Oregon Statute | Act | Code |Title 51 Labor And Employment| US Code - US Statute | Chapter 701 Construction Contractors And Contracts

Chapter 928, Oregon Laws 1989, shall be known
as the Construction Contractors Licensing Act. [Formerly 701.900]

As used in this chapter:

(1) “Board” means the Construction Contractors Board.

(2) “Construction debt” means an amount owed under:

(a) A final order or arbitration award issued by the board; or

(b) A judgment or civil penalty arising from construction
activities within the United States.

(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.

(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 or limited
contractors, as described in ORS 701.085.

(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.

(6) “Inspector” means a contractor registered with the board who
inspects or otherwise provides services to a property owner or other
contractor but does not substantively add to or subtract from a
structure. “Inspector” includes but is not limited to a home inspector
certified under ORS 701.350, a lead-based paint inspector licensed under
ORS 701.515 and a cross connection inspector and backflow assembly tester
certified under ORS 448.279. “Inspector” does not include city or county
inspectors acting under ORS 701.225 or an inspector as defined in ORS
455.715.

(7) “Large commercial structure” means a structure that is not a
residential structure or small commercial structure.

(8) “Licensed developer” means a contractor who owns property or an
interest in property and arranges for construction work, if the
contractor:

(a) Engages in the business of arranging for construction work and
performing other activities associated with the improvement of real
property, with the intent to sell the property;

(b) Acts in association with one or more licensed general
contractors and the general contractor or combination of general
contractors have sole responsibility for overseeing all phases of
construction activity on the property; and

(c) Does not perform any construction work on the property.

(9) “Officer” means any of the following persons:

(a) A president, vice president, secretary, treasurer or director
of a corporation.

(b) A general partner in a limited partnership.

(c) A manager in a manager-managed limited liability company.

(d) A member of a member-managed limited liability company.

(e) A trustee.

(f) A person defined as an officer under board rules. The
definition of officer adopted by board rule may include persons not
listed in this subsection who may exercise substantial control over a
business.

(10) “Residential-only contractor” means a general contractor or
specialty contractor who performs work exclusively in connection with
residential structures and small commercial 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 or small commercial structures with the intent of selling the
structures;

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

(c) A community college district, as defined in ORS 341.005, that
permits students to construct a residential structure or small commercial
structure as an educational experience to learn building techniques and
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.

(11) “Residential structure” means a residence, including a
site-built home, modular home constructed off-site, floating home as
defined in ORS 830.700, condominium unit, manufactured dwelling or
duplex, or a multiunit residential building consisting of four units or
less that is not part of a multistructure complex of buildings.

(12) “Small commercial structure” means a nonresidential structure
that has a ground area of 4,000 square feet or less, including exterior
walls, and a height of not more than 20 feet from the top surface of the
lowest flooring to the highest interior overhead finish of the structure.

(13) “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. [1971 c.740 §1; 1975 c.721 §1; 1977 c.537 §2; 1981
c.618 §8; 1983 c.616 §4; 1989 c.762 §7; 1989 c.928 §1; 1991 c.181 §1;
1993 c.18 §151; 1997 c.814 §1; 1999 c.325 §1; 2001 c.196 §2; 2001 c.197
§9; 2003 c.14 §440; 2003 c.675 §69; 2005 c.432 §6; 2005 c.609 §21] The Construction
Contractors Board may adopt rules to make licensure optional for persons
who offer, bid or undertake to perform work peripheral to construction,
as defined by administrative rule of the board. The following persons are
exempt from licensure 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 that might indicate to the public that the person is a contractor.

(5) An owner who contracts for work to be performed by a licensed
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 is
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 the 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.

(c) A water well contractor licensed by the Water Resources
Department.

(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, arbors, patios, landscape edging,
driveways, walkways or retaining walls and that meets the applicable
bonding requirements under ORS 671.690.

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

(g) An appraiser certified or licensed under ORS chapter 674 or an
appraiser assistant registered under ORS chapter 674 by the Appraiser
Certification and Licensure Board.

(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 the
structures are being moved by their owner if the owner is not a
contractor required to be licensed 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
(10)(b) and (c).

(14) A qualified intermediary in a property exchange that qualifies
under section 1031 of the Internal Revenue Code as amended and in effect
on January 1, 2004, if the qualified intermediary is not performing
construction activities.

(15) A business that supplies personnel to a licensed contractor
for the performance of work under the direction and supervision of the
contractor. [1971 c.740 §20; 1979 c.312 §1; 1981 c.618 §9; 1983 c.616
§5a; 1989 c.928 §2; 1991 c.181 §2; 1991 c.463 §1; 1993 c.18 §152; 1995
c.644 §1; 1997 c.814 §8; 1999 c.32 §4; 1999 c.325 §5; 1999 c.402 §12;
2001 c.196 §3; 2001 c.197 §10; 2003 c.285 §1; 2003 c.329 §1; 2003 c.675
§70; 2005 c.254 §12; 2005 c.432 §7; 2005 c.609 §22]
It is the intent of the Legislative Assembly to reduce the number of city
business licenses that construction contractors and landscape contractors
are required to obtain in order to conduct business in the Portland
metropolitan area. It is the purpose of this section and ORS 701.015 to
enable construction contractors and landscape contractors to secure from
the metropolitan service district one business license that will permit
the conduct of business by such contractors in cities in which the
contractors perform a limited amount of work and in which they do not
have a principal place of business. Furthermore, it is also the intent of
the Legislative Assembly that this section and ORS 701.015 apply only to
contractors engaged in the building trades and crafts and to landscape
contractors without regard to any subsequent expansion of the
jurisdiction of the Construction Contractors Board or State Landscape
Contractors Board over other trades and crafts. It is declared to be the
policy of this state that, to the maximum extent possible consistent with
the requirements of this section and ORS 701.015, the cities within the
boundaries of the metropolitan service district be allowed to control the
imposition of business license taxes and to maintain the level of
revenues obtained from those taxes. The amount and trends of revenue
produced or distributed to each city is intended to reflect the
construction business activity within the participating cities. [1991
c.79 §1; 2001 c.409 §10]Note: 701.013 was enacted into law by the Legislative Assembly but
was not added to or made a part of ORS chapter 701 or any series therein
by legislative action. See Preface to Oregon Revised Statutes for further
explanation.(1) A contractor or landscape contractor shall pay
directly to any city within the boundaries of a metropolitan service
district any business license tax imposed by the city when:

(a) The principal place of business of the contractor or the
landscape contractor is within the city; or

(b) The principal place of business of the contractor or the
landscape contractor is not within the city but the contractor or
landscape contractor derives gross receipts of $250,000 or more from
business conducted within the boundaries of the city during the calendar
year for which the business license tax is owed.

(2) A contractor or landscape contractor who conducts business
during any year in any city within the boundaries of the metropolitan
service district other than a city to which the contractor or landscape
contractor has paid a business license tax for that year may apply for a
business license from the metropolitan service district.

(3) When a contractor or landscape contractor obtains a business
license from the metropolitan service district under subsection (2) of
this section, if a city within the boundaries of the metropolitan service
district other than a city to which the contractor or landscape
contractor is required to directly pay a business license tax under
subsection (1) of this section demands payment of a business license tax
by the contractor or landscape contractor, the city shall waive such
payment upon presentation of proof by the contractor or landscape
contractor that the contractor or landscape contractor has a business
license issued by the metropolitan service district. Possession by the
contractor or landscape contractor of a current business license issued
by the metropolitan service district under subsection (2) of this section
shall be proof sufficient to obtain the waiver described in this
subsection.

(4) The metropolitan service district shall issue a business
license to a contractor or landscape contractor when:

(a) The contractor or landscape contractor presents proof to the
district that the contractor or landscape contractor has paid the
business license tax imposed by each city within the boundaries of the
district to which the contractor or landscape contractor must directly
pay a business license tax under subsection (1) of this section; and

(b) The contractor or landscape contractor pays a license fee to
the district. The license fee charged under this paragraph shall be twice
the average business license tax charged contractors by cities located
within the metropolitan service district plus an amount that is
sufficient to reimburse the district for the administrative expenses of
the district incurred in carrying out its duties under this section.

(5) The metropolitan service district shall distribute the business
license fees collected by the district under this section, less
administrative expenses, to the cities that are located wholly or partly
within the district and that collect a business license tax. In any year,
each such city shall receive such share of the license fees as the number
of residential building permits that it issued during that year bears to
the total number of residential building permits that were issued during
that year by all of the cities located wholly or partly within the
district. Distribution of moneys under this subsection shall be made at
least once in each year. The metropolitan service district shall
determine the number of residential building permits issued by cities
within the district from statistics and other data published by the State
Housing Council.

(6) As used in this section:

(a) “Business license tax” means any fee paid by a person to a city
or county for any form of license that is required by the city or county
in order to conduct business in that city or county. The term does not
include any franchise fee or privilege tax imposed by a city upon a
public utility under ORS 221.420 or 221.450 or any provision of a city
charter.

(b) “Conducting business” means to engage in any activity in
pursuit of gain including activities carried on by a person through
officers, agents and employees as well as activities carried on by a
person on that person’s own behalf.

(c) “Landscape contractor” means a person or business who is
licensed under ORS 671.510 to 671.710 as a landscape contractor.

(d) “Principal place of business” means the location in this state
of the central administrative office of a person conducting business in
this state. [1987 c.581 §2; 1989 c.1064 §§1,2; 1991 c.79 §2; 1999 c.176
§1] (1)
A city that imposes a business license tax based on or measured by
adjusted net income earned by conducting business within the city shall
be exempt from ORS 701.015.

(2) As used in this section, “business license tax” has the meaning
given that term in ORS 701.015. [1987 c.581 §7]Note: 701.020 was enacted into law by the Legislative Assembly but
was not added to or made a part of ORS chapter 701 or any series therein
by legislative action. See Preface to Oregon Revised Statutes for further
explanation.LICENSING(1) An applicant must qualify
as an independent contractor under ORS 670.600 to be eligible for a
license with the Construction Contractors Board.

(2) The board shall establish two classes of independent contractor
licenses:

(a) The nonexempt class is composed of the following entities:

(A) Sole proprietorships, partnerships, corporations, limited
liability companies with one or more employees; and

(B) Partnerships, corporations and limited liability companies with
more than two partners, corporate officers or members, if any of the
partners, corporate officers or members are not part of the same family
and related as parents, spouses, sisters, brothers, daughters or sons,
daughters-in-law or sons-in-law or grandchildren.

(b) The exempt class is composed of all sole proprietorships,
partnerships, corporations and limited liability companies that do not
qualify as nonexempt. All partnerships, corporations and limited
liability companies must have an identification number issued for federal
tax purposes.

(3) If a person who qualifies for a license under subsection (2)(b)
of this section hires one or more employees or falls into any of the
categories set out in subsection (2)(a)(B) of this section, the person is
subject to penalties under ORS 701.992 for improper licensing. The person
must reapply to the board in the correct class.

(4) The decision of the board that a person is an independent
contractor applies only when the person is performing work of the nature
described in ORS 701.055 and 701.060. [1989 c.870 §4; 1995 c.216 §1; 1999
c.402 §13](1) A person may not undertake, offer to
undertake or submit a bid to do work as a contractor unless that person
has a current, valid license issued by the Construction Contractors
Board. A partnership, corporation or joint venture may not undertake,
offer to undertake or submit a bid to do work as a contractor unless that
partnership, corporation or joint venture is licensed under this chapter.
A partnership or joint venture is licensed for the purpose of offering to
undertake work as a contractor on a structure if any of the partners or
joint venturers whose name appears in the business name of the
partnership or joint venture is licensed under this chapter.

(2) A licensed partnership or corporation shall notify the board
immediately upon any change in licensed partners or corporate officers.
If a partnership no longer has a licensed partner, the partnership may
not conduct activities that require a license under this chapter.

(3) A city, county or the State of Oregon may not issue a building
permit to any person required to be licensed under this chapter that does
not have a current, valid license. A county, city or state agency that
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, as
a condition for issuing the permit, require that the applicant for a
permit file a written statement, subscribed by the applicant. The
statement must affirm that the applicant is licensed under this chapter,
give the license number and state that the license is in full force and
effect, or, if the applicant is exempt from licensing under this chapter,
list the basis for the exemption. The city, county or state agency shall
list the contractor’s license number on the permit obtained by that
contractor.

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

(c) I am performing work on property I own, a residence that I
reside in or a residence that I will reside in.

(d) I will be my own general contractor and, if I hire
subcontractors, I will hire only subcontractors licensed 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 licensed 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” that 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 and federal laws regarding Social
Security tax, income tax and unemployment tax.

(b) Workers’ compensation insurance on workers.

(c) Liability and property damage insurance.

