Chapter 325 Oregon Laws 1999

Session Law

AN ACT

HB 2056

Relating to surety requirements for professional building contractors; amending ORS 701.005, 701.010, 701.055, 701.085 and 701.105; and declaring an emergency.

Be It Enacted by the People of the State of Oregon:

SECTION 1. ORS 701.005 is amended to read:

701.005. As used in this chapter:

(1) "Board" means the Construction Contractors Board.

(2) "Consultant" means a person registered as a contractor with the board who inspects or otherwise provides services to a property owner or other contractor but who does not substantively add to or subtract from a structure. "Consultant" includes but is not limited to home inspectors certified under ORS 701.350, lead-based paint inspectors licensed under ORS 701.515, and cross connection and backflow prevention device inspectors certified under ORS 448.279.

[(2)] (3) "Contractor" means a person who, for compensation or with the intent to sell, arranges or undertakes or offers to undertake or submits a bid to construct, alter, repair, add to, subtract from, improve, inspect, move, wreck or demolish, for another, any building, highway, road, railroad, excavation or other structure, project, development or improvement attached to real estate or to do any part thereof. "Contractor" includes general contractors, residential-only contractors and specialty contractors as defined in this section.

[(3)] (4) "General contractor" means a contractor whose business operations require the use of more than two unrelated building trades or crafts that the contractor supervises or performs in whole or part, whenever the sum of all contracts on any single property, including materials and labor, exceeds an amount established by rule by the board. "General contractor" does not include specialty contractors, as defined in subsection [(6)] (8) of this section, or limited contractors, as described in ORS 701.085.

[(4)] (5) "Home inspector" means a person who, for a fee, inspects and provides written reports on the overall physical condition of a residential structure and the appurtenances thereto. "Home inspector" does not include persons certified under ORS chapter 455 to inspect new, repaired or altered structures for compliance with the state building code.

[(5)] (6) "Residential-only contractor" means a general contractor or specialty contractor who performs work exclusively in connection with residential structures and the appurtenances thereto. "Residential-only contractor" includes, but is not limited to:

(a) A person who purchases or owns property and constructs or for compensation arranges for the construction of one or more residential structures with the intent of selling the residential structure or structures;

(b) A school district, as defined in ORS 332.002, that permits students to construct a structure as an educational experience to learn building techniques and, upon completion of the residential structure, the district sells the completed residential structure;

(c) A community college district, as defined in ORS 341.005, that permits students to construct a residential structure as an educational experience to learn building techniques and upon completion of the residential structure, the district sells the completed structure; or

(d) Any person except a landscape contractor, nurseryman, gardener or person engaged in the commercial harvest of forest products who is engaged as an independent contractor to remove trees, prune trees, remove tree limbs or stumps or to engage in tree or limb guying.

[(6)] (7) "Residential structure" means a residence, including a site-built home, a modular home constructed off-site, a floating home as defined in ORS 830.700, a condominium and a manufactured dwelling, a duplex or multiunit residential building consisting of four units or less. "Residential structure" includes any nonresidential structure with a ground area of 4,000 square feet or less and is not more than 20 feet in height from the top surface of the lowest flooring to the highest interior overhead finish of the building.

[(7)] (8) "Specialty contractor" means a contractor who performs work on a structure, project, development or improvement and whose operations as such do not fall within the definition of "general contractor." "Specialty contractor" includes a person who performs work regulated under ORS chapter 446.

SECTION 2. ORS 701.055 is amended to read:

701.055. (1) A person shall not undertake, offer to undertake or submit a bid to do work as a contractor unless that person has a current, valid certificate of registration issued by the Construction Contractors Board. A partnership, corporation or joint venture may do such work, offer to undertake such work or submit a bid to do such work only if that partnership, corporation or joint venture is registered. A partnership or joint venture shall be deemed registered for the purpose of offering to undertake work as a contractor on a nonresidential structure if any one of the partners or joint venturers whose name appears in the name under which the partnership or joint venture does business is registered.

(2) A registered partnership or corporation shall notify the board immediately upon any change in partners or corporate officers. Upon a change in partners, a registered partnership immediately shall register again.

(3) A city, county or the State of Oregon shall not issue a building permit to anyone required to be registered under this chapter who does not have a current, valid certificate of registration. Each county, city or the State of Oregon which 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 also require that each applicant for such permit file as a condition to issuing the permit a written statement, subscribed by the applicant, that the applicant is registered under the provisions of this chapter, giving the number of the registration and stating that the registration is in full force and effect, or, if the applicant is exempt from the provisions of this chapter, listing the basis for the exemption. The city, county or the State of Oregon shall list the contractor's registration number on the permit obtained by that contractor.

