74th OREGON LEGISLATIVE ASSEMBLY--2007 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 762
 
                         House Bill 2110
 
Ordered printed by the Speaker pursuant to House Rule 12.00A (5).
  Presession filed (at the request of Governor Theodore R.
  Kulongoski 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.
 
  Requires construction contractor to retain written evidence
that contractor timely delivered consumer notification form to
owner of residential structure. Provides that failure to retain
written evidence of notification form delivery creates rebuttable
presumption notification form was not timely delivered.
  Makes violation subject to civil penalty, not to exceed $5,000.
  Extends time for property owner to file claim if contractor
fails to deliver consumer notification form by certain
dates. Creates evidentiary presumptions concerning notification
form delivery.
 
                        A BILL FOR AN ACT
Relating to construction contractors; creating new provisions;
  and amending ORS 701.055, 701.135, 701.143 and 701.590.
Be It Enacted by the People of the State of Oregon:
  SECTION 1.  { + Section 2 of this 2007 Act is added to and made
a part of ORS chapter 701. + }
  SECTION 2.  { + (1) The Construction Contractors Board shall
prepare, and provide at no cost to all licensed contractors, a
consumer notification form designed to specifically inform
property owners about what the property owners should do to
protect themselves in a residential repair, remodel or
construction project. The form shall include an explanation of
the meaning of licensure, including a statement that licensure is
not an endorsement of a contractor's work, and an explanation of
the bond and insurance levels required of contractors for the
benefit of property owners. The form must not be larger than one
side of a sheet of paper that is 8-1/2 inches by 11 inches.
  (2) A contractor shall deliver the consumer notification form
to the property owner when the contractor submits a bid or
proposal for work on a residential structure. The contractor may
reproduce the form on the contractor's bid proposal. The
contractor shall retain written evidence of timely delivery of
the form to the property owner for at least:
  (a) Two years after substantial completion of the work
performed by the contractor on the residential structure; or
  (b) One year after delivery of the form, if the contractor and
property owner do not enter into an agreement for work on a
residential structure.
  (3) If the board proposes to assess a civil penalty for failure
to timely deliver a consumer notification form to a property
owner, the failure of a contractor to retain written evidence of
delivery as required by subsection (2) of this section creates a
rebuttable presumption that the contractor failed to timely
deliver the form to the property owner.
  (4) The board shall adopt rules specifying the type of written
evidence that a contractor must retain to comply with subsection
(2) of this section. + }
  SECTION 3. ORS 701.055 is amended to read:
  701.055. (1) A person may not undertake, offer to undertake or
submit a bid to do work as a contractor unless that person has a
current, valid license issued by the Construction Contractors
Board. A partnership, corporation or joint venture may not
undertake, offer to undertake or submit a bid to do work as a
contractor unless that partnership, corporation or joint venture
is licensed under this chapter. A partnership or joint venture is
licensed for the purpose of offering to undertake work as a
contractor on a structure if any of the partners or joint
venturers whose name appears in the business name of the
partnership or joint venture is licensed under this chapter.
  (2) A licensed partnership or corporation shall notify the
board immediately upon any change in licensed partners or
corporate officers. If a partnership no longer has a licensed
partner, the partnership may not conduct activities that require
a license under this chapter.
  (3) A city, county or the State of Oregon may not issue a
building permit to any person required to be licensed under this
chapter that does not have a current, valid license. A county,
city or state agency that requires the issuance of a permit as a
condition precedent to construction, alteration, improvement,
demolition, movement or repair of any building or structure or
the appurtenances to the structure shall, as a condition for
issuing the permit, require that the applicant for a permit file
a written statement, subscribed by the applicant. The statement
must affirm that the applicant is licensed under this chapter,
give the license number and state that the license is in full
force and effect, or, if the applicant is exempt from licensing
under this chapter, list the basis for the exemption. The city,
county or state agency shall list the contractor's license number
on the permit obtained by that contractor.
  (4) If the applicant for a building permit is exempt from
licensure under ORS 701.010 (6), the city, county or state shall
supply the applicant with an Information Notice to Property
Owners About Construction Responsibilities. The city, county or
state may not issue a building permit for a residential structure
to the applicant until the applicant signs a statement in
substantially the following form:
_________________________________________________________________
 