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

(7) A city or county that requires a business license for engaging
in a business subject to regulation under this chapter shall require that
the licensee or applicant for issuance or renewal of the business license
file, or have on file, with the city or county, a signed statement that
the licensee or applicant is licensed under this chapter.

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

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

(10) The provisions of this chapter are exclusive and a city,
county or other political subdivision may not require or issue any
registrations, licenses or surety bonds, nor charge any fee for the
regulatory or surety registration of any contractor licensed with the
board. This subsection does not 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 upon business conducted by any
firm within the city or county;

(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; or

(c) Regulate a contractor that is not required to be licensed under
this chapter.

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

(A) Names and addresses.

(B) License numbers.

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

(12) A contractor may not hire any subcontractor or other
contractor to perform work unless the subcontractor or contractor is
licensed under this chapter or exempt from licensure under ORS 701.010.

(13) A consumer notification form designed to specifically inform a
property owner what the property owner should do to protect themselves in
a residential repair, remodel or construction project shall be prepared
by the board and provided at no cost to all licensed contractors. The
contractor shall deliver the form to the property owner when the
contractor submits a bid or proposal for work on a residential structure.
The form shall include an explanation of the meaning of licensure,
including a statement that licensure is not an endorsement of a
contractor’s work, and an explanation of the bond and insurance levels
required of contractors for the benefit of property owners. The form must
not be larger than one side of a sheet of paper that is 8-1/2 inches by
11 inches. The contractor may reproduce the form on the contractor’s bid
proposal.

(14) A contractor may not perform work subject to this section for
an owner of a residential structure without a written contract if the
aggregate contract price exceeds $2,000. If the price of a contract was
initially less than $2,000, but during the course of performance 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 $2,000. 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. [1971 c.740 §7; 1975 c.721 §2; 1981 c.618
§10; 1983 c.616 §6; 1989 c.430 §6; 1989 c.624 §1; 1989 c.928 §4; 1995
c.771 §1; 1997 c.785 §3; 1999 c.35 §1; 1999 c.325 §2; 1999 c.402 §14;
2001 c.196 §4; 2001 c.197 §11; 2005 c.249 §1; 2005 c.432 §8] The Construction Contractors Board
shall develop a separate class of contractor license for contractors who
are licensed developers. [2003 c.675 §68] (1) Any contractor
licensed under this chapter may at any time apply for a license in
another category. The Construction Contractors Board may charge a
transfer fee not to exceed $20 for each additional license.

(2) If a contractor applies for a license pursuant to subsection
(1) of this section all construction, alteration, improvement, moving
over public highways, roads or streets, demolition or repair performed by
that contractor on buildings of all types shall be subject to the
provisions of this chapter and to regulation by the board. Such licensure
shall be exclusive as provided in ORS 701.055 (10). [1977 c.426 §2; 1981
c.618 §11; 1983 c.616 §7; 1989 c.430 §2; 1989 c.928 §5; 1999 c.402 §15](1) Except as provided in subsection (2) of this
section, a contractor may not perfect a claim of a construction lien, or
commence a claim with the Construction Contractors Board, in arbitration
or in any court of this state for compensation for the performance of any
work or for the breach of any contract for work that is subject to this
chapter, unless the contractor had a valid license issued by the board:

(a) At the time the contractor bid or entered into the contract for
performance of the work; and

(b) Continuously while performing the work for which compensation
is sought.

(2) The board, arbitrator or court shall not apply the provisions
of subsection (1) of this section to a lien or claim if the board,
arbitrator or court determines that:

(a) The contractor either did not have a valid license at any time
required under subsection (1) of this section, or had an initial issuance
thereof, and:

(A) The contractor was not aware of the requirement that the
contractor be licensed, and the contractor submitted a completed
application for a license within a number of days established by the
board, but not more than 90 days, of the date the contractor became aware
of the requirement;

(B) At the time the contractor perfected a claim of a construction
lien or commenced any other claim subject to the provisions of subsection
(1) of this section, the contractor was licensed by the board; and

(C) Enforcement of the provisions of subsection (1) of this section
would result in substantial injustice to the contractor;

(b) The contractor was licensed by the board for some but not all
of the times required under subsection (1) of this section and had a
lapse in such license and:

(A) The contractor was not aware of the lapse in the license for
more than a number of days established by the board, but not to exceed 90
days, before submitting a completed application for license renewal with
the board;

(B) Except for perfection of a claim of a construction lien and a
suit to foreclose the lien, at the time the contractor commenced any
other claim subject to the provisions of subsection (1) of this section
the contractor’s license was renewed under ORS 701.115 to include the
entire time period for which a license was required under subsection (1)
of this section; and

(C) For perfection of a claim of a construction lien and a suit to
foreclose the lien, the contractor’s license was renewed under ORS
701.115 for the entire time period for which a license was required under
subsection (1) of this section, but not later than 90 days following
perfection of the lien;

(c)(A) The contractor is a licensed developer and did not have a
valid license during all or part of the period described in subsection
(1) of this section;

(B) The licensed developer was unaware of the license requirement
and obtained a license within a time established by the board, not to
exceed 90 days after the licensed developer learned of the requirement;

(C) The licensed developer was licensed at the time the licensed
developer perfected the lien or commenced the claim; and

(D) Enforcement of subsection (1) of this section would result in
substantial injustice to the licensed developer; or

(d) The claim:

(A) Is directed against a person or entity that:

(i) Is subject to this chapter or ORS chapter 671 or 672;

(ii) Provides construction or design labor or services of any kind;
or

(iii) Manufactures, distributes, rents or otherwise provides
materials, supplies, equipment, systems or products; and

(B) Arises out of defects, deficiencies or inadequate performance
in the construction, design, labor, services, materials, supplies,
equipment, systems or products provided.

(3) If a contractor falsely swears to information provided under
ORS 701.075 or knowingly violates the provisions of ORS 656.029, 670.600
or 701.075, the contractor may not perfect a claim of a construction
lien, or commence a claim with the board, in arbitration or in any court
of this state for compensation for the performance of any work on a
residential structure or for the breach of any contract for work on a
residential structure that is subject to this chapter. [1971 c.740 §8;
1973 c.832 §55; 1975 c.654 §1; 1979 c.874 §1; 1983 c.616 §8; 1989 c.870
§§10,10a; 1989 c.928 §6; 1997 c.818 §3; 1999 c.402 §16; 2003 c.675 §71]Note: Section 72, chapter 675, Oregon Laws 2003, provides:

Sec. 72. Notwithstanding ORS 701.065, a contractor is not barred
from commencing a claim described in ORS 701.065 (2)(d) with the
Construction Contractors Board, in arbitration or in a court, for
construction work performed in whole or in part prior to April 1, 2004,
if the contractor obtains a license as a licensed developer prior to
April 1, 2004, and at the time of the work the contractor:

(1) Owns the property or an interest in the property associated
with the construction work;

(2) Arranges for the construction work;

(3) Is engaged in the business of arranging for construction work
and performing other activities associated with the improvement of real
property, with the intent to sell the property;

(4) Acts in association with one or more licensed general
contractors and the general contractor or combination of general
contractors have sole responsibility for overseeing all phases of
construction activity on the property; and

(5) Does not perform any construction work on the property. [2003
c.675 §72] If any person
suffered costs or damages as a result of an individual providing a false
or invalid Construction Contractors Board number or otherwise misleading
a person with respect to licensure with the board, that person may bring
suit in a court of competent jurisdiction to recover damages. The court
may award reasonable attorney fees to the prevailing party in an action
under this section. [1989 c.870 §9; 1995 c.618 §124; 1999 c.402 §17]Note: 701.067 was enacted into law by the Legislative Assembly but
was not added to or made a part of ORS chapter 701 or any series therein
by legislative action. See Preface to Oregon Revised Statutes for further
explanation.(1) The
Construction Contractors Board, by rule, shall impose training
requirements for individuals and businesses seeking to be licensed under
this chapter. The training required by the board must relate to business
practices and laws affecting construction contractors. The board shall
adopt standards for programs that provide training that meets the
requirements of this subsection.

(2) In establishing training requirements under subsection (1) of
this section, the board shall take into consideration the availability of
training programs within the state and shall encourage training providers
to use the most up-to-date technology. The board shall recognize and
grant credit for training provided by private organizations if the
training program meets the standards established by the board under
subsection (1) of this section. The board periodically shall review the
qualifications of private organizations and instructors to determine
compliance with the program standards. The board shall develop and make
available to the public a list of public and private programs that
provide training that meets the training requirements established by the
board under subsection (1) of this section.

(3) The board, by rule, shall approve a test for applicants for
licensing under ORS 701.075. The test shall measure the applicant’s
knowledge regarding business practices and laws that are the subject of
the training required under subsection (1) of this section.

(4) Subsections (1) and (3) of this section do not apply to an
applicant for licensing as a licensed developer. [2005 c.432 §2] (1) An applicant for a
construction contractor license must submit the application on a form
prescribed by the Construction Contractors Board. The application shall
include, but not be limited to, the following information regarding the
applicant:

(a) Classification of the license being sought.

(b) A list of construction debts involving the applicant, or an
owner or officer of the applicant, if the order, award, penalty or
judgment that establishes the debt was issued within the preceding five
years.

(c) Social Security number.

(d) Workers’ compensation insurance account number, if the
applicant is required to have workers’ compensation insurance.

(e) Unemployment insurance account number, if the applicant is
required to have unemployment insurance.

(f) State withholding tax account number, if the applicant is
required to withhold state income tax.

(g) Federal employer identification number, if the applicant is
required to have a federal employer identification number.

(h) The name and address of:

(A) Each partner, if the applicant is a partnership, limited
liability partnership or foreign limited liability partnership.

(B) The general partner, if the applicant is a limited partnership.

(C) Each joint venturer, if the applicant is a joint venture.

(D) The owner, if the applicant is a sole proprietorship.

(E) The officers, if the applicant is a corporation.

(F) The manager and each member, if the applicant is a
manager-managed limited liability company.

(G) Each member, if the applicant is a member-managed limited
liability company.

(i) The name and address of the following if the applicant is a
partnership, limited liability partnership, foreign limited liability
partnership, joint venture, manager-managed limited liability company or
member-managed limited liability company:

(A) Each partner in a partnership, limited liability partnership or
foreign limited liability partnership that is a partner, joint venturer
or member of the applicant.

(B) Each general partner in a limited partnership that is a
partner, joint venturer or member of the applicant.

(C) Each joint venturer in a joint venture that is a partner, joint
venturer or member of the applicant.

(D) The manager and each member of a manager-managed limited
liability company that is a partner, joint venturer or member of the
applicant.

(E) Each member of a member-managed limited liability company that
is a partner, joint venturer or member of the applicant.

(F) Each officer of a corporation that is a partner, joint venturer
or member of the applicant.

(G) The general partner in a limited partnership that is a partner,
joint venturer or member of the applicant.

(H) Each individual who has a controlling ownership interest in, or
management authority over, the applicant and who meets criteria adopted
by the board by rule.

(j) The basis on which the applicant meets the standards for
independent contractor status under ORS 670.600.

(2) The application described in subsection (1) of this section
must be accompanied by proof satisfactory to the board that the applicant:

(a) Is in compliance with ORS 701.078.

(b) Has the legal capacity to enter into contracts.

(3) Subsection (2)(a) of this section does not apply to a licensed
developer.

(4) An applicant shall conform to the information provided by the
applicant on the application and to the terms of the application. [1971
c.740 §9; 1973 c.832 §56; 1979 c.312 §2; 1981 c.618 §12; 1989 c.624 §2;
1989 c.870 §2; 1989 c.928 §7; 1995 c.216 §6; 1999 c.344 §1; 1999 c.402
§18a; 2001 c.160 §2; 2001 c.196 §5; 2003 c.675 §73; 2005 c.432 §9] (1) As used
in ORS 701.078 and 701.102, “owner” means:

(a) A sole proprietor of, partner in or holder of a controlling
interest in a business; or

(b) A person defined as an owner by Construction Contractors Board
rule.

(2) The board shall adopt rules defining an owner for purposes of
subsection (1) of this section. The rules may not define an owner in a
manner that includes an investor who has no right to manage a business,
including but not limited to:

(a) A person who is solely a minority shareholder in a corporation;

(b) A member of a manager-managed limited liability company; or

(c) A limited partner in a limited partnership who does not
participate in the control of the business of the limited partnership.
[2005 c.432 §4] (1) As used in this
section, “responsible managing individual” means an individual who:

(a)(A) Is an owner; or

(B) Is an employee of a business, designated by the owner, who
exercises management or supervisory authority over the construction
activities of the business; and

(b)(A) Has successfully completed the training and testing required
for licensing under ORS 701.072 within a period identified by the
Construction Contractors Board by rule;

(B) Has demonstrated experience required by the board by rule; or

(C) Has complied with the licensing requirements of ORS 446.395.

