a:\newslw.96 [4]Alan Lee MitchellStephen De'ak212005-09-20T20:42:00Z2006-07-01T22:33:00Z2006-07-01T22:33:00Z1309117619 146412066911.8026

Scott Hookland LLPConsider . . .VOL. 14, ISSUE 4 October, 2005Law OfficesSCOTT HOOKLAND LLP9185 SW BURNHAM ST. POST OFFICE BOX 23414TIGARD, OR 97223 TIGARD, OR 97281(503) 620-4540 -- (800) 334-8986 -- FAX: (503) 620-4315www.furrer-scott.comNEW LEGISLATION:Please take a moment to review the following legislative summary of a few bills of interest to those associated with the construction industry. This is not intended to be a complete list of all new legislation and it is not intended to analyze or fully set out all provisions of any given bill. Unless stated otherwise, the following new laws go into effect on January 1, 2006.

CONTRACTORS & CONSTRUCTION CONTRACTS

Recorded Warranties

(SB 574; 2005 Or Laws

Ch.

169)

This bill authorizes contractors who build new residential or commercial structures to record a written agreement signed by both the contractor and the original owner that sets out “any express warranties” provided by the contractor. This document will “benefit and burden” the property for ten years after the date of recording. There are no statutory restrictions on the content of these notices. Thus, the bill does not prohibit a “warranty” that is more of a warranty disclaimer than an actual warranty.

Building Trade Licensing

(HB 2181; 2005 Or Laws

Ch.

758)

SEQ CHAPTER \h \r 1

This bill gives broader authority to several agencies (other than the CCB) that administer building trades. In particular, it gives

the

Department of Consumer and Business Services (“DCBS”)

(through its Plumbing Board and its Electrical and Elevator Board) the ability to deny, suspend, or revoke the licenses of plumbers and electricians who violate various laws and regulations. For example, the agency can take action if the business has any unpaid final orders or if any of the owners were also owners of other businesses that have unpaid final orders. The maximum period of disqualification from holding one of these licenses is five years.

This is a lengthy bill (30 pages) and anyone working in the plumbing or electrical business is encouraged to read it in full.

Disqualifying Certain Contractors

(HB 3273; 2005 Or Laws

Ch.

416)

This bill allows DCBS (which regulates electricians and plumbers) to

SEQ CHAPTER \h \r 1

disqualify persons from obtaining or renewing their license, registration, certificate or certification. This gives DCBS powers similar to those granted to the CCB several years ago.For example, DCBS can disqualify a plumber or electrician due to prior civil penalties or other prior adverse actions by DCBS. Also, DCBS can disqualify the contractor when DCBS took similar adverse actions against a prior company where the contractor had direct or indirect control. In the latter situation, the disqualification period cannot exceed five years.DCBS also now has the authority to revoke a specialty registration or certificate if the contractor made false or misleading statements on its application or if the contractor fails to comply with the applicable registration rules and regulations. The department can assess up to a $5,000 civil penalty in those situations.

Electrical Work

(HB 2596; 2005 Or Laws

Ch.

570)

SEQ CHAPTER \h \r 1

This bill authorizes

SEQ CHAPTER \h \r 1

the Director of

DCBS

, after consultation with Electrical and Elevator Board and State Board of Examiners for Engineering and Land Surveying, to adopt rules designating classes of board licensees that may perform certain functions relating to noncomplex electrical installations without additional license, permit, certificate or registration.

Independent Contractors

(SB 323; 2005 Or Laws

Ch.

533)

This bill completely redefines the term "independent contractor" for a broad range of laws, including those relating to income tax, workers compensation, unemployment insurance, architects, landscape contractors, construction contractors, and others. A number of affected state agencies have formed a “task force” to discuss how they will apply this new definition.

Written Contracts

(SB 1002; 2005 Or Laws

Ch.

249)

Previously, the threshold amount for when a residential construction contract must be written was $2,500. Now, the threshold is $2,000. Despite legislative attempts to make non-complying contracts voidable by the consumer, the bill did not affect the existing language that such non-complying contracts are not void.

Low-Rise Building Code

(HB 2303; 2005 Or Laws Ch 435)

This bill allows DCBS to make sure that the structural specialty code and mechanical specialty code are in conformance with the Low-Rise Residential Dwelling Code. This corrects a prior conflict in the law.

Disability Accessibility

(HB 2525; 2005 Or Laws

Ch.

734)

SEQ CHAPTER \h \r 1

This bill directs the Construction Contractors Board (“CCB”) to establish a model list of features that would make residential housing more accessible to persons with disabilities. Developers could include those features as available options

. This bill was declared an “emergency” and became effective on

August 17, 2005

. The bill also includes provisions relating to construction standards for wineries.