  (a) I have read and understand the Information Notice to
Property Owners About Construction Responsibilities; and
  (b) I own, reside in or will reside in the completed dwelling.
My general contractor is ______, Construction Contractors Board
license no. ____, license expiration date _____. I will instruct
my general contractor that all subcontractors who work on this
dwelling must be licensed with the Construction Contractors
Board; or
  (c) I am performing work on property I own, a residence that I
reside in or a residence that I will reside in.
  (d) I will be my own general contractor and, if I hire
subcontractors, I will hire only subcontractors licensed with the
Construction Contractors Board.
  (e) If I change my mind and do hire a general contractor, I
will contract with a general contractor who is licensed with the
Construction Contractors Board and I will immediately notify the
office issuing this building permit of the name of the general
contractor ______.
_________________________________________________________________
 
  (5) The board shall adopt by rule a form entitled ' Information
Notice to Property Owners About Construction Responsibilities'
that shall describe, in nontechnical language and in a clear and
coherent manner using words in their common and everyday meaning,
the responsibilities property owners are undertaking by acting as
their own general contractor and the problems that could develop.
The responsibilities described in the form shall include, but not
be limited to:
  (a) Compliance with state and federal laws regarding Social
Security tax, income tax and unemployment tax.
  (b) Workers' compensation insurance on workers.
  (c) Liability and property damage insurance.
  (6) The board shall develop and furnish to city, county and
state building permit offices, at no cost to the offices, the
Information Notice to Property Owners About Construction
Responsibilities and the statement to be signed by the permit
applicant.
  (7) A city or county that requires a business license for
engaging in a business subject to regulation under this chapter
shall require that the licensee or applicant for issuance or
renewal of the business license file, or have on file, with the
city or county, a signed statement that the licensee or applicant
is licensed under this chapter.
  (8) It is prima facie evidence of doing business as a
contractor if a person for that person's own use performs,
employs others to perform, or for compensation and with the
intent to sell the structure, arranges to have performed any work
described in ORS 701.005 (3) if within any 36-month period that
person offers for sale two or more newly built structures on
which that work was performed.
  (9) Licensure under this chapter is prima facie evidence that
the licensee conducts a separate, independent business.
  (10) The provisions of this chapter are exclusive and a city,
county or other political subdivision may not require or issue
any registrations, licenses or surety bonds, nor charge any fee
for the regulatory or surety registration of any contractor
licensed with the board. This subsection does not limit or
abridge the authority of any city or county to:
  (a) License and levy and collect a general and
nondiscriminatory license fee levied upon all businesses or upon
business conducted by any firm within the city or county;
  (b) Require a contractor to pay a fee, post a bond or require
insurance when the city, county or political subdivision is
contracting for the service of the contractor; or
  (c) Regulate a contractor that is not required to be licensed
under this chapter.
  (11)(a) A contractor shall maintain a list that includes the
following information about all subcontractors or other
contractors performing work on a project for that contractor:
  (A) Names and addresses.
  (B) License numbers.
  (b) The contractor must deliver the list referred to in
paragraph (a) of this subsection to the board within 72 hours
after a board request made during reasonable working hours.
  (12) A contractor may not hire any subcontractor or other
contractor to perform work unless the subcontractor or contractor
is licensed under this chapter or exempt from licensure under ORS
701.010.
    { - (13) A consumer notification form designed to
specifically inform a property owner what the property owner
should do to protect themselves in a residential repair, remodel
or construction project shall be prepared by the board and
provided at no cost to all licensed contractors. The contractor
shall deliver the form to the property owner when the contractor
submits a bid or proposal for work on a residential structure.
The form shall include an explanation of the meaning of
licensure, including a statement that licensure is not an
endorsement of a contractor's work, and an explanation of the
bond and insurance levels required of contractors for the benefit
of property owners.  The form must not be larger than one side of
a sheet of paper that is 8-1/2 inches by 11 inches. The
contractor may reproduce the form on the contractor's bid
proposal. - }
    { - (14) - }  { +  (13) + } A contractor may not perform work
subject to this section for an owner of a residential structure
without a written contract if the aggregate contract price
exceeds $2,000. If the price of a contract was initially less
than $2,000, but during the course of performance the contract
exceeds that amount, the contractor shall mail or otherwise
deliver a written contract to the owner not later than five days
after the contractor knows or should reasonably know that the
contract price will exceed $2,000.  Failure to have a written
contract will not void the contract.
    { - (15) - }  { +  (14) + } Except as provided in ORS
671.540, a contractor that is not licensed under ORS 671.560
shall hire a person licensed under ORS 671.560 to perform
landscaping work.
  SECTION 4. ORS 701.135 is amended to read:
  701.135. (1) The Construction Contractors Board may revoke,
suspend or refuse to issue or reissue a license and the board may
assess a civil penalty as provided in ORS 701.992 if the board
determines after notice and opportunity for hearing:
  (a) That the licensee or applicant has violated ORS 701.055 or
701.078 { +  or section 2 of this 2007 Act + }.
  (b) That the licensee has violated a rule or order of the
board.
  (c) That the licensee has knowingly assisted an unlicensed
person to act in violation of this chapter.
  (d) That a lien was filed on a structure under ORS 87.010 to
87.060 and 87.075 to 87.093 because the licensee or applicant
wrongfully failed to perform a contractual duty to pay money to
the person claiming the lien.
  (e) That the licensee has knowingly provided false information
to the board.
  (f) That the licensee has worked without a construction permit
where a permit is required and the work resulted in a claim being
filed with the board. For purposes of this paragraph, '
construction permit' includes a building permit, electrical
permit, mechanical permit or plumbing permit.
  (g) That the number of licensed contractors working together on
the same task on the same job site, where one of the contractors
is licensed as exempt under ORS 701.035 (2)(b), exceeded the
following:
  (A) Two sole proprietors;
  (B) One partnership;
  (C) One corporation; or
  (D) One limited liability company.
  (h) Consistent with the provisions of ORS 670.280, that the
licensee or applicant has been convicted of one of the following
crimes:
  (A) Murder;