(2) A business licensed under this chapter must at all times have
at least one responsible managing individual.

(3) Subsection (2) of this section does not apply to a licensed
developer. [2005 c.432 §3]A contractor shall notify the Construction
Contractors Board of any change of address while licensed and for one
year following the date the contractor’s license expires or otherwise
becomes inactive. The contractor shall so notify the board within 10 days
of the date upon which the change of address occurs. Initial notice of a
contested case or arbitration directed by the board to the last-known
address of record shall be considered delivered when deposited in the
United States mail and sent registered or certified or post office
receipt secured. Any other communication directed by the board to the
last-known address of record shall be considered delivered when deposited
in the United States mail, regular mail. [1979 c.312 §5; 1983 c.616 §9;
1989 c.928 §8; 1997 c.301 §1; 1999 c.402 §20] (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 subsections (2) to (5) of this section. The surety bond must
provide that the applicant, with regard to work subject to this chapter,
will pay claims ordered paid by the board under ORS 701.145 or 701.146.
Bonds filed under this subsection shall remain in effect for at least one
year or until depleted by claims paid under ORS 701.150, 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 (6) of this section, the aggregate
liability of the surety under the bond for claims against the bond may
not exceed the penal sum of the bond no matter how many years the bond is
in force. Except as provided in subsection (6) of this section, an
extension by continuation certificate, reinstatement, reissue or renewal
of the bond may not increase the liability of the surety.

(2) A general contractor or licensed developer shall obtain a
surety bond in the amount of $15,000.

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

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

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

(6) The board, by rule, may require a licensee to obtain a new
surety bond if, pursuant to a board order for payment of a claim
described in ORS 701.140, the surety pays a claim out of the bond of the
licensee. The new surety bond must be in the amount set forth in
subsections (2) to (5) of this section unless a higher amount is required
by a board condition or rule described in subsection (7) or (8) 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 claim.

(7) If the amount the licensee must pay against the bond under 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 this
section.

(8) 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 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.

(9) 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.

(10) Upon determination under ORS 701.145 or 701.146 of a claim
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.

(11) A suit or 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 claim.

(12) 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) Twice the amount of any damages that the board ordered the
surety to pay on the claim, if the surety arbitrarily and capriciously
refused to pay upon order of the board. [1971 c.740 §10; 1975 c.383 §4;
1975 c.721 §3; 1979 c.874 §2; 1981 c.618 §1; 1983 c.616 §10; 1989 c.430
§3; 1989 c.624 §3; 1989 c.928 §10; 1991 c.181 §4; 1995 c.771 §2; 1997
c.301 §2; 1999 c.325 §3; 1999 c.344 §2; 1999 c.402 §21a; 2001 c.157 §1;
2001 c.196 §6; 2001 c.197 §12; 2003 c.675 §74] (1) The
failure of a contractor to comply with the provisions of this section and
ORS 87.007 (2), 656.021, 657.665, 670.600, 701.035, 701.065, 701.067,
701.075, 701.135, 701.240 and 701.250 or to be in conformance with the
provisions of ORS chapter 316, 656 or 657 or ORS chapter 455 and the
rules adopted thereunder is a basis for suspension of the contractor’s
license, revocation of the contractor’s license, refusal to issue or
reissue a contractor’s license, assessment of a civil penalty as set
forth in ORS 701.992 or a combination of these sanctions.

(2) Any action against a contractor under this section shall be
conducted in conformance with the provisions of ORS 183.413 to 183.497.
[1989 c.870 §5; 1991 c.67 §185; 1991 c.181 §5; 1995 c.771 §8; 1999 c.344
§3; 1999 c.402 §22; 2001 c.850 §5; 2001 c.924 §24; 2003 c.778 §3] (1) As
used in this section, “construction contractor license” means a license
issued within the United States to engage in the business of construction
contracting.

(2) The Construction Contractors Board may suspend or refuse to
issue a license required under this chapter to a business if:

(a) The business owes a construction debt or has had a construction
contractor license revoked or suspended;

(b) An owner or officer of the business owes a construction debt or
has had a construction contractor license revoked or suspended; or

(c) An owner or officer of the business was an owner or officer of
another business at the time the other business incurred a construction
debt that is owing or at the time of an event that resulted in the
revocation or suspension of the other business’s construction contractor
license.

(3) The board may place a contractor on probation if a total of
three or more claims are filed with the board within a 12-month period
against the contractor or a former licensed construction contracting
business in which the contractor held at least a 10 percent ownership
interest, measured as determined by board rule. A contractor may not be
placed on probation unless the board determines after investigation that
it is likely that the contractor has caused harm to the claimants. The
board may require a contractor that is placed on probation to develop a
corrective action plan, to attend specific classes and to resolve
outstanding claims. The board may require a contractor that is placed on
probation to take training and pass a test, both as described in ORS
701.072. The board shall take action to terminate the contractor’s
license if the contractor is unwilling or unable to comply with the
conditions of probation. [Formerly 701.137; 1999 c.344 §8; 1999 c.402
§23a; 2001 c.924 §27; 2005 c.432 §10]A lapse, surrender, suspension or other change in license
status does not affect any authority otherwise granted the Construction
Contractors Board to proceed with an investigation, conduct a
disciplinary hearing or take disciplinary action against a person for a
violation of this chapter or rules of the board, or to determine a timely
claim described in ORS 701.140. [2001 c.850 §2](1) Except as provided in subsection (2) of this
section, a contractor who possesses a license as required under this
chapter shall have in effect public liability, personal injury and
property damage insurance covering the work of the contractor that is
subject to this chapter, for an amount not less than:

(a) $500,000 for a general contractor or licensed developer.

(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 an inspector.

(2) The Construction Contractors Board by rule, in consultation
with the Department of Consumer and Business Services, may allow a
general or specialty contractor that is a residential-only contractor to
provide an alternative form of security approved by the board instead of
procuring a public liability, personal injury and property damage
insurance policy. The board may approve an alternative form of security
if the board determines that the alternative form of security provides
protection to the public equivalent to the protection provided by an
insurance policy in the amounts otherwise applicable to the
residential-only contractor under subsection (1) of this section. A
board-approved alternative form of security may consist of a combination
of financial resources.

(3) A residential-only contractor who provides a board-approved
alternative form of security under subsection (2) of this section is
considered for purposes of this chapter to have obtained insurance
described in subsection (1) of this section. This subsection does not
subject to regulation as an insurer a person who issues all or part of an
alternative form of security, unless the alternative form of security
otherwise qualifies as an insurance product.

(4) The contractor shall provide satisfactory evidence to the board
at the time of licensure and renewal that the insurance policy or
board-approved alternative form of security required by this section has
been procured and is in effect. [1971 c.740 §12; 1975 c.383 §5; 1979
c.312 §3; 1983 c.616 §11; 1989 c.624 §4; 1989 c.928 §12; 1991 c.181 §6;
1999 c.325 §4; 1999 c.402 §24a; 2001 c.196 §7; 2003 c.675 §75; 2003 c.766
§1]Note: The amendments to 701.105 by section 2, chapter 766, Oregon
Laws 2003, become operative January 2, 2008. See section 3, chapter 766,
Oregon Laws 2003. The text that is operative on and after January 2,
2008, is set forth for the user’s convenience.701.105. (1) A contractor who possesses a license as required under
this chapter shall have in effect public liability, personal injury and
property damage insurance covering the work of the contractor that is
subject to this chapter, for an amount not less than:

(a) $500,000 for a general contractor or licensed developer.

(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 an inspector.

(2) The contractor shall provide satisfactory evidence to the
Construction Contractors Board at the time of licensure and renewal that
the insurance required by subsection (1) of this section has been
procured and is in effect.(1) A license is valid for two years from the date
of issuance unless the license is revoked or suspended as set forth in
ORS 701.135.

(2) A license may be renewed by submitting an application for
renewal on the prescribed form, providing any additional information
required, including evidence of completion of any required education, and
submitting the appropriate application fee, as provided by Construction
Contractors Board rule.

(3) The board may vary the dates of license renewal by giving to
the licensee written notice of the renewal date assigned and by making
appropriate adjustments in the fee for the license renewal application.

(4) If a contractor applies for renewal not more than one year
after the contractor’s license lapses, upon the contractor’s compliance
with the requirements of subsection (2) of this section, the board may
renew the lapsed license. The board may designate the effective date of
renewal as the last date on which the contractor was licensed.

(5) A contractor may convert a license to inactive status if the
contractor is not engaged in work as a contractor. A contractor having an
inactive license is subject to board licensing requirements and
application fees, but is not subject to the bonding requirement of ORS
701.085 or the insurance requirement of ORS 701.105. An inactive license
is not considered a valid license for purposes of offering to undertake
construction work, submitting a bid for construction work, obtaining a
building permit or performing construction work. A license may not be
placed or maintained in inactive status more than once during any
two-year licensing term.

(6) The board shall issue a pocket-card certificate of licensure to
a contractor licensed under this chapter indicating the type of license
issued. [1971 c.740 §13; 1975 c.721 §5; 1983 c.616 §12; 1989 c.624 §6;
1989 c.928 §13; 1993 c.470 §2; 1997 c.818 §2; 1999 c.402 §25; 2001 c.196
§8; 2003 c.675 §76; 2005 c.432 §11](1) As used in this section, a “specialized education
program” means one or more of the following:

(a) A structured program that is approved or certified by an
appropriate state or federal agency, or by an organization recognized by
the Construction Contractors Board as representing construction
contractors, and is designed to educate contractors to deal with one or
more specific consumer health or safety issues.

(b) A board-approved program from an accredited college or
university that grants a two-year or four-year degree upon successful
completion of the program.

(c) An apprenticeship program that is approved by the board.

(2) The board may identify general contractor and specialty
contractor activities that require or substantially benefit from
specialized education and establish standards for programs providing
specialized education in those activities. The board may recognize and
adopt the program standards established by another state agency
regulating the same or related activities.

(3) Upon receipt of a request from a contractor who has
successfully completed a specialized education program meeting board
standards, the board shall note the specialized education on the
contractor’s licensing record as part of the contractor’s professional
credentials. The board may remove a professional credential from the
contractor’s licensing record if the contractor fails to complete
continuing education or other requirements imposed by the entity issuing
the credential for maintaining competency in the activity, if the
requirements were clearly stated in writing and provided to the
contractor by the entity.

(4) The board shall include professional credentials described in
this section in releases of contractor licensing information by the
board. The board shall adopt rules to permit the inclusion of
professional credentials described in this section in advertising or
other information holding forth to the public the qualifications of a
contractor. [2001 c.428 §1]Note: 701.120 was enacted into law by the Legislative Assembly but
was not added to or made a part of ORS chapter 701 or any series therein
by legislative action. See Preface to Oregon Revised Statutes for further
explanation. Each applicant shall pay to the
Construction Contractors Board:

(1) For an application for the issuance or renewal of a contractor
license, an application fee as determined by the board under ORS 701.130.

(2) For an application for changes to a contractor license, other
than changes due to clerical errors by the board, an application fee
established by board rule. [1971 c.740 §14; 1973 c.832 §57; 1975 c.721
§6; 1983 c.180 §3; 1999 c.402 §26; 2005 c.432 §12] (1) Before July 1 of
each year, the Construction Contractors Board shall determine the amounts
of the fees to be charged for applications under ORS 701.125 for the
issuance or renewal of contractor licenses. The fee amounts are subject
to prior approval of the Oregon Department of Administrative Services and
a report to the Emergency Board prior to adoption. The fee amounts shall
be within the budget authorized by the Legislative Assembly as that
budget may be modified by the Emergency Board. The fee amounts
established under this section may not exceed the cost of administering
the regulatory program of the board under this chapter, as authorized by
the Legislative Assembly within the board’s budget, as the budget may be
modified by the Emergency Board.

(2) The amounts of the fees determined by the board under
subsection (1) of this section shall be effective as set by rule. [1983
c.180 §2; 1989 c.624 §5; 1989 c.928 §14; 1991 c.703 §38; 1999 c.402 §27;
2005 c.432 §13](1) The Construction Contractors
Board may revoke, suspend or refuse to issue or reissue a license and the
board may assess a civil penalty as provided in ORS 701.992 if the board
determines after notice and opportunity for hearing:

(a) That the licensee or applicant has violated ORS 701.055 or
701.078.

(b) That the licensee has violated a rule or order of the board.

(c) That the licensee has knowingly assisted an unlicensed person
to act in violation of this chapter.

(d) That a lien was filed on a structure under ORS 87.010 to 87.060
and 87.075 to 87.093 because the licensee or applicant wrongfully failed
to perform a contractual duty to pay money to the person claiming the
lien.

(e) That the licensee has knowingly provided false information to
the board.