Prefabricated Structures

(SB 328; 2005 Or Laws

Ch.

310)

This bill exempts residential prefabricated structures intended for delivery in another state from certain Oregon construction code requirements and enforcement. These structures do not have to comply with Oregon’s building code, are not subject to plan review and are not subject to inspection. If a structure is installed in Oregon, it must meet Oregon codes.Plumbers and Backflow Prevention Devices

(HB 3093; 2005 Or Laws

Ch.

736)

This bill prohibits the Department of Human Services from requiring journeyman and apprentice plumbers to obtain DHS certification to test backflow prevention device assemblies. DHS will require plumbers to complete a state-approved training program for these assemblies.

Plumbing Code Review

(HB 3092; 2005 Or Laws

Ch.

661)

This bill corrects an issue that arose when the 2003 legislature exempted certain buildings from plumbing code review. Now, the

SEQ CHAPTER \h \r 1

DCBS must adopt rules making it clear that plumbing code plan review is mandatory only for certain “complex” structures

. This bill was declared an “emergency” and became effective on

July 27, 2005

Special Permits and Inspections

(HB 3304; 2005 Or Laws

Ch.

288)

This bill makes minor revisions to municipalities’ enforcement and administration of special alternative permit and inspection programs.

Building Codes

(SB 421; 2005 Or Laws

Ch.

833)

This bill requires DCBS to establish building code administrative regions for all areas of

Oregon

. The goals are to promote consistent interpretation of the building code, to resolve disputes between building officials and the public, and to provide oversight of the state building code statutes and administrative rules. The bill was declared an “emergency” and became effective

September 2, 2005

Asbestos Lawsuits

(HB 3159; 2005 Or Laws

Ch.

740)

This bill exempts certain licensed construction contractors from product liability civil actions brought for damages related to asbestos. The bill lists three criteria that a contractor must meet in order to qualify for this exemption. The exemption do

s not apply if the contractor installed asbestos when the plans and specifications did not call for it or it the owner or owner’s representative did not expressly allow the use of asbestos.

CONSTRUCTION CONTRACTORS BOARD (“CCB”)

Commercial Project Claims

(HB 2071; 2005 Or Laws

Ch.

263)

Persons wishing to file

SEQ CHAPTER \h \r 1

CCB claims relating to large commercial structures must now include a completed CCB claim form in addition to a copy of the lawsuit. This new rule applies to claims made after

January 1, 2006

. (The CCB’s web site has downloadable claim forms.)

CCB Dispute Resolution Revisions

(HB 2072; 2005 Or Laws

Ch.

207)

This bill reorganizes and clarifies some existing rules and a

SEQ CHAPTER \h \r 1

llows the CCB to pass certain new rules relating to arbitrations and contested case hearings. It also allows the CCB to waive its pre-claim notice if the contractor has actual knowledge of the dispute (note that this CCB pre-claim notice is different than the notice of defect required before filing a construction defect lawsuit). The CCB now has the authority to waive the filing fee for all labor claimants.

Standards for Home Inspectors

(HB 2075; 2005 Or Laws

Ch.

114)

SEQ CHAPTER \h \r 1

This bill requires the CCB to adopt minimum standards of practice and professional conduct for certified home inspectors.

Task Force on Construction Claims

(HB 2078; 2005 Or Laws

Ch.

647)

SEQ CHAPTER \h \r 1

This bill creates a new nine-member “Task Force on Construction Claims.” Its purpose is to “study the relationship between construction claims and construction industry practices, construction defects, consumer protection, and state-mandated requirements for contractors.” The Task Force is jointly administered by CCB and DCBS.

This bill was declared an “emergency” and became effective on

July 27, 2005

RMI

Requirements

(HB 2200; 2005 Or Laws

Ch.

432)

SEQ CHAPTER \h \r 1

This bill redefines the terms “owner,” “officer,” and “responsible managing individual”

under the CCB statutes. It also creates a new term of “construction debts” that is used when the CCB is determining whether to issue or renew a license. All of these revisions are basically clarification of prior law.

SEQ CHAPTER \h \r 1

LANDSCAPE CONTRACTORS BOARD (“LCB”)

Landscape Contractors

(HB 2069; 2005 Or Laws Ch 609)

This is a multi-faceted bill that should be studied by anyone associated with landscape contracting.

The bill grants the

SEQ CHAPTER \h \r 1

LCB the authority to implement and create rules that:

create an inactive status for individual landscape contractors and landscaping business licenses for those who request this status;

allow the LCB to put a landscaping business and landscape contractor on probation if three or more claims are filed against the business in a 12 month period;

allow the LCB to refuse to issue, revoke, or suspend a license for certain criminal or fraudulent conduct and other consumer safety issues; and

create a “stepped” bonding requirement to a maximum of $15,000 for projects over $25,000 in value.