(4) If the applicant for a building permit is exempt from registration under the provisions of ORS 701.010 (6), the city, county or State of Oregon shall supply the applicant with an Information Notice to Property Owners About Construction Responsibilities. The city, county or State of Oregon shall 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 registration no. _____, registration expiration date ______. I will instruct my general contractor that all subcontractors who work on this dwelling must be registered with the Construction Contractors Board; or

(d) I will be my own general contractor and, if I hire subcontractors, I will hire only subcontractors registered 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 registered 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" which 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 of Oregon and federal laws regarding social security tax, income tax and unemployment tax.

(b) Workers' compensation insurance on workers.

(6) The board shall develop and furnish to the city, county and State of Oregon building permit offices, at no cost to these offices, the Information Notice to Property Owners About Construction Responsibilities and the statement to be signed by the permit applicant.

(7) Every city and county which requires the issuance of a business license as a condition precedent to engaging, within the city or city and county, in a business which is subject to regulation under this chapter, shall require that each licensee and each applicant for issuance or renewal of such license file, or have on file, with such city or city and county, a signed statement that such licensee or applicant is registered under the provisions of this chapter and stating that the registration is in full force and effect.

(8) It shall be prima facie evidence of doing business as a contractor when 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 [(2)] (3) if within any one 36-month period that person offers for sale two or more newly built structures on which that work was performed.

(9) Registration under this chapter is prima facie evidence that the registrant conducts a separate, independent business.

(10) The provisions of this chapter shall be exclusive and no city, county or other political subdivision shall require or issue any registrations, licenses or surety bonds, nor charge any fee for the regulatory or surety registration of any contractor registered with the board. However, nothing in this subsection shall 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 to levy a tax based upon business conducted by any firm within said jurisdiction, or to limit the authority of any city or county with respect to contractors not required to be registered under this chapter; or

(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.

(11)(a) Every contractor shall maintain a list which includes the following information about all subcontractors or other contractors performing work on a project for that contractor:

(A) Names and addresses.

(B) Registration numbers.

(b) The list referred to in paragraph (a) of this subsection shall be delivered to the board within 72 hours after a request made during reasonable working hours.

(12) A contractor shall not hire any subcontractor or other contractor to perform work unless the subcontractor or contractor is registered under this chapter or exempt from registration under the provisions of ORS 701.010.

(13) A summary of this chapter, prepared by the board and provided at cost to all registered contractors, shall be delivered by the contractor to the owner when the contractor begins work on a residential structure. The summary prepared by the board shall include an explanation of the meaning of registration, including a statement that registration is not an indorsement of the quality of work.

(14) A contractor shall not perform work subject to this section for an owner of a residential structure without a written contract if the aggregate contract price exceeds $2,500. If the price of such contract was initially less than $2,500, but during the course of performance of 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 $2,500. Failure to have a written contract will not void the contract.

(15) 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 3. ORS 701.085 is amended to read:

701.085. (1) A person who wishes to register as a contractor or renew a certificate of registration 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 subsections (2) to [(4)] (5) of this section, conditioned that the applicant, with regard to work subject to this chapter, will pay claims ordered paid by the board under ORS 701.140. Bonds filed under this subsection shall remain in effect for at least one year or until depleted by claims paid under ORS 701.140, 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. The aggregate liability of the surety under the bond for claims against the bond shall not exceed the penal sum of the bond no matter how many years the bond is in force. No extension by continuation certificate, reinstatement, reissue or renewal of the bond shall increase the liability of the surety.

(2) A general contractor shall obtain a surety bond in the amount of [$10,000] $15,000.

(3) A specialty contractor shall obtain a surety bond in the amount of [$5,000] $10,000.

(4) A consultant shall obtain a surety bond in the amount of $10,000.

[(4)] (5) The board may reduce the amount of the surety bond required by this section to [$2,000] $5,000 for a contractor upon a showing that the contractor does not perform work as a contractor exceeding [$30,000] $40,000 in gross annual volume and does not enter into contracts that exceed $5,000. These contractors shall be designated as limited contractors.

[(5)] (6) If the amount the registrant must pay against the bond under this section exceeds the amount of the bond, the board shall suspend the certificate of the registrant until the amount owed is paid. The board, as a condition of ending the suspension, may require the registrant to file a bond of an amount up to five times as much as the amount required ordinarily of a registrant under this section.

[(6)] (7) The board by rule may establish conditions for applicants under which an applicant must file a bond of an amount up to five times as much as the amount required ordinarily of an applicant under this section. 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)] (8) 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)] (9) Upon determination of a claim under ORS 701.140 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 claims upon which a final order has been issued.

[(9)] (10) No suit or action may 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 701.140 that payment is due on the claim.