(f) That the licensee has worked without a construction permit
where a permit is required and the work resulted in a claim being filed
with the board. For purposes of this paragraph, “construction permit”
includes a building permit, electrical permit, mechanical permit or
plumbing permit.

(g) That the number of licensed contractors working together on the
same task on the same job site, where one of the contractors is licensed
as exempt under ORS 701.035 (2)(b), exceeded the following:

(A) Two sole proprietors;

(B) One partnership;

(C) One corporation; or

(D) One limited liability company.

(h) Consistent with the provisions of ORS 670.280, that the
licensee or applicant has been convicted of one of the following crimes:

(A) Murder;

(B) Assault in the first degree;

(C) Kidnapping;

(D) Rape, sodomy or unlawful sexual penetration;

(E) Sexual abuse;

(F) Arson in the first degree;

(G) Robbery in the first degree;

(H) Theft in the first degree; or

(I) Theft by extortion.

(i) That the licensee or applicant has not, within 90 days after
the date when payment was received from the public contracting agency, or
contractor in the case of a subcontractor, made payment to any person for
supplying labor or materials contracted for with a public contract for a
public improvement plus the amount of interest due.

(j) That the licensee or applicant has repeatedly reported bad
faith or false claims of nonpayment against contractors or subcontractors.

(k) That the licensee or applicant has engaged in conduct as a
contractor that is dishonest or fraudulent and that the board finds
injurious to the welfare of the public.

(2)(a) The administrator of the board, in accordance with
administrative rules adopted by the board and after setting forth
specific reasons for the findings, may suspend or refuse to renew a
license without hearing in any case where the administrator finds a
serious danger to the public welfare, including but not limited to:

(A) Lack of a surety bond required by ORS 701.085;

(B) Lack of liability insurance required by ORS 701.105;

(C) Hiring employees while licensed as exempt under ORS 701.035; or

(D) Conduct as a construction contractor that is dishonest or
fraudulent.

(b) If the licensee or applicant demands a hearing within 90 days
after the date of notice to the licensee or applicant of the suspension
or refusal to renew, then a hearing must be granted to the licensee or
applicant as soon as practicable after the demand, and the administrator
shall issue an order pursuant to the hearing as required by ORS chapter
183 confirming, altering or revoking the administrator’s earlier order.
Notwithstanding ORS 670.325, a hearing need not be held where the order
of suspension or refusal to renew is accompanied by or is pursuant to a
citation for violation that is subject to judicial determination in any
court of this state, and the order by its terms will terminate in case of
final judgment in favor of the licensee or applicant.

(3) In addition to all other remedies, if it appears to the board
that a person has engaged in, or is engaging in, any act, practice or
transaction that violates the provisions of this chapter, the board may
direct the Attorney General or the district attorney of the county in
which the act, practice or transaction occurs, to apply to the court for
an injunction restraining the person from violating the provisions of
this chapter. An injunction may not issue for failure to maintain the
list provided for in ORS 701.055 (11) unless the court determines that
the failure is intentional.

(4) A certified copy of the record of conviction shall be
conclusive evidence of a conviction under subsection (1)(h) of this
section.

(5) If the board suspends or revokes the license of an individual
contractor or contractor business for a violation of subsection (1)(g) of
this section, the board may not restore or reissue the license unless the
individual contractor or a responsible managing individual, as defined in
ORS 701.078, for the contractor business has successfully completed the
training and testing described in ORS 701.072. [1971 c.740 §15; 1975
c.721 §7; 1979 c.874 §3; 1981 c.618 §6; 1987 c.414 §40b; 1989 c.430 §7;
1989 c.744 §4; 1989 c.870 §§11,11a; 1989 c.928 §15; 1991 c.67 §186; 1991
c.181 §7; 1993 c.446 §1; 1995 c.216 §2; 1999 c.344 §4; 1999 c.402 §28c;
1999 c.689 §10; 2001 c.160 §3; 2001 c.196 §9; 2001 c.850 §6; 2005 c.432
§14]Note: Section 19 (4) chapter 432, Oregon Laws 2005, provides:

Sec. 19. (4) ORS 701.135 (5) applies to the restoration or
reissuance of a license on or after the effective date of this 2005 Act
[January 1, 2006] regardless of the suspension or revocation date. [2005
c.432 §19(4)] (1) Every person offering to
undertake or undertaking construction of building sewer piping shall
comply with the requirements of ORS chapter 701.

(2) Every person submitting a bid or a written estimate of the
costs to construct building sewer piping shall provide to potential
customers, prior to an agreement to perform, the following:

(a) The person’s Construction Contractors Board license number and
category;

(b) The applicable bonding and liability coverage; and

(c) The statement described in ORS 701.055 (3).

(3) Any person licensed under ORS 701.055 may install a building
sewer after obtaining a permit for plumbing inspection under ORS 447.095.

(4) As used in this section, “building sewer” means that part of
the system of drainage piping that conveys sewage into a septic tank,
cesspool or other treatment unit that begins five feet outside the
building or structure within which the sewage originates. [1991 c.598
§§1,2,5; 1999 c.402 §29; 1999 c.551 §15]Note: 701.138 was enacted into law by the Legislative Assembly but
was not added to or made a part of ORS chapter 701 or any series therein
by legislative action. See Preface to Oregon Revised Statutes for further
explanation.CLAIMS
Except as provided in ORS 701.148 (2), the Construction Contractors Board
may resolve a dispute against a licensed contractor only if a claim is
made against the contractor’s surety bond required by ORS 701.085. In
order to have access to the bond, a person must file a claim of a type
described in ORS 701.140 within the applicable time limitation described
in ORS 701.143. The claim must be filed and resolved as follows:

(1) A claim that involves work on a residential structure or an
appurtenance to the structure must be resolved as provided under ORS
701.145.

(2) A claim that involves work on a small commercial structure or
an appurtenance thereto may be resolved as provided in ORS 701.145 or
701.146.

(3) Except as provided in subsections (4) and (5) of this section,
a claim that involves work on a large commercial structure or an
appurtenance thereto must be resolved as provided in ORS 701.146.

(4) A claim by an owner that involves work on a large commercial
structure or an appurtenance thereto when the total contract involved in
the claim is $25,000 or less may be resolved as provided in ORS 701.145
or 701.146.

(5) Notwithstanding subsections (1) to (4) of this section, with
prior agreement of the claimant and the licensed contractor, a claim may
be resolved by the board through binding arbitration under ORS 701.148.
[2001 c.197 §3; 2001 c.414 §5a]A claim made against a licensed contractor’s bond
required by ORS 701.085 must arise from the performance, or a contract
for the performance, of work that is subject to this chapter. The claim
must be of one or more of the following types:

(1) A claim against a contractor by the owner of a structure or
other real property for the following:

(a) Negligent work.

(b) Improper work.

(c) Breach of contract.

(2) A claim against a contractor by the owner of a structure or
other real property to discharge, or to recoup funds expended in
discharging, a lien established under ORS 87.010 to 87.060 and 87.075 to
87.093 under circumstances described under this subsection. If the claim
is processed under ORS 701.145, the Construction Contractors Board may
reduce a claim by any amount the claimant owes the contractor. The board
shall process claims described in this subsection under ORS 701.145 only
if:

(a) The owner paid the contractor for that contractor’s work
subject to this chapter; and

(b) A lien is filed against the property of the owner under ORS
87.010 to 87.060 and 87.075 to 87.093 because the contractor failed to
pay the person claiming the lien for that person’s contribution toward
completion of the improvement.

(3) A claim against a licensed subcontractor by a licensed
contractor for the following:

(a) Negligent work;

(b) Improper work; or

(c) Breach of contract.

(4) A claim by a person furnishing labor to a contractor.

(5) A claim, as limited by rule of the board, by a person
furnishing material or renting or supplying equipment to a contractor.
The minimum limit set by the board shall not exceed $150.

(6) A claim by a subcontractor against a contractor for unpaid
labor or materials arising out of a contract. [1981 c.618 §4; 1983 c.616
§13; 1989 c.167 §1; 1989 c.928 §16; 1991 c.181 §9; 1991 c.717 §1; 1997
c.301 §3; 1999 c.402 §30; 2001 c.197 §13] The
Construction Contractors Board may not process a claim against a licensed
contractor, including a claim based upon a court judgment or arbitration
award, unless the claim is filed in a timely manner as follows:

(1) Except as otherwise provided in this section, if the owner of a
new structure files the claim, the board must receive the claim no later
than the earlier of:

(a) One year after the date the structure was first occupied; or

(b) Two years after substantial completion of the structure by the
contractor filed against.

(2) Except as otherwise provided in this section, if the owner of
an existing structure files the claim, the board must receive the claim
no later than one year after the date the work was substantially
completed by the contractor filed against.

(3) Regardless of whether the claim involves a new or existing
structure, if the owner of the structure files the claim and the licensed
contractor failed to begin the work, the board must receive the claim no
later than one year after the date the parties entered into the contract.

(4) Regardless of whether the claim involves a new or existing
structure, if the owner of the structure files the claim and the licensed
contractor failed to substantially complete the work, the board must
receive the claim no later than one year after the date the contractor
ceased to work on the structure.

(5) Except as otherwise provided in this section, if a licensed
contractor files the claim against the licensed contractor performing
work as a subcontractor on a new structure, the board must receive the
claim no later than the earlier of:

(a) Fourteen months after the date the structure was first
occupied; or

(b) Two years after substantial completion of the structure.

(6) Except as otherwise provided in this section, if a licensed
contractor files the claim against the licensed contractor performing
work as a subcontractor on an existing structure, the board must receive
the claim no later than 14 months after the date the work on the
structure was substantially completed.

(7) If a licensed contractor files the claim against the licensed
contractor performing work as a subcontractor on a structure and the
subcontractor failed to substantially complete the work, the board must
receive the claim no later than 14 months after the date the
subcontractor ceased to work on the structure.

(8) If the licensed contractor’s employee, subcontractor or
material or equipment supplier files the claim, the board must receive
the claim no later than one year after the date the contractor incurred
the indebtedness. [2001 c.197 §2 and 2001 c.414 §2]For a claim described in
ORS 701.139 (1) involving work on a residential structure or an
appurtenance thereto, a claim described in ORS 701.139 (2) involving work
on a small commercial structure or an appurtenance thereto that is not
resolved under ORS 701.146 or an owner’s claim described in ORS 701.139
(4) involving work on a large commercial structure or an appurtenance
thereto that is not resolved under ORS 701.146:

(1) The person having the claim must file with the Construction
Contractors Board a statement of the claim in a form prescribed by the
board.

(2) The board may suspend processing of the claim if:

(a) The same facts and issues involved in the claim have been
submitted to a court of competent jurisdiction for determination or have
been submitted to any other entity authorized by law or the parties to
effect a resolution or settlement; or

(b) The board determines that the nature or complexity of the claim
is such that a court is the appropriate forum for the adjudication of the
claim.

(3) The board may dismiss or close the claim as established by rule
of the board if any of the following conditions apply:

(a) The claimant does not permit the contractor against whom the
claim is filed to be present at an on-site investigation made by the
board.

(b) The board determines that the contractor against whom the claim
is filed is capable of complying with recommendations made by the board
relative to the claim, but the claimant does not permit the contractor to
comply with the recommendations. The board may refuse to accept or
further process a claim under this paragraph only if the contractor was
licensed at the time the work was first performed and is licensed at the
time the board makes its recommendations.

(c) The amount in controversy is less than an amount adopted by the
board and not more than $250.

(4) Upon acceptance of the statement of claim, the board shall give
notice to the contractor against whom the claim is made and shall
initiate proceedings to determine the validity of the claim. If, after
investigation, the board determines that a violation of this chapter or
of any rule adopted thereunder has occurred, or damage has been caused by
the contractor, the board may recommend to the contractor such action as
the board considers appropriate to compensate the claimant. If the
contractor performs accordingly, the board shall give that fact due
consideration in any subsequent disciplinary proceeding brought by the
board. If a claim is for less than $1,000, the board may process the
claim without conducting an on-site investigation.

(5) Subject to ORS 701.148, if the board is unable to resolve the
claim under subsection (4) of this section, the board may issue a
contested case notice under ORS 183.415 and:

(a) Issue a proposed default order under ORS 183.415 to become
effective only if a party does not request a contested case hearing; or

(b) Refer the matter for hearing.

