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 804
House Bill 2113
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.
Allows property owner to obtain disallowance of supplier liens
for materials, equipment, labor or services if owner has already
paid original contractor for materials, equipment, labor or
services that are basis of lien.
A BILL FOR AN ACT
Relating to construction liens; creating new provisions; and
amending ORS 87.023, 87.025, 87.058, 87.060, 87.091 and 87.093.
Be It Enacted by the People of the State of Oregon:
SECTION 1. ORS 87.023 is amended to read:
87.023. The notice of right to a lien required under ORS 87.021
shall include, but not be limited to, the following information
and shall be substantially in the following form:
_________________________________________________________________
NOTICE OF RIGHT TO A LIEN.
WARNING: READ THIS NOTICE.
{ -
PROTECT YOURSELF FROM - }
{ -
PAYING ANY CONTRACTOR - }
{ -
OR SUPPLIER TWICE - }
{ -
FOR THE SAME SERVICE. - }
{ +
AVOID CLAIMS FOR PAYMENTS + }
{ +
YOU HAVE ALREADY MADE. + }
____NOTE_TO_WEB_CUSTOMERS:__________________________________
THE FOLLOWING TABULAR TEXT MAY BE IRREGULAR.
FOR COMPLETE INFORMATION PLEASE SEE THE PRINTED MEASURE.
_______________________________________________________________
To:_____
Date of mailing: ___
Owner
_______
Owner's address
_______
____________________________________________________________
END OF POSSIBLE IRREGULAR TABULAR TEXT
____________________________________________________________
This is to inform you that ________ has begun to
provide ________ (description of materials, equipment, labor or
services) ordered by ________ for improvements to property you
own. The property is located at ____________.
A lien may be claimed for all materials, equipment, labor and
services furnished after a date that is eight days, not including
Saturdays, Sundays and other holidays, as defined in ORS 187.010,
before this notice was mailed to you.
Even if you or your mortgage lender { - have - }
{ + has + } made full payment to the contractor who ordered
these materials { + , equipment, labor + } or services,
{ - your property may still be subject to a lien unless the
supplier providing this notice is paid. - } { + if the
contractor does not pay the supplier providing this notice, you
may have to appear in court and prove payment to the contractor
to avoid enforcement of a lien against your property. + }
THIS IS NOT A LIEN. It is a notice sent to you for your
protection in compliance with the construction lien laws of the
State of Oregon.
This notice has been sent to you by:
NAME: ______
ADDRESS: _____
TELEPHONE: ____
IF YOU HAVE ANY QUESTIONS ABOUT THIS NOTICE, FEEL FREE TO CALL
US.
IMPORTANT INFORMATION ON
REVERSE SIDE
_________________________________________________________________
_________________________________________________________________
IMPORTANT INFORMATION
FOR YOUR PROTECTION
Under Oregon's laws, those who work on your property or provide
{ - labor, - } { + materials, + } equipment, { + labor or + }
services { - or materials - } and are not paid have a right to
enforce their claim for payment against your property. This claim
is known as a construction lien.
If your contractor fails to pay subcontractors, material
suppliers, rental equipment suppliers, { + laborers or + }
service providers { - or laborers - } or neglects to make
other legally required payments, the people who are owed
{ - money - } { + moneys + } can look to your property for
payment { - , even if you have paid your contractor in full. - }
{ + unless you prove in court that those moneys have already
been paid to the contractor. + }
The law states that all people hired by a contractor to provide
you with materials, equipment, labor or services must give you a
notice of right to a lien to let you know what they have
provided.
WAYS TO PROTECT
YOURSELF ARE:
- RECOGNIZE that this notice of right to a lien may result in
{ - a - } { + an action to enforce a + } lien against your
property { - unless - } { + if the contractor fails to pay
+ }all those supplying a notice of right to a lien { - have
been paid - } .
- LEARN more about the lien laws and the meaning of this notice
by contacting the Construction Contractors Board, an attorney or
the firm sending this notice.
- ASK for a statement of the { - labor, - } { +
materials, + } equipment, { + labor or + } services { - or
materials - } provided to your property from each party that
sends you a notice of right to a lien.
- WHEN PAYING your contractor for materials, equipment, labor
or services, you may make checks payable jointly to the
contractor and the firm furnishing materials, equipment, labor or
services for which you have received a notice of right to a lien.
- OR use one of the methods suggested by the 'Information
Notice to Owners.' If you have not received such a notice,
contact the Construction Contractors Board.