[(10)] (11) In any action against a surety on a bond under this section that is based on the failure of the surety to pay a claim or on the denial of a claim by the surety, the court may award:

(a) Costs;

(b) Reasonable attorney fees to the prevailing party as part of the costs; and

(c) If the surety is ordered to pay a claim on the bond that the surety arbitrarily and capriciously refused to pay upon order of the board, twice the amount of damages against the surety as ordered by the board.

SECTION 4. ORS 701.105 is amended to read:

701.105. (1) Throughout the period of registration, [the residential-only and the limited contractor] a contractor shall have in effect public liability, personal injury and property damage insurance covering the work of [that] the contractor [which] that is subject to this chapter, for an amount not less than [$100,000]:

(a) $500,000 for a general contractor.

(b) $300,000 for a residential-only specialty contractor.

(c) $500,000 for all other specialty contractors.

(d) $100,000 for a limited contractor.

(e) $300,000 for a consultant.

[(2) Throughout the period of registration, the general contractor and the specialty contractor shall have in effect public liability and property damage insurance covering the work of the contractor that is subject to the provisions of this chapter in an amount of not less than $500,000.]

[(3)] (2) The contractor shall provide satisfactory evidence to the Construction Contractors Board at the time of registration and renewal that the insurance required by [subsections (1) and (2)] subsection (1) of this section has been procured and is in effect.

SECTION 5. ORS 701.010 is amended to read:

701.010. The Construction Contractors Board may adopt rules to make registration optional for persons who offer, bid or undertake to perform work peripheral to construction, as defined by administrative rule of the Construction Contractors Board. The following persons are exempt from registration under this chapter:

(1) A person who is constructing, altering, improving or repairing personal property.

(2) A person who is constructing, altering, improving or repairing a structure located within the boundaries of any site or reservation under the jurisdiction of the Federal Government.

(3) A person who furnishes materials, supplies, equipment or finished product and does not fabricate them into, or consume them, in the performance of the work of a contractor.

(4) A person working on one structure or project, under one or more contracts, when the aggregate price of all of that person's contracts for labor, materials and all other items is less than $500 and such work is of a casual, minor or inconsequential nature. This subsection does not apply to a person who advertises or puts out any sign or card or other device which might indicate to the public that that person is a contractor.

(5) An owner who contracts for work to be performed by a registered contractor. This subsection does not apply to a person who, in the pursuit of an independent business, constructs, remodels, repairs or for compensation and with the intent to sell the structure, arranges to have constructed, remodeled or repaired a structure with the intent of offering the structure for sale before, upon or after completion. It shall be prima facie evidence that there was an intent of offering the structure for sale if the person who constructed, remodeled or repaired the structure or arranged to have the structure constructed, remodeled or repaired does not occupy the structure after its completion.

(6) A person performing work on a property that person owns or performing work as the owner's employee, whether the property is occupied by the owner or not, or a person performing work on that person's residence, whether or not that person owns the residence. This subsection does not apply to a person performing work on a structure owned by that person or the owner's employee if such work is performed, in the pursuit of an independent business, with the intent of offering the structure for sale before, upon or after completion.

(7) A person licensed in one of the following trades or professions when operating within the scope of that license:

(a) An architect licensed by the State Board of Architect Examiners.

(b) A registered professional engineer licensed by the State Board of Examiners for Engineering and Land Surveying.

(d) A sewage disposal system installer licensed by the Department of Environmental Quality.

(e) A landscaping business licensed under ORS 671.510 to 671.710 that constructs fences, decks, walkways or retaining walls only when done in conjunction with landscaping work.

(f) A pesticide operator licensed under ORS 634.116 who does not conduct inspections for wood destroying organisms for the transfer of real estate.

(8) A person who performs work subject to this chapter as an employee of a contractor.

(9) A manufacturer of a manufactured home constructed under standards established by the Federal Government.

(10) A person involved in the movement of:

(a) Modular buildings or structures other than manufactured structures not in excess of 14 feet in width.

(b) Structures not in excess of 16 feet in width when they are being moved by their owner if such owner is not a contractor required to be registered under this chapter.

(11) A commercial lending institution or surety company that arranges for the completion, repair or remodeling of a structure. As used in this subsection, "commercial lending institution" means any bank, mortgage banking company, trust company, savings bank, savings and loan association, credit union, national banking association, federal savings and loan association, insurance company or federal credit union maintaining an office in this state.

(12) A real estate licensee as defined in ORS 696.010 or the employee of that licensee when performing work on a structure that the real estate licensee manages under a contract.

(13) Units of government other than those specified in ORS 701.005 [(5)(b) and (c)] (6)(b) and (c).

SECTION 6. This 1999 Act being necessary for the immediate preservation of the public peace, health and safety, an emergency is declared to exist, and this 1999 Act takes effect on its passage.

Approved by the Governor June 23, 1999

Filed in the office of Secretary of State June 24, 1999

Effective date June 23, 1999

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