In addition, the bill cleans up statutory confusion by:

amending the definition of landscape contractor and landscaping business; and

amending the list of types of work that the are (and are not) subject to LCB jurisdiction

Finally, the bill allows a landscaping business to conduct business on farm land when the business is done in conjunction with the production of nursery stock on the land

REAL

PROPERTY & REALTORS

Real Estate Licensee Discipline

(HB 2604; 2005 Or Laws Ch 393)

This bill modifies the grounds for discipline of real estate licensees. It also allows brokers to create a business entity to receive commissions from the broker’s principal broker.

Lawsuits against Real Estate Licensees

(HB 2634; 2005 Or Laws Ch 277)

Previously legislatures barred professional negligence against design professionals unless the lawsuit included an expert affidavit that the defendant’s conduct was negligent. This bill now extends that pleading requirement to lawsuits asserting professional negligence against real estate licensees. This limitation only applies to those persons who contracted with or received the benefit of services from a real estate licensee.

Real Estate Disclosures

(SB 353; 2005 Or Laws Ch 311)

This bill requires a Measure 37 “disclaimer” to be included in

all agreements that transfer or contract to transfer title to real property. This disclaimer is to be made part of the existing “land use laws and regulations” disclaimer.

Homeowner Associations

(SB 955; 2005 Or Laws Ch 543)

This bill expands on the existing requirement for declarants and boards of directors of homeowner associations to conduct a reserve study (and set up a reserve account) for a 30-year plan for maintenance, repair and replacement of common elements and association property. Now, the plan must be “appropriate for the size and complexity of the common property” and “address issues that include but are not limited to warranties and the useful life of the common property.” Neither the old law nor the new one state what happens if a declarant fails to fulfill these obligations.

DESIGN PROFESSIONALS

Registration Renewal Dates

(HB 2590; 2003 Or Laws

Ch.

25)

This changes the statutory

SEQ CHAPTER \h \r 1

registration renewal date for landscape architects and landscape architects in training from October 31 of each year to a date set by State Landscape Architect Board. This bill was declared an “emergency” and became effective on

May 11, 2005

PUBLIC WORKS PROJECTS

Payment Bonds for Wages

(SB 477; 2005 Or Laws Ch 360)

Contractors and subcontractors on public improvement projects must now file a $30,000 bond with the CCB to ensure payment of claims relating to worker wages. This applies only if the contractor or subcontractor must pay prevailing wages.Businesses that are certified as disadvantaged, minority, women, or emerging small business enterprises can elect not to file this bond for the first year after obtaining that certification.If BOLI finds that workers were not paid all wages, it must first make claims against this bond before it can make a claim against the prime contractor’s project payment bond. As a consequence of this change, all claimants under Oregon’s Little Miller Act must now revise their form of notice.Contractors may not allow subcontractors to begin work unless confirming that the subcontractor has an appropriate bond in place with the CCB. All public works contracts and subcontracts must include language concerning these new bonds.Like the regular CCB surety bond, this will be a single bond, not one for every project. The CCB must post information about these bonds on its web site.These new requirements apply to public contracts first bid after January 1, 2006.

Revisions to Chapter “279”

(HB 2214; 2005 Or Laws

Ch.

103)

The 2003 Oregon Legislature adopted a major revision of

Oregon

’s public contracting laws (formerly Chapter 279; now Chapters 279A, 279B, and 279C). This bill makes certain “technical revisions” to those changes. While most of these are minor, parties interested in public contracting should review this bill. For example, transportation project contracts below $50,000 and other public improvement contracts below $100,000 are now exempt from competitive bidding (as well as the bid bond, payment bond, and performance bond requirements). An initial comparison of this exemption and the new payment bond provisions of SB 477 indicates that this exemption does not apply to the new payment bond provision.

Steel Pricing Adjustments in Public Contracts

(HB 2077; 2005 Or Laws

Ch.

557)

This bill is a response to the recent rapid increases in steel pricing. It requires that ODOT must adjust the amount it pays to a contractor if the contractor demonstrates that the market price increased by more than ten percent.

This bill was deemed an “emergency” and became effective on

July 20, 2005

. The bill’s payment adjustment portions apply to public contracts entered after

April 1, 2003

and before

October 1, 2005

. It applies even if the contract has been completed. In addition, ODOT must now include a “steel price escalation” clause in all of its public contracts.

“Not Qualified” Contractor List

(HB 3017; 2005 Or Laws

Ch.

