What developers, insurers, lenders, and others should know about this pending legislation in Oregon
Oregon's condominium sector has seen a significant decline in new construction over the past decade, prompting renewed legislative interest in how these projects are regulated and managed. House Bill 3746 A proposes several adjustments to existing statutes—including a shorter seven‑year statute of repose for construction‑defect claims, mandatory moisture‑intrusion testing at key post‑completion milestones, and updated notification and voting procedures for homeowners' associations. Whether you work in development, insurance, lending, or HOA governance, understanding the specifics of HB 3746 A will be essential to planning, budgeting, and compliance as the state considers these changes.
What Does the Bill Do?
House Bill 3746 A's engrossed language makes three important changes:
- Shortened Statute of Repose: Under the proposed amendments to ORS 12.135, condo and planned‑community structures now have just a seven‑year window (instead of 10) to bring construction‑defect claims, with a one‑year discovery "safety valve" if a defect surfaces in years 6-7. In plain terms, the clock on major liability risks for builders, engineers and architects begins ticking at "substantial completion" and expires seven years later—period. That aligns Oregon more closely with other neighboring states like Colorado, Nevada, and Washington.
- Mandatory Moisture‑Intrusion Testing: The bill adds a new ORS 100.417(8) requirement that condo boards (and ultimately owners) conduct—and fund from reserves—independent moisture‑intrusion inspections before the end of the second and sixth years after "substantial completion." Early detection of hidden leaks or envelope failures can head off large‑scale remediation, but it also creates a new operational line item (and potential punch‑list liability) for developers and homeowners associations alike.
- Enhanced Notice, Approval and Voting Rules: HB 3746 A tightens the procedural steps an HOA or unit‑owner association must follow before filing any defect lawsuit. Associations now need multiple rounds of mailed notice (including certified mail), a detailed defect description, board approval at a duly noticed meeting (with quorum and voting rules), plus explicit opt‑out language for individual owners. These procedural gates are designed to ensure transparency and owner buy‑in—but they also add complexity (and potential delay) to defect‑claim strategies.
Where Is the Bill Now?
As of today, HB 3746 A cleared all House committees and floor votes. It is now assigned to the Senate Committee on Housing and Development, where it awaits hearings, possible amendments, and a work session vote. After the committee reviews and any revisions, the Committee on Housing and Development will schedule a work session. If approved there, HB 3746 A will go to the full Senate for a floor vote before being sent to the governor.
Why Does It Matter?
While the amended statutes dive into technical details—from revised procedural requirements to updated notification language—the overall intent is to balance the interests of property owners, developers, and associations. By streamlining when and how litigation can be pursued, HB 3746 A is expected to foster a more predictable and efficient process for resolving disputes related to construction defects. For property developers, association boards, and unit owners, staying informed about these changes can influence project management, risk assessment, and overall legal strategy.