(6) The board shall send a copy of the notice and any proposed
order described in subsection (5) of this section to the surety on the
contractor bond required by ORS 701.085. [1971 c.740 §16; 1979 c.874 §4;
1983 c.616 §14; 1989 c.167 §2; 1989 c.928 §17; 1991 c.181 §10; 1991 c.717
§2; 1993 c.470 §3; 1993 c.471 §1; 1995 c.771 §4; 1997 c.301 §4; 1999
c.331 §1; 1999 c.344 §5; 1999 c.402 §31; 1999 c.849 §§172,173; 2001 c.197
§§14,15; 2001 c.414 §§9a,10a]For a claim described in ORS 701.139 (3) involving work
on a large commercial structure or an appurtenance thereto, a claim
described in ORS 701.139 (2) involving work on a small commercial
structure or an appurtenance thereto that is not resolved under ORS
701.145 or an owner’s claim described in ORS 701.139 (4) involving work
on a large commercial structure or an appurtenance thereto that is not
resolved under ORS 701.145:

(1) The person seeking to file the claim must:

(a) Bring an action on the claim against the licensed contractor in
a court of competent jurisdiction; or

(b) Initiate a proceeding to resolve the claim through binding
arbitration substantially in conformance with ORS 36.600 to 36.740.

(2) The claimant must file the claim with the Construction
Contractors Board by delivering to the board a copy of the complaint or
the demand for arbitration or other document necessary to initiate
arbitration. The complaint, demand or other document must be accompanied
by a statement of claim in a form prescribed by board rule. The claimant
must also give notice to the surety on the bond by delivering to the
surety a copy of the complaint, demand for arbitration or other document
necessary to initiate arbitration and a copy of the statement of claim.
Delivery to the board and the surety must be accomplished by certified
mail, return receipt requested, no later than the earlier of:

(a) The 90th day after the complaint, demand or other document was
filed or made;

(b) The 14th day before the first day of trial or arbitration; or

(c) The 30th day before:

(A) The court issues a judgment on the complaint; or

(B) The arbitrator issues an award on the arbitration.

(3) Filing the claim with the board under subsection (2) of this
section constitutes filing the claim for purposes of establishing
timeliness of the claim under ORS 701.143 and priority of the claim under
ORS 701.150.

(4) Except as provided in this subsection and subsection (7) of
this section, if the claimant properly gives notice to the surety under
subsection (2) of this section, a judgment or award against the
contractor entered in the action or arbitration is binding on the surety.
If the claimant delivers the notice required under subsection (2) of this
section to the wrong surety, the surety receiving the notice may avoid
being bound by a judgment or award by delivering notice of the mistake to
the claimant or the claimant’s attorney of record, and to the board, on
or before the 30th day after the surety receives notice under subsection
(2) of this section. Delivery of the notice of mistake must be by
certified mail, return receipt requested, or by facsimile machine or
other form of transmission with an acknowledgment of receipt.

(5) A surety under subsection (2) of this section has an absolute
right to intervene in an action or arbitration brought or initiated under
subsection (1) of this section. A claimant may not join a surety as a
party to an action or arbitration unless the claimant disputes the
validity or timeliness of the surety’s notice of mistake or the surety
disputes the validity or timeliness of the delivery to the surety of the
notice required by subsection (2) of this section. If the surety elects
to intervene or is joined as a party, the surety is bound by all issues
of fact and law determined by the court or arbitrator and may not seek
board review of those determinations.

(6) If a court issues a judgment on an action, or reduces an
arbitration award to judgment, against a contractor on a claim described
in subsection (1) of this section, the claimant must deliver a certified
copy of the judgment to the board and to the surety no later than the
30th day after entry of the judgment in order to retain a claim against
the bond. The entry of a final judgment against the contractor concludes
the contractor’s involvement in any proceedings to determine whether the
bond is subject to payment of the claim. The claimant and the surety are
the only parties to the administrative process set forth in subsection
(7) of this section.

(7) Upon receipt of a timely delivered certified copy of the
judgment as described in subsection (6) of this section, the board shall
issue a proposed order in the amount of the judgment together with any
costs, interest and attorney fees awarded under the judgment, to the
extent that the judgment, costs, interest and fees are within the
jurisdiction of the board. The board’s determination of the claim is
limited to whether the claim comes within the jurisdiction of the board
and is subject to payment by the surety. The board shall issue the
proposed order in a form that indicates the surety’s maximum liability to
the claimant. If a hearing is not requested within the time set forth in
the proposed order, the proposed order becomes final without any further
action by the board. If a hearing is requested, unless review of an issue
is precluded under subsection (5) of this section, the board may
determine:

(a) Whether the claim was timely filed with the board as provided
in ORS 701.143.

(b) Whether the surety received timely notice as provided in
subsections (2) and (6) of this section.

(c) Whether the claim is for work subject to this chapter.

(d) The extent of the surety’s liability to the claimant. [2001
c.197 §4; 2003 c.294 §1; 2003 c.598 §50; 2005 c.263 §1] (1) Unless
otherwise provided by the Construction Contractors Board by rule, before
filing a claim under ORS 701.139, a person must send notice to the
contractor that the person intends to file the claim. The person must
send the notice at least 30 days before filing the claim. The notice must
be mailed by certified mail to the last known address of the contractor
as shown in board records. The board by rule may:

(a) Specify the manner in which the person may show compliance with
this subsection at the time of filing the claim.

(b) Provide that all or part of the requirements for sending a
notice under this subsection may be waived if the contractor, by other
means, has actual notice of the dispute with the person filing the claim.

(2) If the notice described in subsection (1) of this section is
mailed to the contractor fewer than 45 days before expiration of the time
limitation under ORS 701.143 for the board to receive the claim, the time
limitation for the board to receive the claim does not expire until 60
days after the notice is mailed.

(3) The board by rule may impose a processing fee for claims filed
under ORS 701.139. The fee amount may not exceed the amount of the filing
fee provided by ORS 21.110 (1) for a plaintiff filing a civil action in
circuit court. The board may impose different processing fees for claims
processed under ORS 701.145 than for claims processed under ORS 701.146.

(4) If the board adopts rules under subsection (3) of this section,
the rules:

(a) Except as provided in paragraphs (b) and (c) of this
subsection, must provide that a prevailing claimant recover processing
fees as damages in the final order of the board.

(b) Must provide that the board may waive or defer all or part of
the processing fee upon application by the person filing the claim that
shows the person is unable to pay all or part of the fee. The application
must be made under oath and notarized. The application must show the
average monthly income and expenses of the claimant, assets and
liabilities of the claimant and any other information required by board
rule.

(c) May provide for the processing fee to be waived for all claims
that are based on the furnishing of labor by a claimant to a contractor.
The board may provide for processing fee waiver under this paragraph only
if, in the opinion of the board, a majority of claimants who file claims
based on the furnishing of labor to contractors are eligible for fee
waivers as described in paragraph (b) of this subsection. [2001 c.414 §5;
2001 c.414 §§5b,7b; 2003 c.75 §61; 2003 c.294 §§2,3; 2005 c.207 §3](1) Subject to subsection (4) of
this section, if the resolution of a claim under ORS 701.145 requires a
hearing, the Construction Contractors Board may require that the hearing
be conducted as a binding arbitration under rules adopted by the board
under subsection (3) of this section. This subsection does not authorize
the board to require binding arbitration of a claim that is subject to
ORS 701.146.

(2) The board may use mediation or arbitration to resolve a
construction dispute between any parties who agree to follow the rules of
the board, including but not limited to parties to a claim that is
subject to ORS 701.146.

(3) Except as provided in this subsection, rules adopted by the
board to regulate arbitration under subsections (1) and (2) of this
section must substantially conform with the provisions of ORS 36.600,
36.610 to 36.630, 36.635 (2), 36.640, 36.645 (2), 36.650 to 36.680,
36.685 (1) and 36.690 to 36.740. The rules may:

(a) Require that a hearing under ORS 183.413 to 183.470 be
conducted for issues for which a petition could be filed under ORS
36.615, 36.620, 36.625 and 36.640;

(b) Limit orders and awards made by the arbitrator as necessary to
comply with this chapter;

(c) Require that a request that an arbitrator modify or correct an
award under ORS 36.690 be submitted in a form specified by the rule;

(d) Require that a petition under ORS 36.705 (2) or 36.710 (1) be
filed in a shorter period of time than provided by ORS 36.705 and 36.710;
and

(e) Include any other provision necessary to conform the
arbitration to this chapter.

(4) A party to a claim that is subject to a board order of binding
arbitration under subsection (1) of this section may avoid the
arbitration if the party requests to have the claim resolved through a
contested case hearing or files a complaint in a court. A party making a
request or filing a complaint under this subsection is subject to the
following provisions:

(a) If the party requests to have a claim resolved through a
contested case hearing, the party must, within the time specified in
paragraph (c) of this subsection, deliver the request in writing to the
board and to all parties entitled by board rule to receive a copy of the
request.

(b) If the party files a complaint in court, the party must, within
the time specified in paragraph (c) of this subsection, deliver a copy of
the complaint to the board and to all parties entitled by board rule to
receive a copy of the complaint. If the party filing the complaint is the
claimant, the claimant must allege all elements of the claim in the
complaint. If the complaint is filed by the contractor against whom a
claim is alleged, the complaint may be a complaint for damages, a
complaint for declaratory judgment or other complaint that allows the
claimant to file a response alleging the elements of the claim. The
claimant has the burden of proving the elements of the claim in any
action described in this paragraph.

(c) A party that is subject to paragraph (a) or (b) of this
subsection must deliver a request or complaint to the board as described
in paragraphs (a) and (b) of this subsection no later than the 30th day
after the board sends notice that an arbitration hearing has been
scheduled. Failure to timely deliver a request or complaint under this
paragraph constitutes consent to the binding arbitration.

(d) If a party makes a timely request under paragraph (a) of this
subsection for a contested case hearing and another party timely files a
complaint in compliance with paragraph (b) of this subsection, the filing
of the complaint supersedes the request for a contested case hearing.

(e) A party may not withdraw a request made in compliance with
paragraph (a) of this subsection unless all parties agree to the
withdrawal.

(f) The board may adopt a rule that a contested case hearing for a
claim of less than $1,000 is not available under this subsection.

(g) The provisions of paragraph (b) of this subsection are in
addition to any other requirements imposed by law regarding the filing of
a complaint.

(5) The board may refuse to accept a dispute for mediation or
arbitration under subsection (1) or (2) of this section if the board
determines that the nature or complexity of the dispute is such that a
court or other forum is more appropriate for resolution of the dispute.
[2001 c.414 §4; 2001 c.414 §4a; 2003 c.598 §51](1) An arbitration conducted under ORS 701.148 must be
held before an administrative law judge assigned under ORS 183.600 to
183.690 to act as arbitrator on behalf of the Construction Contractors
Board. The assignment of an administrative law judge to act as arbitrator
is subject to a request for a different arbitrator under ORS 183.645 or a
rule adopted pursuant to ORS 183.645.

(2) If a party to a claim under ORS 701.145 requests a contested
case hearing, the board shall schedule the hearing.

(3) The board may adopt rules governing the avoidance of a
contested case hearing. The rules may include, but need not be limited
to, a limit on the time period during which a party to a claim may avoid
a contested case hearing by filing a complaint in a court.

(4) Contested case hearings before the board must be conducted by
an administrative law judge assigned under ORS 183.600 to 183.690.
Notwithstanding ORS 670.325, the board may delegate authority to the
administrative law judge to issue a final order in any matter.

(5) In assigning administrative law judges for arbitration and
contested case hearings conducted under this section, the chief
administrative law judge of the Office of Administrative Hearings
established under ORS 183.605 shall defer to board requests.

(6) If a claim is submitted for determination by a court, the board
may require that the claimant provide status reports on the pending
action. The board may dismiss or close a claim filed under ORS 701.139 if
the claimant fails to submit status reports on a pending action.

(7) ORS 183.600 to 183.690 do not limit in any way the ability of
the board to make full use of alternative dispute resolution, including
mediation or arbitration, to resolve claims against contractors filed
under ORS 701.139. [2005 c.207 §2](1) If a Construction Contractors Board final order
is not paid by the contractor, the board shall notify the surety on the
bond. The surety may not pay a claim until the surety receives notice
from the board that the claim is ready for payment.

(2) If an order of the board that determines a claim under ORS
701.145 becomes final by operation of law or on appeal and remains unpaid
10 days after the date the order becomes final, the claimant may file the
order with the county clerk in any county of this state.

(3) Upon receipt, the clerk shall record the order in the County
Clerk Lien Record. In addition to any other remedy provided by law,
recording an order in the County Clerk Lien Record pursuant to the
provisions of this section has the effect provided for in ORS 205.125 and
205.126, and the order may be enforced as provided in ORS 205.125 and
205.126.

(4) Payments from the surety bond of a contractor pursuant to board
order and notice are satisfied in the following priority in any 90-day
period. A 90-day period begins on the date the first claim is filed with
the board. Subsequent 90-day periods begin on the date the first claim is
filed with the board after the close of the preceding 90-day period.
Within a 90-day period:

(a) Board orders as a result of claims against a contractor by the
owner of a residential or small commercial structure have payment
priority to the full extent of the bond over all other types of claims.