  (B) Assault in the first degree;
  (C) Kidnapping;
  (D) Rape, sodomy or unlawful sexual penetration;
  (E) Sexual abuse;
  (F) Arson in the first degree;
  (G) Robbery in the first degree;
  (H) Theft in the first degree; or
  (I) Theft by extortion.
  (i) That the licensee or applicant has not, within 90 days
after the date when payment was received from the public
contracting agency, or contractor in the case of a subcontractor,
made payment to any person for supplying labor or materials
contracted for with a public contract for a public improvement
plus the amount of interest due.
  (j) That the licensee or applicant has repeatedly reported bad
faith or false claims of nonpayment against contractors or
subcontractors.
  (k) That the licensee or applicant has engaged in conduct as a
contractor that is dishonest or fraudulent and that the board
finds injurious to the welfare of the public.
  (2)(a) The administrator of the board, in accordance with
administrative rules adopted by the board and after setting forth
specific reasons for the findings, may suspend or refuse to renew
a license without hearing in any case where the administrator
finds a serious danger to the public welfare, including but not
limited to:
  (A) Lack of a surety bond required by ORS 701.085;
  (B) Lack of liability insurance required by ORS 701.105;
  (C) Hiring employees while licensed as exempt under ORS
701.035; or
  (D) Conduct as a construction contractor that is dishonest or
fraudulent.
  (b) If the licensee or applicant demands a hearing within 90
days after the date of notice to the licensee or applicant of the
suspension or refusal to renew, then a hearing must be granted to
the licensee or applicant as soon as practicable after the
demand, and the administrator shall issue an order pursuant to
the hearing as required by ORS chapter 183 confirming, altering
or revoking the administrator's earlier order. Notwithstanding
ORS 670.325, a hearing need not be held where the order of
suspension or refusal to renew is accompanied by or is pursuant
to a citation for violation that is subject to judicial
determination in any court of this state, and the order by its
terms will terminate in case of final judgment in favor of the
licensee or applicant.
  (3) In addition to all other remedies, if it appears to the
board that a person has engaged in, or is engaging in, any act,
practice or transaction that violates the provisions of this
chapter, the board may direct the Attorney General or the
district attorney of the county in which the act, practice or
transaction occurs, to apply to the court for an injunction
restraining the person from violating the provisions of this
chapter. An injunction may not issue for failure to maintain the
list provided for in ORS 701.055 (11) unless the court determines
that the failure is intentional.
  (4) A certified copy of the record of conviction shall be
conclusive evidence of a conviction under subsection (1)(h) of
this section.
  (5) If the board suspends or revokes the license of an
individual contractor or contractor business for a violation of
subsection (1)(g) of this section, the board may not restore or
reissue the license unless the individual contractor or a
responsible managing individual, as defined in ORS 701.078, for
the contractor business has successfully completed the training
and testing described in ORS 701.072.
  SECTION 5. ORS 701.143 is amended to read:
  701.143.  { + (1)  + }The Construction Contractors Board may
not process a claim against a licensed contractor, including a
claim based upon a court judgment or arbitration award, unless
the claim is filed in a timely manner as follows:
    { - (1) - }  { +  (a) + } Except as otherwise provided in
 { + paragraph (c) or (d) of this subsection or in subsection (2)
of  + }this section, if the owner of a new structure files the
claim, the board must receive the claim no later than the earlier
of:
    { - (a) - }  { +  (A) + } One year after the date the
structure was first occupied; or
    { - (b) - }  { +  (B) + } Two years after substantial
completion of the structure by the contractor filed against.
    { - (2) - }  { +  (b) + } Except as otherwise provided in
 { + paragraph (c) or (d) of this subsection or in subsection (2)
of + } this section, if the owner of an existing structure files
the claim, the board must receive the claim no later than one
year after the date the work was substantially completed by the
contractor filed against.
    { - (3) - }  { +  (c) + } Regardless of whether the claim
involves a new or existing structure, if the owner of the
structure files the claim and the licensed contractor failed to
begin the work, the board must receive the claim no later than
one year after the date the parties entered into the contract.
    { - (4) - }  { +  (d) + } Regardless of whether the claim
involves a new or existing structure, if the owner of the
structure files the claim and the licensed contractor failed to
substantially complete the work, the board must receive the claim
no later than one year after the date the contractor ceased to
work on the structure.
    { - (5) - }  { +  (e) + } Except as otherwise provided in
 { - this section - }  { +  paragraph (g) of this subsection + },
if a licensed contractor files the claim against the licensed
contractor performing work as a subcontractor on a new structure,
the board must receive the claim no later than the earlier of:
    { - (a) - }  { +  (A) + } Fourteen months after the date the
structure was first occupied; or
    { - (b) - }  { +  (B) + } Two years after substantial
completion of the structure.
    { - (6) - }  { +  (f) + } Except as otherwise provided in
 { - this section - }  { +  paragraph (g) of this subsection + },
if a licensed contractor files the claim against the licensed
contractor performing work as a subcontractor on an existing
structure, the board must receive the claim no later than 14
months after the date the work on the structure was substantially
completed.
    { - (7) - }  { +  (g) + } If a licensed contractor files the
claim against the licensed contractor performing work as a
subcontractor on a structure and the subcontractor failed to
substantially complete the work, the board must receive the claim
no later than 14 months after the date the subcontractor ceased
to work on the structure.
    { - (8) - }  { +  (h) + } If the licensed contractor's
employee, subcontractor or material or equipment supplier files
the claim, the board must receive the claim no later than one
year after the date the contractor incurred the indebtedness.
   { +  (2) The time limits described in subsection (1)(a) to (d)
of this section for filing a claim are extended by 12 months if
the licensed contractor failed to deliver the consumer
notification form described in section 2 of this 2007 Act prior
to the following dates:
  (a) Except as provided in paragraph (c) or (d) of this
subsection, if the claim involves a new structure, the date the
structure is first occupied.
  (b) Except as provided in paragraph (c) or (d) of this
subsection, if the claim involves an existing structure, the date
the work was substantially completed by the contractor.
  (c) Regardless of whether the claim involves a new or existing
structure, if the licensed contractor failed to begin the work,
the date the parties entered into the contract.
  (d) Regardless of whether the claim involves a new or existing
structure, if the licensed contractor failed to substantially
 