- GET EVIDENCE that all firms from whom you have received a
notice of right to a lien have been paid or have waived the right
to claim a lien against your property.
- CONSULT an attorney, a professional escrow company or your
mortgage lender.
_________________________________________________________________
SECTION 2. ORS 87.025 is amended to read:
87.025. (1) A lien created under ORS 87.010 (2) or (6) and
perfected under ORS 87.035 upon any lot or parcel of land shall
be preferred to any lien, mortgage or other encumbrance which
attached to the land after or was unrecorded at the time of
commencement of the improvement.
(2) Except as provided in subsections (3) and (6) of this
section, a lien created under ORS 87.010 (1), (4) or (5) and
perfected under ORS 87.035 upon any improvement shall be
preferred to all prior liens, mortgages or other encumbrances
upon the land upon which the improvement was constructed. To
enforce such lien the improvement may be sold separately from the
land; and the purchaser may remove the improvement within a
reasonable time thereafter, not to exceed 30 days, upon the
payment to the owner of the land of a reasonable rent for its use
from the date of its purchase to the time of removal. If such
removal is prevented by legal proceedings, the 30 days shall not
begin to run until the final determination of such proceedings in
the court of first resort or the appellate court if appeal is
taken.
(3) No lien for materials or supplies shall have priority over
any recorded mortgage or trust deed on either the land or
improvement unless the person furnishing the material or
supplies, not later than eight days, not including Saturdays,
Sundays and other holidays as defined in ORS 187.010, after the
date of delivery of material or supplies for which a lien may be
claimed delivers to the mortgagee either a copy of the notice
given to the owner under ORS 87.021 to protect the right to claim
a lien on the material or supplies or a notice in any form that
provides substantially the same information as the form set forth
in ORS 87.023.
(4) A mortgagee who has received notice of delivery of
materials or supplies in accordance with the provisions of
subsection (3) of this section, may demand a list of those
materials or supplies including a statement of the amount due by
reason of delivery thereof. The list of materials or supplies
shall be delivered to the mortgagee within 15 days, not including
Saturdays, Sundays and other holidays as defined in ORS 187.010,
of receipt of demand, as evidenced by a receipt or a receipt of
delivery of a registered or certified letter containing the
demand. Failure to furnish the list or the amount due by the
person giving notice of delivery of the materials or supplies
shall constitute a waiver of the preference provided in
subsections (1) and (2) of this section.
(5) Upon payment and acceptance of the amount due to the
supplier of materials or supplies, and upon demand of the person
making payment, the supplier shall execute a waiver of all lien
rights as to materials or supplies for which payment has been
made.
(6) Unless the mortgage or trust deed is given to secure a loan
made to finance the alteration or repair, a lien created under
ORS 87.010 and perfected under ORS 87.035 for the alteration and
repair of an improvement commenced and made subsequent to the
date of record of a duly executed and recorded mortgage or trust
deed on that improvement or on the site shall not take precedence
over the mortgage or trust deed.
(7) The perfection of a lien under ORS 87.035 relates to the
date of commencement of the improvement as defined in ORS 87.005.
Except as provided in subsection (3) of this section, the date of
creation of the lien under ORS 87.010 and the date of perfection
of the lien under ORS 87.035 do not affect the priorities under
this section, the equal priority of perfected lien claimants, or
the distribution of proceeds to perfected lien claimants under
ORS 87.060 { - (6) - } { + (7) + }.
SECTION 3. ORS 87.058 is amended to read:
87.058. (1) As used in this section:
(a) { + Notwithstanding ORS 87.005, + } 'contractor' has the
meaning given that term in ORS 701.005.
(b) 'Board' means the Construction Contractors Board
established in ORS 701.205.
(2) When a suit to enforce a lien perfected under ORS 87.035 is
filed and the owner of the structure subject to that lien files a
claim that is being processed by the board under ORS 701.145
against a contractor who performed work on the structure, the
owner may obtain a stay of proceedings on the suit to enforce the
lien if:
(a) The owner already has paid the contractor for that
contractor's work that is subject to this chapter on the
structure;
(b) The person suing to enforce the lien perfected under ORS
87.035:
(A) Performed work that is subject to ORS chapter 701 on the
structure for the contractor who has been paid by the owner;
(B) Furnished labor, services or materials or rented or
supplied equipment used on the structure to the contractor who
has been paid by the owner; or
(C) Otherwise acquired the lien as a result of a contribution
toward completion of the structure for which the contractor has
been paid by the owner; and
(c) The continued existence of the lien on which the suit is
pending is attributable to the failure of the contractor who has
been paid by the owner to pay the person suing for that person's
contribution toward completion of the structure.