(b) If the claims described in paragraph (a) of this subsection do
not exhaust the bond, then amounts due as a result of all other types of
residential or small commercial structure claims filed within that 90-day
period may be satisfied from the bond, except that the total amount paid
from any one bond to nonowner claimants may not exceed $3,000.

(c) If payments involving residential and small commercial
structures do not exhaust the bond, board orders and notice involving
large commercial structure claims are satisfied in the following
priority, except that the total amount paid from any one bond to nonowner
claimants may not exceed $3,000:

(A) Labor, including employee benefits.

(B) All other claims involving large commercial structures except
costs, interest and attorney fees.

(C) Any costs, interest and attorney fees the plaintiff may be
entitled to recover.

(d) If the total claims filed with the board against a contractor
within 90 days after the board receives notice of the first claim against
the contractor exceed the amount of the bond available for those claims,
the bond shall be apportioned as the board determines, subject to the
priorities established under this section.

(e) If the total amounts due as a result of claims filed with the
board within 90 days after the first claim is filed do not exceed the
amount of the bond available for those claims, all amounts due as a
result of claims filed within the 90-day period shall have priority over
all claims subsequently filed until the amount of the bond available for
the payment of claims is exhausted.

(5) Notwithstanding subsection (4) of this section, a bond is not
subject to payment for a claim that is filed more than 14 months after
the earlier of:

(a) The expiration or cancellation date of the license that was in
force when the work that is the subject of the claim was completed or
abandoned; or

(b) The date that the surety canceled the bond.

(6) The total amount paid from any one bond for costs, interest and
attorney fees may not exceed $3,000. [1971 c.740 §17; 1973 c.832 §60;
1981 c.618 §7; 1983 c.616 §15; 1987 c.414 §40c; 1989 c.928 §18; 1991
c.181 §11; 1997 c.387 §7; 1999 c.59 §208; 1999 c.402 §32; 2001 c.197 §16;
2001 c.427 §1a]Notwithstanding ORS 9.320:

(1) A party may appear or be represented by an individual who is
not a member of the Oregon State Bar in a proceeding before the
Construction Contractors Board if:

(a) The party is a corporation and the individual is an officer of
the corporation;

(b) The party is a partnership, or a limited liability partnership
or foreign limited liability partnership as those terms are defined in
ORS 67.005, and the individual is a partner in the partnership, limited
liability partnership or foreign limited liability partnership;

(c) The party is a limited partnership as defined in ORS 70.005 and
the individual is a general partner in the partnership;

(d) The party is a manager-managed limited liability company as
defined in ORS 63.001 and the individual is a manager of the company; or

(e) The party is a member-managed limited liability company as
defined in ORS 63.001 and the individual is a member of the company.

(2) In addition to parties described in subsection (1) of this
section, the board, by rule, may recognize particular business forms as
parties that may appear or be represented by an individual who is not a
member of the Oregon State Bar in a proceeding before the board. A board
rule adopted under this subsection must identify the business form of the
party and specify the required relationship between the party and the
individual. The board may allow appearance or representation of a party
only by an individual who is a director, officer, partner, trustee,
manager or authorized regular employee of the party. [1985 c.599 §3; 1989
c.928 §19; 1995 c.480 §1; 2001 c.163 §1; 2003 c.75 §109] A
contract that is for the performance of work on a residential structure
and that is subject to this chapter may not contain a provision that
limits the right of a person to file a claim described in ORS 701.140
with the Construction Contractors Board. A contract described in this
section may contain a provision requiring mediation or arbitration of a
dispute arising from the contract. [2001 c.850 §3] Notwithstanding the
provisions of ORS 36.600 to 36.740, any other provision of law or any
contractual provision, failure of a contractor to initiate mediation or
arbitration proceedings within 30 days after notification by the
Construction Contractors Board of a claim under ORS 701.145 is a waiver
by the contractor of any contractual right to mediation or arbitration.
[Subsection (1) enacted as 1989 c.430 §5; subsection (2) enacted as 1989
c.928 §21; 1991 c.67 §187; 1991 c.181 §12; 2001 c.197 §17; 2001 c.414
§11; 2003 c.598 §52]Note: Sections 1 and 2, chapter 647, Oregon Laws 2005, provide:

Sec. 1. Task Force on Construction Claims. (1) There is created the
Task Force on Construction Claims consisting of nine members appointed as
follows:

(a) The administrative officer of the Construction Contractors
Board shall appoint three members:

(A) One of whom must be a contractor licensed under ORS chapter 701
who specializes in the construction of single-family residences;

(B) One of whom must be a general contractor licensed under ORS
chapter 701 who specializes in the construction of commercial multifamily
structures; and

(C) One of whom must be a general contractor licensed under ORS
chapter 701 who specializes in the construction of commercial structures.

(b) The Director of the State Department of Energy shall appoint
one member as a representative of the State Department of Energy.

(c) The Director of the Department of Consumer and Business
Services shall appoint five members:

(A) One of whom must be a member of the Residential Structures
Board;

(B) One of whom must be a person with expertise in residential
construction design;

(C) One of whom must be an insurance agent or other person with
expertise in the insurance industry who is not affiliated with the
construction industry;

(D) One of whom must be a representative of an insurance industry
carrier offering insurance of a type required by ORS 701.105; and

(E) One of whom must be a representative of the public.

(2) The task force shall study the relationship between
construction claims and construction industry practices, construction
defects, consumer protection and state-mandated requirements for
contractors. The study shall be designed to produce:

(a) An evaluation of construction claims in Oregon, including but
not limited to the causes and extent of construction defects, the
availability and affordability of contractor liability insurance and the
need for maintaining or increasing consumer protection.

(b) Recommendations regarding construction practice changes to
reduce construction claims, such as changes to education, quality control
and building code requirements.

(3) In addition to the study results described in subsection (2) of
this section, the task force may design the study to produce one or more
of the following:

(a) A review of any construction claim reduction actions taken in
other states or countries.

(b) Recommendations regarding Oregon construction claims, including
but not limited to recommendations concerning construction defects,
consumer protection and state-mandated requirements for contractors.

(c) A cost-benefit or other analysis to determine whether current
consumer protection laws, building codes and contractor insurance
requirements regarding construction claims are adequate and any
recommendations for changing those laws, codes or requirements.

(d) Recommendations regarding changes to the inspection of
construction materials and construction methods that may reduce the
number of construction claims.

(e) Recommendations regarding possible restrictions on construction
materials or methods that may reduce the number of construction claims.

(f) A review of the impact of construction warranty use on the
filing of construction claims and recommendations regarding construction
warranties.

(4) The Director of the Department of Consumer and Business
Services shall provide for a professional qualified expert to study
options regarding actuarially sound insurance reforms, alternatives and
pricing, including loss control discounts or the designation of a single
private insurer to provide the construction contractor insurance coverage
required under ORS 701.105. The task force shall include any
recommendations of the professional qualified expert in the study
materials developed by the task force and may include the recommendations
in the recommendations for legislation reported by the task force under
subsection (11) of this section.

(5) A majority of the members of the task force constitutes a
quorum for the transaction of business.

(6) Official action by the task force requires the approval of a
majority of the members of the task force.

(7) The task force shall elect one of its members to serve as
chairperson.

(8) If there is a vacancy for any cause, the appointing authority
shall make an appointment to become immediately effective.

(9) The task force shall meet at times and places specified by the
call of the chairperson or of a majority of the members of the task force.

(10) The task force may adopt rules necessary for the operation of
the task force.

(11) The task force shall submit a report, and may include
recommendations for legislation, regarding construction claims to the
Seventy-fourth Legislative Assembly no later than January 31, 2007.

(12) The Construction Contractors Board and the Department of
Consumer and Business Services shall provide staff support to the task
force pursuant to the interagency agreement described in subsection (15)
of this section.

(13) Members of the task force are not entitled to compensation,
but may be reimbursed for actual and necessary travel and other expenses
incurred by them in the performance of their official duties in the
manner and amounts provided for in ORS 292.495. Claims for expenses shall
be paid out of funds made available to the Department of Consumer and
Business Services for that purpose under the interagency agreement
described in subsection (15) of this section.

(14) All agencies of state government, as defined in ORS 174.111,
are directed to assist the task force in the performance of its duties
and, to the extent permitted by laws relating to confidentiality, to
furnish such information and advice as the members of the task force
consider necessary to perform their duties.

(15) The Construction Contractors Board and the Department of
Consumer and Business Services shall enter into an interagency agreement
to coordinate expenditures and staff support to carry out the duties of
the task force. [2005 c.647 §1]

Sec. 2. Section 1 of this 2005 Act is repealed on January 1, 2008.
CONSTRUCTION CONTRACTORS BOARD(1) The Construction Contractors
Board is established, consisting of nine members appointed by the
Governor subject to confirmation by the Senate in the manner provided by
law. Three of the members shall be contractors who primarily work on
residential or small commercial structures, including one contractor
engaged in the business of remodeling, two shall be public members and
one shall be an elected representative of a governing body of local
government. Two of the members shall be general contractors who primarily
work on large commercial structures, and one shall be a specialty
contractor who primarily works on large commercial structures or a
limited contractor. One member who is a contractor may be certified as a
home inspector.

(2) The term of office of each member is four years, but a member
serves at the pleasure of the Governor. Before the expiration of the term
of a member, the Governor shall appoint a successor whose term begins on
July 1 next following. A member is eligible for reappointment. If there
is a vacancy for any cause, the Governor shall make an appointment
immediately effective for the unexpired term.

(3) In order to be eligible for board membership, the six
contractor members of the board shall be licensed under this chapter and
shall maintain their licenses in good order during their term of office.
[Subsections (1) and (2) enacted as 1971 c.740 §3; subsection (3) enacted
as 1971 c.740 §5; 1975 c.721 §8; 1977 c.537 §1; 1981 c.618 §13; 1987
c.414 §40; 1989 c.928 §22; 1991 c.181 §14; 1993 c.470 §4; 1997 c.814 §4;
1999 c.402 §33; 2001 c.197 §18](1) The Construction Contractors Board shall select from
among its members a chairperson, a vice chairperson and such other
officers for such terms and with such duties and powers necessary for the
performance of their duties as the board determines.

(2) A majority of the members of the board constitutes a quorum for
the transaction of business.

(3) A member of the board is entitled to compensation and expenses
as provided in ORS 292.495.

(4) The board may create advisory committees as the board considers
necessary. The chairperson of the board, or a board member designated by
the chairperson, shall be a member of any advisory committee created by
the board. [1971 c.740 §6; 1989 c.928 §23; 2001 c.160 §6](1) The Construction Contractors Board may
investigate the activities of any person engaged in the building and
construction industry to determine compliance with this chapter.

(2) With the approval of the city or county, the board may conduct
investigations with city or county inspectors, provided that the city or
county is reimbursed by the board for the costs of such investigations.

(3) Any inspector authorized by the board to determine compliance
with the provisions of this chapter is authorized to require any person
who is engaged in any activity regulated by this chapter to demonstrate
proof of compliance with the licensing requirements of this chapter. If a
person who is contracting directly with the owner of a structure does not
demonstrate proof of compliance with the licensing requirements of this
chapter, the inspector shall give notice of noncompliance to the person.
The notice of noncompliance shall be in writing, shall specifically state
that the person is not in compliance with the licensing requirements of
this chapter and shall provide that unless the person demonstrates proof
of compliance within 10 days of the date of the notice, the inspector may
by order stop all work then being done by the person. The notice of
noncompliance shall be served upon the person and shall be served upon or
delivered to the owner of each structure upon which the person is then
performing work under contract, or mailed to all persons who are
mortgagees or trust deed beneficiaries of record with respect to the real
property upon which each such structure is situated. If more than one
person is the owner of any such structure, a copy of the notice need be
given to only one of such persons. If after receipt of the notice of
noncompliance the person fails within the 10-day period specified in the
notice to demonstrate proof of compliance with the licensing requirements
of this chapter, the inspector is authorized to order the work stopped by
notice in writing served on any persons engaged in the activity. Any
person so notified shall stop such work until proof of compliance is
demonstrated. However, the inspector may not order the work stopped until
at least 10 days after the copies of the notice of noncompliance have
been served upon or delivered to the owners or mailed to the mortgagees
and trust deed beneficiaries specified in this subsection.

(4) The board has the power to administer oaths, issue notices and
subpoenas in the name of the board, compel the attendance of witnesses
and the production of evidence, hold hearings and perform such other acts
as are reasonably necessary to carry out its duties under this chapter.

(5) If any person fails to comply with a subpoena issued under
subsection (4) of this section or refuses to testify on matters on which
the person may be lawfully interrogated, the board shall compel obedience
in the manner provided in ORS 183.440.