complete the work, the date the contractor ceased to work on the
structure.
  (3) For purposes of subsection (2) of this section:
  (a) Written evidence of delivery that complies with board rules
adopted under section 2 (4) of this 2007 Act creates a rebuttable
presumption that the contractor delivered the consumer
notification form on the date established by the written
evidence.
  (b) If the time described in section 2 (2) of this 2007 Act for
retaining written evidence of delivery has not expired, failure
of a contractor to produce written evidence of delivery that
complies with board rules adopted under section 2 (4) of this
2007 Act creates a rebuttable presumption that the contractor
failed to deliver the consumer notification form. + }
  SECTION 6. ORS 701.590 is amended to read:
  701.590. (1) A contractor shall deliver a notice of the
procedure contained in ORS 701.565 to 701.580 to an owner along
with the consumer notification form required to be delivered to
an owner under   { - ORS 701.055 (13) - }   { + section 2 of this
2007 Act + }. The notice must be 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 7.  { + (1) Section 2 of this 2007 Act applies to bids
and proposals that a contractor submits to a property owner on or
after the effective date of this 2007 Act.
  (2) The amendments to ORS 701.055 by section 3 of this 2007 Act
do not relieve any person from civil penalty or other sanction
for a violation prior to the effective date of this 2007 Act of
ORS 701.055 (13) as set forth in the 2005 Edition of Oregon
Revised Statutes.
  (3) The amendments to ORS 701.143 by section 5 of this 2007 Act
apply to a claim if the bid or proposal by the contractor was
subject to the consumer notification form delivery requirement of
section 2 of this 2007 Act. + }
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