(3) The owner may petition for the stay of proceedings
described in subsection (2) of this section by filing the
following papers in the circuit court in which the suit on the
lien is pending:
(a) A certified copy of the claim filed for processing by the
board under ORS 701.145; and
(b) An affidavit signed by the owner that contains:
(A) A description of the structure;
(B) The street address of the structure;
(C) A statement that the structure is the structure upon which
the suit to enforce the lien is pending; and
(D) A statement that the petitioner is the owner of the
structure.
(4) Upon receipt of a complete petition described in subsection
(3) of this section, the circuit court shall stay proceedings on
the suit to enforce the lien.
(5) After the board order on the claim becomes final and the
board issues any required notice for payment against the
contractor's bond or deposit, the circuit court shall dissolve
the stay ordered under subsection (4) of this section.
{ + (6) The issuance or dissolution of a stay of proceedings
under this section does not waive the right of the owner to
subsequently seek and obtain disallowance of the lien under ORS
87.060 (3). + }
SECTION 4. ORS 87.060 is amended to read:
87.060. (1) A suit to enforce a lien perfected under ORS 87.035
shall be brought in circuit court, and the pleadings, process,
practice and other proceedings shall be the same as in other
cases.
(2) In a suit to enforce a lien perfected under ORS 87.035,
evidence of the actual costs of the { - labor, - } { +
materials, + } equipment, { + labor or + } services { - and
material - } provided by the lien claimant establishes a
rebuttable presumption that those costs are the reasonable value
of { - that labor, - } { + the materials, + } equipment, { +
labor or + } services { - and material - } .
{ + (3) In a suit to enforce a lien perfected under ORS
87.035, the court shall disallow the lien if the owner proves
that the owner paid the original contractor for the materials,
equipment, labor or services that are the basis of the lien. This
subsection does not prohibit a court from issuing a stay of
proceedings on the suit upon request of an owner who complies
with ORS 87.058. If an owner seeks disallowance of a lien for
which a stay of proceedings was issued under ORS 87.058, in
determining whether the owner is entitled to disallowance of the
lien, the court shall consider any proof that was submitted by
the owner for purposes of obtaining the stay of proceedings. + }
{ - (3) - } { + (4) + } In a suit to enforce a lien
perfected under ORS 87.035, the court shall allow or disallow the
lien. If the lien is allowed, the court shall proceed with the
foreclosure of the lien and resolve all other pleaded issues. If
the lien is disallowed, and a party has made a demand for a jury
trial as provided for in subsection { - (4) - } { + (5) + }
of this section, the court shall impanel a jury to decide any
issues triable of right by a jury. All other issues in the suit
shall be tried by the court.
{ - (4) - } { + (5) + } A party may demand a trial by jury
of any issue triable of right by a jury after the lien is
disallowed, if that party serves a demand therefor in writing
upon the other parties at any time prior to commencement of the
trial to foreclose the lien. The demand shall be filed with the
court. The failure of a party to serve a demand as required by
this subsection shall constitute a waiver by the party of trial
by jury. A demand for trial by jury made as provided in this
subsection may not be withdrawn without the consent of the
parties.
{ - (5) - } { + (6) + } When notice of intent to foreclose
the lien has been given, pleaded and proven as provided for in
ORS 87.057, the court, upon entering judgment for the lien
claimant, shall allow as part of the costs all moneys paid for
the filing or recording of the lien and all moneys paid for title
reports required for preparing and foreclosing the lien. In a
suit to enforce a lien perfected under ORS 87.035 the court shall
allow a reasonable amount as attorney fees at trial and on appeal
to the party who prevails on the issues of the validity and
foreclosure of the lien.
{ - (6) - } { + (7) + } { - In case - } { + If + } the
proceeds of any sale under ORS 87.001 to 87.060 and 87.075 to
87.093 are insufficient to pay all lienholders claiming under
such statutes, the liens of all persons shall be paid pro rata.
Each claimant is entitled to execution for any balance due the
claimant after the distribution of the proceeds, and that
execution shall be issued by the clerk of the court, upon demand,
after the return of the sheriff or other officer making the sale
showing the balance due.