(6) Notwithstanding the provisions of subsection (3) of this
section:

(a) The board may order the work stopped immediately if the
contractor is working on a structure and the contractor was not licensed
by the board when the work began; or

(b) The board may order the work stopped after 10 days’ notice to
the persons listed in subsection (3) of this section if the contractor is
working on a structure and was licensed by the board when the job began
but has let the license lapse. [1971 c.740 §18; 1975 c.721 §9; 1987 c.414
§40d; 1989 c.744 §3; 1989 c.928 §26; 1991 c.561 §1; 1999 c.402 §34](1) The Construction
Contractors Board shall begin an action to determine whether a contractor
or a subcontractor shall not be considered qualified to hold or
participate in a public contract for a public improvement upon receipt of
information from a public contracting agency or from any person who
supplied labor or materials in connection with a public contract for a
public improvement indicating that the contractor or subcontractor has
not made payment to persons who supplied labor or materials within 60
days after the date when the payment was received by the contractor or
subcontractor and that the payment was not a subject of a good faith
dispute as defined in ORS 279C.580.

(2) If the board determines after notice and opportunity for
hearing that a contractor or a subcontractor did not make payment to
persons who supplied labor or materials in connection with a public
contract for a public improvement within 60 days after the date when
payment was received by the contractor or subcontractor, the board shall
place the contractor or the subcontractor on the list of persons who have
been determined not to be qualified to hold or participate in a public
contract for a public improvement. The board may not place a contractor
or subcontractor on the list if the only reason that the contractor or
subcontractor did not make payment to a person when payment was due is
that the contractor or subcontractor did not receive payment from the
public contracting agency, contractor or subcontractor when payment was
due. The contractor or subcontractor shall remain on the list for a
period of not less than six months.

(3) If the board determines that the claim made against a
contractor or subcontractor was made in bad faith or was false, the
person filing the bad faith or false claim shall be placed on the list of
persons who have been determined not to be qualified to hold or
participate in a public contract for a public improvement.

(4) The board shall create and maintain a list of contractors and
subcontractors who have been determined not to be qualified to hold or
participate in a public contract for a public improvement. The list may
include any corporation, partnership or other business entity of which
the contractor or subcontractor is an owner, shareholder or officer of
the business or was an owner or officer of the business. The board shall
provide access to the list to all public contracting agencies,
contractors and subcontractors. [1999 c.689 §9; 2003 c.794 §318; 2005
c.409 §§1,2]At least once each month, the Construction Contractors
Board shall provide to investigative units of the Department of Revenue,
Department of Consumer and Business Services and Employment Department
the name and address of each person who acts as a contractor in violation
of this chapter or who knowingly assists an unlicensed person to act in
violation of this chapter. [1983 c.616 §2; 1989 c.928 §27; 1999 c.402 §35]
(1) The Construction Contractors Board shall adopt rules to carry out the
provisions of this chapter including, but not limited to, rules that:

(a) Establish language for surety bonds;

(b) Establish processing requirements for different types of claims
described in this chapter;

(c) Limit whether a claim may be processed by the board if there is
no direct contractual relationship between the claimant and the
contractor;

(d) Notwithstanding ORS 701.146 (7) and 701.150 (4) and subject to
ORS 701.150 (6), exclude or limit recovery from the contractor’s bond
required by ORS 701.085, of damages awarded by a court or arbitrator for
interest, service charges, costs and attorney fees arising from filing
and proving the claim; and

(e) Designate a form to be used by an owner of residential property
under ORS 87.007 for the purpose of indicating the method the owner has
selected to comply with the requirements of ORS 87.007 (2) or to indicate
that ORS 87.007 (2) does not apply.

(2) The board may adopt rules prescribing terms and conditions
under which a contractor may substitute a letter of credit from a bank
authorized to do business in this state instead of the bond requirements
prescribed in ORS 701.085. [1971 c.740 §19; 1989 c.928 §28; 1991 c.181
§13; 2001 c.197 §19; 2003 c.778 §6](1) The Construction Contractors Board shall supply the
Department of Revenue and the Employment Department with a partial or
complete list of licensees as deemed necessary by the board.

(2) The lists required by subsection (1) of this section shall
contain the name, address, Social Security or federal employer
identification number of each licensee or such other information as the
departments may by rule require. [1989 c.870 §6; 1999 c.402 §36; 2005
c.22 §479] (1) Any
individual may request and the Construction Contractors Board shall
provide notification of the status of one or more licensees. Status
information provided by the board shall include any professional
credentials earned by the contractor as described in ORS 701.120.

(2) The board may charge a standard fee for the notification
described in subsection (1) of this section not to exceed the cost of
preparation and provision of such notices. [1989 c.870 §7; 1999 c.402
§37; 2001 c.311 §4; 2001 c.428 §2; 2002 s.s.1 c.6 §§2,7; 2003 c.778 §11]The Construction Contractors Board shall maintain and make
available to the public a record of grievances made to the board against
contractors that are licensed under this chapter. The board shall
separately record:

(1) Inquiries for which no investigation has taken place;

(2) Claims that are being processed but upon which action has not
been completed;

(3) Claims that have been voluntarily settled by the contractor and
the claimant;

(4) Claims that have resulted in a final order of the board to
dismiss the claim; and

(5) Claims that have resulted in a final order of the board to
require payment to the claimant. [1999 c.174 §2; 2001 c.104 §281] The
Construction Contractors Board may retain 20 percent annually from the
funds collected under ORS 701.992. The amount retained under this section
shall be continuously appropriated for the board’s costs of collection of
civil penalties imposed by order of the board. [1989 c.928 §29; 1995
c.771 §5] (1) From within its
membership, the Construction Contractors Board shall appoint three
members, including one of the public members or the elected official, as
an appeal committee. The board may appoint one or more appeal committees.
At least one residential contractor shall be appointed to any committee
that hears appeals involving residential complaints.

(2) An appeal committee shall hear appeals on proposed orders and
on petitions for reconsideration and rehearing and motions for stays that
were originally appealed to the board as proposed orders.

(3) The Construction Contractors Board shall not consider an appeal
of a decision of an appeal committee. However, the full board may act as
an appeal committee. The parties affected by a decision of an appeal
committee shall retain the right to appeal the decision to the Court of
Appeals. [1989 c.928 §24; 1993 c.470 §1; 1993 c.742 §53]The Construction Contractors Board shall investigate
allegations of illegal activity in the construction industry and seek
civil or criminal prosecution of illegal activity that warrants more than
an administrative sanction. [2001 c.850 §4]HOME INSPECTORS (1)
An individual may not undertake, offer to undertake or submit a bid to do
work as a home inspector unless the individual is certified as a home
inspector under this section by the Construction Contractors Board and is
an owner of, or employed by, a business that is licensed by the board.

(2) A business may not undertake, offer to undertake or submit a
bid to do work as a home inspector unless the business is licensed by the
board under this chapter and has an owner or an employee who is certified
as a home inspector under this section.

(3) The board shall adopt minimum standards of practice and
professional conduct.

(4) The board shall require that an applicant for certification as
a home inspector pass a test demonstrating the competency of the
applicant to act as a home inspector. The board, by rule, may accept the
results of competency testing by a nationally recognized certification
program for home inspectors. The board, by rule, may adopt additional
requirements for the issuance or renewal of a home inspector certificate,
including but not limited to training and continuing education
requirements.

(5) The board by rule shall adopt procedures for the issuance,
renewal and revocation of home inspector certification.

(6) The board by rule may adopt fees necessary for the
administration of this section. The fees may not exceed the following:

(a) $50 for application;

(b) $50 for testing; and

(c) $75 for annual certificate renewal.

(7) This section does not apply to a person acting within the scope
of a license, certificate or registration issued to the person by the
Appraiser Certification and Licensure Board under ORS chapter 674. [1997
c.814 §§3,3a; 1997 c.690 §6; 1999 c.402 §39; 2001 c.196 §10; 2005 c.114
§1; 2005 c.254 §13; 2005 c.432 §15a]Note: Section 3b, chapter 814, Oregon Laws 1997, provides:

Sec. 3b. The requirements of section 3 of this Act [701.350 (1) and
(2)] shall not apply to a person registered each year as a general
contractor under ORS chapter 701 during the period from January 1, 1991,
through the effective date of this Act [August 11, 1997]. [1997 c.814 §3b]A business licensed as a contractor under this chapter and
providing home inspector services by a home inspector certified under ORS
701.350 may not undertake, offer to undertake or offer to submit a bid to
undertake work to repair a structure inspected by an owner or employee of
the business within the 12 months following the inspection. [1997 c.814
§7; 2001 c.196 §11; 2005 c.432 §16]RETAINAGE(1) As used in ORS 279C.555, 279C.570,
701.410, 701.420, 701.430, 701.435 and 701.440, unless the context
otherwise requires:

(a) “Construction” includes:

(A) Excavating, landscaping, demolishing and detaching existing
structures, leveling, filling in and doing other preparation of land for
the making and placement of a building, structure or superstructure;

(B) Creating or making a building, structure or superstructure; and

(C) Altering, partially constructing and doing repairs in and upon
a building, structure or superstructure.

(b) “Contractor” includes a person who contracts with an owner on
predetermined terms to be responsible for the performance of all or part
of a job of construction in accordance with established specifications or
plans, retaining control of means, method and manner of accomplishing the
desired result.

(c) “Owner” includes a person who is or claims to be the owner in
fee or a lesser estate of the land, building, structure or superstructure
on which construction is performed and who enters into an agreement with
a contractor for the construction.

(d) “Subcontractor” includes a person who contracts with a
contractor or another subcontractor on predetermined terms to be
responsible for the performance of all or part of a job of construction
in accordance with established specifications or plans.

(2) As used in ORS 701.410, 701.420, 701.430, 701.435 and 701.440,
“retainage” means the difference between the amount earned by a
contractor or subcontractor under a construction contract and the amount
paid on the contract by the owner or, in the case of a subcontractor, by
a contractor or another subcontractor. [1975 c.772 §1; 1987 c.158 §148;
1999 c.59 §209; 2003 c.794 §319; 2005 c.22 §§480,481]Note: 701.410 to 701.440 were enacted into law by the Legislative
Assembly but were not added to or made a part of ORS chapter 701 or any
series therein by legislative action. See Preface to Oregon Revised
Statutes for further explanation.(1) Partial payment shall be
allowed and made on contracts for construction. Except as provided in ORS
701.430 (2), an amount equal to not more than five percent of the
contract price of the work completed may be withheld by an owner,
contractor or subcontractor as retainage. Partial payment allowed under
this subsection shall not be construed as acceptance or approval of some
of the work or as a waiver of any defects therein.

(2) The owner, contractor or subcontractor shall pay interest at
the rate of one percent per month on the final payment due the contractor
or subcontractor. Except as provided in ORS 701.430 (2), the interest
shall commence 30 days after the work under the contract for construction
for which the final payment is due has been completed and accepted and
shall run until the date when final payment is tendered to the contractor
or subcontractor. The contractor or subcontractor shall notify the party
to whom the contractor or subcontractor is responsible for the
performance of construction work under the contract when the contractor
or subcontractor considers the work that the contractor or subcontractor
contracted to perform to be complete and that party shall, within 15 days
after receiving the notice, either accept the work or notify the
contractor or subcontractor of work yet to be performed on the contract.
If the party to whom the contractor or subcontractor is responsible for
the performance of construction work under the contract does not notify
the contractor or subcontractor of work yet to be performed within the
time allowed, the interest required under this subsection shall commence
30 days after the end of the 15-day period.

(3) When a contractor pays a subcontractor in full, including the
amount withheld as retainage, the owner with whom that contractor has the
contract shall pay the contractor, out of the amount that is withheld by
the owner from that contractor as retainage, a sum equal to the amount of
retainage that the contractor paid the subcontractor. The contractor
shall notify the owner when the contractor pays a subcontractor in full
under this section and the owner shall, within 15 days after receiving
the notice, pay the contractor the amount due the contractor under this
subsection. Interest on the amount due the contractor at the rate of one
percent per month shall commence 30 days after the owner receives notice
of full payment to the subcontractor. [1975 c.772 §2]Note: See note under 701.410. (1)
Except as provided in subsection (2) of this section, a contractor or
subcontractor may execute and deliver to the owner, contractor or
subcontractor before the commencement of construction for which the
contractor or subcontractor will be responsible for performing a good and
sufficient bond in a sum equal to the contract price for the faithful
performance of the contract. The term of the bond required under this
subsection shall extend to include the period during which claims of lien
or notices of other encumbrances based on the construction performed
under the contract may be filed under applicable law. The bond must be
approved by the owner, contractor or subcontractor entitled to withhold
retainage. A faithful performance bond delivered under this section shall
include, but not be limited to, provisions to the effect that:

(a) The obligations of the contract shall be faithfully performed;

(b) Payment shall promptly be made to all persons supplying labor
or materials to the contractor or subcontractor for prosecution of the
work provided in the contract;

(c) All contributions due the Industrial Accident Fund and the
State Unemployment Compensation Fund from the contractor or subcontractor
in connection with the performance of the contract shall promptly be
made; and

(d) All sums required to be deducted and retained from the wages of
employees of the contractor or subcontractor pursuant to the Personal
Income Tax Act of 1969, shall be paid over to the Department of Revenue.

