75th OREGON LEGISLATIVE ASSEMBLY--2009 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 336
 
                         Senate Bill 204
 
Printed pursuant to Senate Interim Rule 213.28 by order of the
  President of the Senate in conformance with presession filing
  rules, indicating neither advocacy nor opposition on the part
  of the President (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.
 
  Revises construction contractor bonding and construction claim
statutes to clarify availability of residential and commercial
contractor bonds for satisfaction of claims.
 
                        A BILL FOR AN ACT
Relating to construction contractor bonding; amending ORS 701.068
  and 701.139.
Be It Enacted by the People of the State of Oregon:
  SECTION 1. ORS 701.068 is amended to read:
  701.068. (1) An applicant for issuance or renewal of a
contractor 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 ORS 701.081 or 701.084.
  (2) If an applicant for issuance, renewal or an additional
endorsement of a license will hold endorsements as both a
residential contractor and a commercial contractor, the applicant
shall file with the board a surety bond for each endorsement in
the amount set forth in ORS 701.081 or 701.084.
  (3) The surety bond  { + for a residential contractor + } must
provide that the applicant, with regard to work subject to this
chapter, will pay amounts ordered paid by the board under ORS
701.145   { - or 701.146 - } .  { + The surety bond for a
commercial contractor must provide that the applicant, with
regard to work subject to this chapter, will pay amounts ordered
paid by the board under ORS 701.146. + } Bonds filed under this
section shall remain in effect for at least one year or until
depleted by payments under ORS 701.150, 701.153 and 701.157,
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 (4) of
this section, the aggregate liability of the surety under the
bond for complaints against the contractor may not exceed the
penal sum of the bond no matter how many years the bond is in
force. Except as provided in subsection (4) of this section, an
extension by continuation certificate, reinstatement, reissue or
renewal of the bond may not increase the liability of the surety.
  (4) The board, by rule, may require a licensee to obtain a new
surety bond if, pursuant to a board order for payment of a
complaint described in ORS 701.140, the surety pays an amount out
of the bond of the licensee. The new surety bond must be in the
applicable amount set forth in ORS 701.081 or 701.084 unless a
higher amount is required by a board condition or rule described
in subsection (5) or (6) 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 complaint.
  (5) If the amount the licensee must pay against the bond under
subsection (3) of 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 ORS 701.081 or 701.084.
  (6) 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 ORS 701.081 or 701.084. 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.
  (7) 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.
  (8) Upon determination under ORS 701.145 or 701.146 of a
complaint 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 complaints upon which a
final order has been issued.
  (9) A court action may not 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 701.150 that
payment is due on the final order.
  (10) In any action against a surety on a bond under this
section that is based on the failure of the surety to pay a final
order, the court may award:
  (a) Costs;
  (b) Reasonable attorney fees to the prevailing party as part of
the costs; and
  (c) Twice the amount of any damages that the board ordered the
surety to pay on the complaint, if the surety arbitrarily and
capriciously refused to pay upon order of the board.
  SECTION 2. ORS 701.139 is amended to read:
  701.139. The Construction Contractors Board may determine the
validity of a complaint described in ORS 701.140 filed against a
licensed contractor. A person must file the complaint within the
applicable time limitation described in ORS 701.143. The
complaint must be filed and resolved as follows:
  (1) A complaint against a residential contractor that is not
also endorsed as a commercial contractor  { + involving work on a
residential or small commercial structure or an appurtenance to a
residential or small commercial structure + } must be resolved as
provided in ORS 701.145.
  (2) A complaint against a commercial contractor that is not
also endorsed as a residential contractor  { + involving work on
a small commercial or large commercial structure or an
appurtenance to a small commercial or large commercial structure
 + }must be resolved as provided in ORS 701.146.
  (3) A complaint against a contractor that is endorsed as both a
residential contractor and a commercial contractor:
  (a)   { - That involves - }  { +  Involving + } work on a
residential structure or an appurtenance to a residential
structure must be resolved as provided under ORS 701.145.
  (b)   { - That involves - }  { +  Involving + } work on a small
commercial structure or an appurtenance to a small commercial
structure may be resolved as provided in ORS 701.145 or 701.146,
at the complainant's election.
  (c)   { - That involves - }  { +  Involving + } work on a large
commercial structure or an appurtenance to a large commercial
structure must be resolved as provided in ORS 701.146.
  (4) Notwithstanding subsections (1) to (3) of this section and
except as provided in ORS 701.148, with prior agreement of the
complainant and the licensed contractor, a complaint may be
resolved by the board through binding arbitration under ORS
701.148.
                         ----------