{ - (7) - } { + (8) + } All suits to enforce any lien
perfected under ORS 87.035 shall have preference on the calendar
of the court over every civil suit, except suits to which the
state is a party, and shall be tried by the court without
unnecessary delay. { - In such a suit, all persons personally
liable, and all lienholders whose claims have been filed for
record pursuant to ORS 87.035, shall, and all other persons
interested in the matter in controversy, or in the property
sought to be charged with the lien, may be made parties; but
persons not made parties are not bound by the proceedings. - }
{ + In a suit to enforce a lien perfected under ORS 87.035, all
persons personally liable for the lien and all lienholders whose
claims have been filed for record under ORS 87.035 shall be
parties. All other persons interested in the matter in
controversy or interested in the property sought to be charged
with the lien may be made parties to the suit. Persons who are
not parties to the suit are not bound by the proceedings. + } The
proceedings upon the foreclosure of the liens perfected under ORS
87.035 shall, as nearly as possible, conform to the proceedings
of a foreclosure of a mortgage lien upon real property.
SECTION 5. ORS 87.091 is amended to read:
87.091. (1) A written waiver described in ORS 87.007 (2) and
signed by the purchaser of residential real property shall
include the information described in subsection (2) of this
section. The waiver shall be printed as a separate document and
in at least 12-point boldfaced type.
(2) The waiver described in subsection (1) of this section
shall include, but not be limited to, the following information
and shall be in substantially the following form:
_________________________________________________________________
WAIVER OF PROTECTIONS
FROM SUBCONTRACTORS' LIENS.
WARNING: READ THIS NOTICE.
{ -
PROTECT YOURSELF FROM - }
{ -
PAYING ANY CONTRACTOR - }
{ -
OR SUPPLIER TWICE - }
{ -
FOR THE SAME SERVICE. - }
{ +
AVOID CLAIMS FOR PAYMENTS + }
{ +
YOU HAVE ALREADY MADE. + }
This is to inform you that if you are purchasing residential
real property within 75 days after completion of construction,
the property you are purchasing may be subject to construction
liens that are not yet recorded on the date of sale. The property
is located at _____.
Under Oregon law, those who work on your property or provide
materials, equipment, labor or services and are not paid have a
right to enforce their claim for payment against the property.
This claim is known as a construction lien.
If a contractor fails to pay subcontractors, material
suppliers, rental equipment suppliers, laborers or service
providers or neglects to make other legally required payments,
any person who is owed { - money - } { + moneys + } can look
to the property for payment { - , even if the contractor has
been paid in full. - } { + unless you prove in court that those
moneys have already been paid to the contractor. + }
OREGON LAW PROVIDES
THE FOLLOWING PROTECTIONS:
Under Oregon Law, the seller of residential real property is
required to take one of the following actions to protect you from
construction liens that are not yet recorded on the date of sale:
- PURCHASE or PROVIDE title insurance to help cover any
construction liens that are recorded after you complete the
purchase of the residential real property.
- RETAIN { - money - } { + moneys + } in escrow until the
status of all construction liens is resolved after the purchase
of the residential real property is complete.
- MAINTAIN a bond or letter of credit until the status of all
construction liens is resolved after the purchase of the
residential real property is complete.
- GET waivers from every person claiming a right to a lien
against the property in an aggregate amount of $5,000 or more.
- WAIT to close the purchase of the residential real property
until 75 days after the completion of construction.
WAIVER OF RIGHTS
Under Oregon law, you may waive the requirements that apply to
the seller of the residential real property. By signing this
document, you agree to waive these protections and accept the
risk that the property you are purchasing may be subject to a
lien that is recorded after the date of sale. { - By waiving
your rights, you may become liable for payment of the lien even
if the contractor has been paid in full. - } { + If you waive
your rights and the contractor does not pay the lien, you may
have to appear in court and prove payment to the contractor to
avoid enforcement of the lien against your property. + } Before
signing this waiver, you may wish to consult an attorney.
_________________________________________________________________
I have read this statement and understand the risks it
describes. I hereby choose to assume those risks and waive the
protections provided under ORS 87.007 by signing this form.
