reasonable advance notice to the owner or the owner's legal
representative, if any, of the identity of any contractor,
subcontractor or supplier who will attend the inspection.
(5) Unless otherwise agreed to by the owner, a contractor,
subcontractor or supplier that receives a notice of defect or
secondary notice shall send a written response to the owner not
later than 90 days after the contractor, subcontractor or
supplier receives a notice of defect or secondary notice. A
contractor, subcontractor or supplier that receives a secondary
notice also shall send a copy of the written response to the
sender of the secondary notice. The written response must be sent
by registered mail, return receipt requested. The written
response must include:
(a) One or more of the following for each defect described in
the notice of defect or secondary notice or discovered during the
course of any visual examination or inspection:
(A) An acknowledgement of the existence, nature and extent of
the defect without regard to responsibility for the defect.
(B) A statement describing the existence of a defect different
in nature or extent from the defect described in the notice of
defect or secondary notice, without regard to responsibility for
the defect.
(C) A denial of the existence of the defect.
(b) A copy of the documents described in section 4 (4) of this
2003 Act.
(c) One or more of the following:
(A) An offer to perform some or all of the remediation. The
offer must specify the date by which the offered remediation will
be completed.
(B) An offer to pay a stated amount of monetary compensation to
the owner for some or all of the acknowledged defects and any
incidental damage. The offer must specify the date by which
payment will be made.
(C) A denial of responsibility for some or all of the
acknowledged defects or incidental damage. + }
SECTION 4. { + (1) An owner sending a notice of defect under
section 2 of this 2003 Act shall make the residence available for
visual examination pursuant to any written request sent under
section 3 of this 2003 Act. The owner shall make the residence
available for visual examination, during normal business hours or
as otherwise agreed, not later than 20 days after receiving the
written request for visual examination.
(2) An owner sending a notice of defect under section 2 of this
2003 Act shall make the residence available for an inspection
pursuant to any written request sent under section 3 of this 2003
Act. The owner shall make the residence available for inspection
during normal business hours or at a time that is mutually
agreeable to the owner and the requester.
Enrolled Senate Bill 909 (SB 909-INTRO) Page 3
(3) An inspection by a contractor, subcontractor or supplier
may include any reasonable measures, including testing, for
determining the nature, cause and extent of the defects described
in the notice of defect or incidental damage and the nature and
extent of the necessary remediation. Unless the contractor,
subcontractor or supplier conducting the inspection and the owner
agree otherwise, the contractor, subcontractor or supplier
conducting the inspection shall repair any damage caused by the
inspection. Any damage caused by the inspection that is not
repaired may be sought as incidental damage in any subsequent
arbitration or court action by an owner against the contractor,
subcontractor or supplier conducting the inspection.
(4) A contractor, subcontractor or supplier that requests to
inspect a residence must include as part of the written response
of the contractor, subcontractor or supplier under section 3 of
this 2003 Act, a written report or other document evidencing the
result of the inspection and the existence or nonexistence of the
defects described in the notice of defect or discovered during
the inspection. + }
SECTION 5. { + (1) An owner may accept an offer contained in a
written response under section 3 of this 2003 Act by delivering a
written acceptance to the offering contractor, subcontractor or
supplier within 30 days after receiving the offer. If an owner
fails to accept an offer within 30 days after receipt, the offer
is deemed rejected.
(2) If the owner accepts a contractor, subcontractor or
supplier's offer to perform remediation or to pay monetary
compensation, completion of the remediation or payment satisfies
the claims by the owner for those defects included in the offer
for which remediation was performed or compensation paid, but not
for any other defect. Except as provided in subsection (3) of
this section, if the owner accepts an offer by a contractor,
subcontractor or supplier that received a secondary notice,
completion of the remediation or payment satisfies claims for
those defects included in the offer for which remediation was
performed or compensation paid, including claims by the owner and
claims for contribution or indemnity against the contractor,
subcontractor or supplier by the sender of the secondary notice,
but not for any other defect.
(3) If the owner accepts an offer by a contractor,
subcontractor or supplier that received a secondary notice to
perform remediation or to pay monetary compensation and the
contractor, subcontractor or supplier fails to perform in
accordance with the accepted offer, then the sender of the
secondary notice may perform the remediation or pay the monetary
compensation offered by the nonperforming contractor,
subcontractor or supplier.
(4) An owner that sends a notice of defect under section 2 of
this 2003 Act may compel arbitration or commence a court action
against a contractor, subcontractor or supplier if:
(a) The contractor, subcontractor or supplier that receives the
notice of defect sent under section 2 of this 2003 Act does not
send a timely written response under section 3 of this 2003 Act;
(b) The written response of the contractor, subcontractor or
supplier that received the notice of defect or a secondary notice
does not offer remediation or monetary compensation;
(c) The owner rejects a written offer, or any part thereof,
made by the contractor, subcontractor or supplier; or
(d) The contractor, subcontractor or supplier fails to perform
in accordance with an accepted offer.
Enrolled Senate Bill 909 (SB 909-INTRO) Page 4
(5) A notice of defect and the documents described in section 4
(4) of this 2003 Act are admissible in any arbitration or court
action between or among an owner, contractor, subcontractor or
supplier arising out of or related to the construction,
alteration or repair of the residence.