409)

This bill corrects a minor “glitch” in the “not qualified” list maintained by the CCB. The prior statute only required that a contractor remain on that list for not less than six months after the CCB received a complaint. Since it sometimes took more than six months to process these complaints, this new bill removes the “after receipt of the CCB” language. Now, the CCB will begin counting the six-month period from the date its “not qualified” order becomes final.

Non-resident bidders

(HB 3206; 2005 Or Laws Ch 413)

This bill prohibits Oregon public contracting agencies from awarding certain public contracts to education service districts that are “nonresident bidders.”

Design Professional Services

(HB 3272; 2005 Or Laws Ch 509)

This bill modifies the conditions under which local contracting agencies select candidates to provide architectural, engineering or land surveying services.

Notice of Award

(SB 316; 2005 Or Laws Ch 351)

For all public contracts with a value of $5,000 or more, the applicable state agency must notify the Advocate for Minority, Women and Emerging Small Business about both the bid and contract award.

Documenting Low Bidders

(SB 1006; 2005 Or Laws Ch 376)

Public contracting agencies must now document their determination of the lowest responsible bidder and confirmation that the bidder was not on the CCB’s “not qualified” list. The agencies must use the form set out in the bill and submit the form to the CCB within 30 days of letting the contract.

Emerging Small Businesses

(SB 173; 2005 Or Laws Ch 683)

This bill m

SEQ CHAPTER \h \r 1

odifies the eligibility requirements for certification of a business as an emerging small business. It also extends the period of time during which an eligible business may be certified. In addition, it allows reinstatement of a formerly certified business that has eligibility remaining under these new requirements.

Wages for Flaggers

(SB 136; 2005 Or Laws Ch 153)

This bill modifies ORS 279C.810 to remove the requirement that contractors and subcontractors must pay state prevailing wage rates to flaggers on projects regulated under the federal Davis-Bacon Act.

DEBTOR/CREDITOR

Home Solicitation Sales

(SB 214; 2005 Or Laws

Ch.

223)

This bill revises certain home solicitation sales provisions. It now excludes the situation where homeowners ask a contractor to come to their residence to perform repair or maintenance work. If the homeowners agree to purchase additional work, then the home solicitation laws apply. All contracts subject to the home solicitation laws must be in writing and include certain specified information (including the three day cancellation right) that is different from the prior disclosures.

Homestead

Exemption

(SB 273; 2005 Or Laws

Ch.

456)

This bill increases the normal homestead exemption from $25,000 to $30,000 for a single debtor, and from $33,000 to $39,600 for joint debtors who are members of same household

LEGAL/PROCEDURAL

Employee wages

(HB 3319; 2005 Or Laws Ch 664)

This bill modifies the provisions relating to payment of wages and penalty liability if an employee quits employment without giving employer 48 hours' notice

. It also prohibits the assessment of penalty wages against an employer if it cures any insufficient termination payment within five days of the employee submitting a final time card.

Execution Sales

(SB 920; 2005 Or Laws Ch 542)

This bill revises the laws relating to writs of execution and execution sales of real property.

Email Notice of Rulemaking

(HB 2204; 2005 Or Laws Ch 17)

State agencies may now notify interested parties of proposed rulemaking actions via email.FIRM NEWS:DOUGLAS R. HOOKLAND and ALAN L. MITCHELL will present an all-day seminar for the Building Materials Dealers Association on December 8, 2005 (in Portland) entitled “Oregon and Washington Construction Lien and Bond Law.” Contact BMDA (503-624-0561) or Shari Persen in our office if you would like more information.

Reminder: DOUGLAS L. GALLAGER

is now located at our

Eugene

branch office

located at

423 Lincoln Street

Eugene

Oregon

97401

. The toll-free number from

Portland

(503)

754-4700

. Doug’s fax number is

(541)

284-5821

; his local phone number is

(541)

284-5820

. Doug’s email remains the same:

dlg@scott-hookland.com

RANDOM THOUGHTS:“If there were no bad people there would be no good lawyers.” Charles Dickens.This newsletter is published quarterly by the law firm of Scott Hookland LLP for the benefit of its clients and friends and is intended to inform them about legal matters of interest. While this information is meant to be current, we do not promise or guarantee that the information is correct, complete or up-to-date. This information is not intended to and should not be considered to provide legal advice or create an attorney-client relationship. No action should be undertaken in reliance hereon without professional legal counsel.Alan L. Mitchell, EditorSCOTT  HOOKLAND LLPL A W Y E R SMailing Address: Post Office Box 23414, Tigard, Oregon 97281  Street Address: 9185 SW Burnham, Tigard, Oregon 97223Telephone: 503-620-4540  Facsimile: 503-620-4315 www.scott-hookland.com