__________
(Signature of purchaser)
________ , 2___
____________________________________________________________
END OF POSSIBLE IRREGULAR TABULAR TEXT
____________________________________________________________
_________________________________________________________________
SECTION 6. ORS 87.093 is amended to read:
87.093. (1) The Construction Contractors Board shall adopt by
rule a form entitled 'Information Notice to Owner' which shall
describe, in nontechnical language and in a clear and coherent
manner using words in their common and everyday meanings, the
pertinent provisions of the Construction Lien Law of this state
and the rights and responsibilities of an owner of property and
an original contractor under that law. The rights and
responsibilities described in the form shall include, but not be
limited to:
(a) Methods by which an owner may avoid { - multiple payments
for the same - } { + having to defend lien claims for + }
materials { + , equipment, labor + } and { - labor - } { +
services + };
(b) The right to file a claim against a licensed contractor
with the Construction Contractors Board and, when appropriate, to
be reimbursed from the contractor's bond filed under ORS chapter
701; and
(c) The right to receive, upon written request
{ - therefor - } , a statement of the reasonable value of
materials, equipment, { + labor or + } services { - or
labor - } provided from the persons providing the materials,
equipment, { + labor or + } services { - or labor - } at the
request of an original contractor and who have also provided
notices of right to a lien.
(2)(a) Each original contractor shall provide a copy of the '
Information Notice to Owner' adopted by the Construction
Contractors Board under this section to:
(A) The first purchaser of residential property constructed by
the contractor and sold before or within the 75-day period
immediately following the completion of construction; and
(B) The owner or an agent of the owner, other than an original
contractor, at the time of signing a written residential
construction or improvement contract with the owner.
(b) When the residential construction or improvement contract
is an oral contract, the original contractor shall mail or
otherwise deliver the 'Information Notice to Owner' not later
than five days after the contract is made.
(3) This section applies only to a residential construction or
improvement contract for which the aggregate contract price
exceeds $1,000. If the price of a home improvement contract was
initially less than $1,000, but during the course of the
performance of the contract exceeds that amount, the original
contractor shall mail or otherwise deliver the 'Information
Notice to Owner' not later than five days after the contractor
knows or should reasonably know that the contract price will
exceed $1,000.
(4) An 'Information Notice to Owner' need not be sent when the
owner is a contractor licensed with the Construction Contractors
Board under ORS chapter 701.
(5) Notwithstanding ORS 87.010, if an original contractor does
not provide an owner or agent with an 'Information Notice to
Owner' as required under subsections (2) and (3) of this section,
the original contractor may not claim any lien created under ORS
87.010 upon any improvement, lot or parcel of land of the owner
for { + materials, equipment, + } labor { - , - } { + or + }
services { - or materials - } supplied under the residential
construction or improvement contract for which the 'Information
Notice to Owner' was not provided.
(6) If an original contractor does not provide an owner or
agent with an 'Information Notice to Owner' as required under
subsection (2) of this section, the Construction Contractors
Board may suspend the license of the original contractor for any
period of time that the board considers appropriate or impose a
civil penalty of not more than $5,000 upon the original
contractor as provided in ORS 701.992.
(7) As used in this section:
(a) 'Residential construction or improvement' means the
original construction of residential property and constructing,
repairing, remodeling or altering residential property and
includes, but is not limited to, the construction, repair,
replacement or improvement of driveways, swimming pools,
terraces, patios, fences, porches, garages, basements and other
structures or land adjacent to a residential dwelling.
(b) 'Residential construction or improvement contract ' means
an agreement, oral or written, between an original contractor and
an owner for the performance of a home improvement and includes
all { + materials, equipment, + } labor { - , - } { + and + }
services { - and materials - } furnished and performed
{ - thereunder - } { + under the agreement + }.
SECTION 7. { + (1) The amendments to ORS 87.023 by section 1
of this 2007 Act apply to notices of lien for the supplying of
materials, equipment, labor or services on or after the effective
date of this 2007 Act. If a supplier has previously sent the
owner a notice of lien under ORS 87.023 as set forth in the 2005
Edition of Oregon Revised Statutes, that previously sent notice
is not effective as a notice of lien with regard to materials,
equipment, labor or services supplied on or after the effective
date of this 2007 Act.
(2) The amendments to ORS 87.058 and 87.060 by sections 3 and 4
of this 2007 Act apply to liens for the supplying of materials,
equipment, labor or services supplied on or after the effective
date of this 2007 Act.
(3) The amendments to ORS 87.091 by section 5 of this 2007 Act
apply for residential property purchases that close on or after
the later of:
(a) The effective date of this 2007 Act; or
(b) Seventy-five days after the date construction was
completed, if construction was completed before the effective
date of this 2007 Act. + }
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