(6) Except as provided in this subsection, a written response
containing an offer to perform remediation or pay monetary
compensation made under section 3 (5) of this 2003 Act that is
not accepted by the owner, and any reply by an owner, unless the
reply contains a counteroffer accepted by a contractor,
subcontractor or supplier, are not admissible during any
subsequent arbitration or court action. A response or reply
described in this subsection is admissible solely for the purpose
of proving that an owner is qualified to compel arbitration or
commence a court action under subsection (4)(c) of this section
or determining the timeliness of an action under section 6 of
this 2003 Act. + }
SECTION 6. { + (1) If an owner sends a contractor,
subcontractor or supplier a notice of defect within the time
allowed for the owner to commence a court action against that
contractor, subcontractor or supplier for a claim described in
section 2 of this 2003 Act, the time for the owner to commence
the action shall be extended, notwithstanding any statute of
limitation or statute of ultimate repose, until the later of:
(a) One hundred and twenty days after the owner receives a
written response from the contractor, subcontractor or supplier
that received the notice of defect if the written response does
not contain a written offer to perform remediation or pay
monetary compensation for one or more of the defects or
incidental damage described in the notice of defect;
(b) One hundred and twenty days after the owner rejects a
written offer by any contractor, subcontractor or supplier to
perform remediation or pay monetary compensation for one or more
of the defects or incidental damage described in the notice of
defect; or
(c) Thirty days after the date specified in an accepted written
offer by which the offering contractor, subcontractor or supplier
is to complete the remediation or complete payment of monetary
compensation for one or more of the defects and any incidental
damage described in the notice of defect.
(2) Subsection (1) of this section does not shorten or
terminate the time for bringing a claim in accordance with
applicable statutes of ultimate repose and statutes of
limitation.
(3) Delivery of a secondary notice sent by a contractor,
subcontractor or supplier under section 3 of this 2003 Act does
not act to toll the expiration of any right of the owner to
commence a court action against the recipient of the secondary
notice.
(4) Any remediation performed pursuant to an accepted offer
made under section 3 of this 2003 Act does not constitute a new
performance and, for purposes of ORS 12.135, relates back to the
earliest date of substantial completion or abandonment of the
construction, alteration or repair of the improvement to real
property. + }
SECTION 7. { + (1) A contractor shall deliver a notice of the
procedure contained in sections 2 to 5 of this 2003 Act to an
owner along with the consumer notification form required to be
delivered to an owner under ORS 701.055 (13). The notice must be
Enrolled Senate Bill 909 (SB 909-INTRO) Page 5
conspicuous and may be included as part of the underlying
contract.
(2) The notice required by subsection (1) of this section must
be in substantially the following form: + }
________________________________________________________________
{ + OREGON LAW CONTAINS IMPORTANT REQUIREMENTS YOU MUST
FOLLOW BEFORE YOU MAY COMMENCE ARBITRATION OR A COURT ACTION
AGAINST ANY CONTRACTOR, SUBCONTRACTOR OR SUPPLIER FOR
CONSTRUCTION DEFECTS. BEFORE YOU COMMENCE ARBITRATION OR A COURT
ACTION YOU MUST DELIVER A WRITTEN NOTICE OF ANY CONDITIONS YOU
ALLEGE ARE DEFECTIVE TO THE CONTRACTOR, SUBCONTRACTOR OR SUPPLIER
YOU BELIEVE IS RESPONSIBLE FOR THE ALLEGED DEFECT AND PROVIDE THE
CONTRACTOR, SUBCONTRACTOR OR SUPPLIER THE OPPORTUNITY TO MAKE AN
OFFER TO REPAIR OR PAY FOR THE DEFECTS. YOU ARE NOT OBLIGATED TO
ACCEPT ANY OFFER MADE BY THE CONTRACTOR, SUBCONTRACTOR OR
SUPPLIER. THERE ARE STRICT DEADLINES AND PROCEDURES UNDER STATE
LAW. FAILURE TO MEET THOSE DEADLINES OR FOLLOW THOSE PROCEDURES
WILL AFFECT YOUR ABILITY TO COMMENCE ARBITRATION OR A COURT
ACTION. + }
________________________________________________________________
SECTION 8. { + If an owner compels arbitration or commences a
court action against any contractor, subcontractor or supplier to
assert a claim arising out of or related to the construction,
alteration or repair of a residence located in this state and the
owner has not followed the procedure set forth in sections 2 and
4 of this 2003 Act, the arbitrator or court must dismiss the
arbitration or action without prejudice. The owner may not
commence a new arbitration or action unless the owner follows the
procedure set forth in sections 2 and 4 of this 2003 Act. + }
SECTION 9. { + Sections 1 to 8 of this 2003 Act do not apply:
(1) To personal injury or death claims.
(2) To claims filed pursuant to ORS 671.703 or 701.139.
(3) To claims against a person licensed under ORS 671.010 to
671.220. + }
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Passed by Senate July 9, 2003
...........................................................
Secretary of Senate
...........................................................
President of Senate
Passed by House August 5, 2003
...........................................................
Speaker of House
Enrolled Senate Bill 909 (SB 909-INTRO) Page 6
Received by Governor:
......M.,............., 2003
Approved:
......M.,............., 2003
...........................................................
Governor
Filed in Office of Secretary of State:
......M.,............., 2003
...........................................................
Secretary of State
Enrolled Senate Bill 909 (SB 909-INTRO) Page 7