(2) When a contractor or subcontractor does not obtain the bond
required under subsection (1) of this section, the owner, contractor or
subcontractor may withhold that percentage of the contract price of the
work completed as retainage that is agreed to by the parties to the
contract. The owner, contractor or subcontractor shall pay interest at
the rate of one percent per month on the final payment due a contractor
or subcontractor who was unable to obtain the bond required under
subsection (1) of this section. The interest shall commence 10 days after
the date on which claims of lien or notices of other encumbrances based
on the construction performed under the contract must be properly filed
under applicable law. For purposes of this subsection, “final payment due
a contractor or subcontractor” means the amount withheld as retainage
minus the total dollar amount of liens and other encumbrances resulting
from the failure of the contractor or subcontractor to faithfully perform
the obligations of the contract and properly filed within the time
allowed under applicable law. [1975 c.772 §3]Note: See note under 701.410. (1) When a contractor
on a public contract deposits bonds or securities under ORS 279C.560 (3),
if the subcontract price exceeds $50,000 and constitutes more than 10
percent of the cost of the public contract, a subcontractor on the public
contract may deposit bonds or securities with the contractor or in any
bank or trust company to be held in lieu of cash retainage for the
benefit of the contractor. In such event the contractor shall reduce the
retainage in an amount equal to the value of the bonds and securities and
pay the amount of the reduction to the subcontractor in accordance with
ORS 701.420 and 701.430. Interest on such bonds or securities shall
accrue to the subcontractor.

(2) When a contractor on a public contract elects to have the
public contracting agency deposit the accumulated retainage in an
interest-bearing account under ORS 279C.560 (4), the contractor, within
30 days following payment of the final amount due for construction of the
public improvement, shall pay to each subcontractor who performed work on
the construction the subcontractor’s proportional share of the interest
earnings that accrued to the contractor as a result of that election. A
subcontractor’s share of the total amount of interest earnings under this
subsection shall be determined by the proportion which the amount of
retainage withheld from the subcontractor bears to the amount of
retainage withheld from the contractor and the length of time the
retainage was withheld from the subcontractor. A share of the interest
earnings shall be paid to a subcontractor under this subsection only when:

(a) Retainage is withheld from the subcontractor for more than 60
days after the day on which the first partial payment was due the
subcontractor under the terms of the subcontract; and

(b) The amount of interest earnings due the subcontractor exceeds
$100.

(3) If the contractor incurs additional costs as a result of the
exercise of the options described in subsections (1) and (2) of this
section, the contractor may recover such costs from the subcontractor by
reduction of the final payment. As work on the subcontract progresses,
the contractor shall, upon demand, inform the subcontractor of all
accrued additional costs.

(4) Bonds and securities deposited or acquired in lieu of
retainage, as permitted by this section, shall be of a character approved
by the Director of the Oregon Department of Administrative Services,
including but not limited to:

(a) Bills, certificates, notes or bonds of the United States.

(b) Other obligations of the United States or its agencies.

(c) Obligations of any corporation wholly owned by the federal
government.

(d) Indebtedness of the Federal National Mortgage Association.
[1977 c.767 §2; 1983 c.690 §16; 2003 c.794 §320]Note: See note under 701.410.ORS 279C.555, 701.410,
701.420 and 701.430 do not apply when the owner is the United States or
any agency thereof or when the construction is paid for, in whole or in
part, with federal moneys. [1975 c.772 §6; 2003 c.794 §321]Note: See note under 701.410.LEAD POISONING AND HAZARD REDUCTION The Legislative Assembly finds that:

(1) The federal government regulates lead poisoning and lead hazard
reduction through:

(a)(A) The Lead-Based Paint Poisoning Prevention Act;

(B) The Lead Contamination Control Act of 1988;

(C) The Safe Drinking Water Act;

(D) The Resource Conservation and Recovery Act of 1976; and

(E) The Residential Lead-Based Paint Hazard Reduction Act of 1992;
and

(b) Implementing regulations of:

(A) The Department of Housing and Urban Development;

(B) The Environmental Protection Agency;

(C) The Occupational Safety and Health Administration; and

(D) The Centers for Disease Control.

(2) In 1992, Congress passed the federal Residential Lead-Based
Paint Hazard Reduction Act, which requires that:

(a) States provide for the accreditation of lead-based paint
activities training programs, the certification of persons completing
such training programs and the licensing of lead-based paint activities
contractors pursuant to standards to be developed by the Environmental
Protection Agency.

(b) Effective October 28, 1995, sellers and landlords of
residential housing constructed before 1978 notify buyers and tenants of
known lead-based paint hazards.

(3) Lead affects every system of the body. It is harmful to
individuals of all ages and is especially harmful to children, fetuses
and women of childbearing age. Lead poisoning is one of the most common
and preventable pediatric health problems today. [1995 c.795 §2] For the
purposes of ORS 431.920 and 701.500 to 701.515:

(1) “Abatement” has the meaning given that term in P.L. 102-550,
section 1004, 40 C.F.R. 745.223 and as further defined pursuant to the
authorities described in ORS 701.500.

(2) “Accredited Training Program” means a training program that has
been accredited by the Department of Human Services to provide training
for individuals engaged in lead-based paint activities.

(3) “Certified” means an action by the Department of Human Services
verifying the successful completion of a training program accredited by
the department and any other requirements.

(4) “Discipline” means a specific type or category of lead-based
paint activity.

(5) “Evaluation” has the meaning given that term in P.L. 102-550,
section 1004, and as further defined pursuant to the authorities
described in ORS 701.500.

(6) “Inspection” has the meaning given that term in P.L. 102-550,
section 1004, 40 C.F.R. 745.223 and as further defined pursuant to the
authorities described in ORS 701.500.

(7) “Lead-based paint” has the meaning given that term in P.L.
102-550, section 1004, and as further defined pursuant to the authorities
described in ORS 701.500.

(8) “Lead-based paint activities” has the meaning given that term
in 40 C.F.R. 745.223 and as further defined pursuant to the authorities
described in ORS 701.500.

(9) “Lead-based paint hazard” means any condition that causes
exposure to lead from lead-contaminated dust, lead-contaminated soil,
lead-contaminated paint that is deteriorated or present in accessible
surfaces, friction surfaces or impact surfaces that would result in
adverse human health effects as established by the appropriate federal
agency.

(10) “Licensed” means a person who has been certified by the
Department of Human Services in one or more disciplines and has completed
the requirements of the Construction Contractors Board.

(11) “Registered” means a person or business that has met the
requirements for registration under this chapter. [1995 c.795 §3]
(1) A person may not perform lead-based paint activities in this state
unless the person is licensed in the appropriate lead-based paint
discipline under ORS 701.515.

(2) A person required by subsection (1) of this section to obtain a
license must comply with the provisions of ORS 431.920 and 701.500 to
701.515 or any rules adopted pursuant thereto.

(3) A person registered to conduct a lead-based paint activities
business may not employ any individual to perform lead-based paint
activities unless the person is licensed in the appropriate lead-based
paint discipline under ORS 701.515.

(4) A construction contractor who successfully completes an
accredited training program in lead-based paint activities qualifies to
have certification in that activity included in the professional
credentials of the contractor as described in ORS 701.120. The provisions
of this subsection do not affect the licensing requirements established
in ORS 701.515. [1995 c.795 §4; 2001 c.428 §3]
(1) In accordance with any applicable provisions of ORS chapter 183, the
Construction Contractors Board by rule shall establish a system to
license persons and individuals in lead-based paint disciplines required
to be licensed under ORS 701.510. Such licensing shall include
disciplines and requirements described in 40 C.F.R. 745.225. Such a
system shall include but not be limited to provisions:

(a) Prescribing the form and content of the times and procedures
for submitting applications for license issuance or renewal.

(b) Prescribing the fees for original issuance and renewal of the
license in amounts that do not exceed the cost of administering the
program.

(c) Prescribing those actions or circumstances that constitute
failure to achieve or maintain licensing requirements, or that otherwise
are contrary to the public interest, for which the agency may refuse to
issue or renew or may suspend or revoke a license.

(2) In accordance with any applicable provisions of ORS chapter
183, the Construction Contractors Board by rule shall establish a system
to register businesses that employ persons or individuals in lead-based
paint disciplines required to be licensed under ORS 701.510. Such
registration shall include the requirements described in 40 C.F.R.
745.226. Such a system shall include but not be limited to provisions:

(a) Prescribing the form and content of the times and procedures
for submitting applications for registration or renewal.

(b) Prescribing the fees for original registration and renewal of
the registration in amounts that do not exceed the cost of administering
the program.

(c) Prescribing those actions or circumstances that constitute
failure to achieve or maintain licensing requirements, or that otherwise
are contrary to the public interest, for which the agency may refuse to
issue or renew or may suspend or revoke a license.

(3) The Construction Contractors Board may impose the following
licensing fees:

(a) Lead abatement contractor, up to $50 per year;

(b) Lead inspection contractor, up to $50 per year;

(c) Lead supervisor or lead contractor, up to $50 per year;

(d) Lead inspector or assessor, up to $50 per year; and

(e) Lead worker, up to $25 per year. [1995 c.795 §5]ACCESSIBILITY FEATURES
(1) As used in this section and ORS 701.530:

(a) “Developer” means a person who contracts to construct, or
arrange for the construction of, new residential housing on behalf of, or
for the purpose of selling the residential housing to, a specific
individual the person knows is the purchaser of the residential housing.

(b) “Residential housing”:

(A) Means a structure designed for use as a residence and
containing dwelling units for three or fewer families.

(B) Means a structure that is a condominium as defined in ORS
100.005.

(C) Does not mean a manufactured structure as defined in ORS
446.003.

(2) A developer who enters into a contract to construct or arrange
for the construction of new residential housing may, at the time of
providing a purchaser with a written contract, also provide the purchaser
with a list of features that may make residential housing more accessible
to a person with disabilities. The list may include the features
identified in the model list of features adopted by the Construction
Contractors Board by rule under ORS 701.530.

(3) The inclusion of a feature on the list supplied by the
developer under subsection (2) of this section does not obligate the
developer to make the feature available to a purchaser. The list supplied
by the developer may specify for each feature whether the feature is
standard, optional, available on a limited basis or unavailable from the
developer. If a listed feature is available from the developer as an
option or on a limited basis, the list of features may specify the stage
of construction by which the purchaser must submit to the developer any
request that the residential housing be constructed with that feature.

(4) This section, or the inclusion of a feature on the model list
developed under ORS 701.530, does not affect the requirement that
installation of a feature comply with the state building code or be
approved under ORS 455.060. [2005 c.734 §4]Note: 701.525 and 701.530 were enacted into law by the Legislative
Assembly but were not added to or made a part of ORS chapter 701 or any
series therein by legislative action. See Preface to Oregon Revised
Statutes for further explanation. The
Construction Contractors Board shall adopt by rule a model list of
features recommended for inclusion in a list of features that a developer
supplies to a purchaser of residential housing under ORS 701.525. In
developing the model list of features, the board shall solicit the
comments of advocacy groups and other organizations serving persons with
disabilities. [2005 c.734 §5]Note: See note under 701.525.MERCURY THERMOSTATSThe Construction
Contractors Board shall provide an annual notice to each contractor
licensed under this chapter that informs contractors of the rules
developed by the Director of the Department of Consumer and Business
Services pursuant to ORS 455.355 prohibiting the installation of
thermostats that contain mercury and requiring proper disposal of
thermostats that contain mercury. [2001 c.924 §22]NOTICES OF DEFECT IN RESIDENCE As used
in ORS 701.560 to 701.595 and 701.605:

(1) “Contractor” means a person that performed services for the
construction, alteration or repair of a residence.

(2) “Defect” means a deficiency, an inadequacy or an insufficiency
arising out of or relating to the construction, alteration or repair of a
residence. “Defect” includes a deficiency, an inadequacy or an
insufficiency in a system, component or material incorporated into a
residence.

(3) “Owner” means a person that possesses an interest in a
residence or in land that is a residential site or has entered into a
contract for the purchase of an interest in the residence or land.
“Owner” includes:

(a) A homeowners association as defined in ORS 94.550;

(b) A managing entity as defined in ORS 94.803;

(c) An owners’ association as described in ORS 94.858;

(d) An association of unit owners as defined in ORS 100.005; and

(e) Any other entity that possesses an interest in a residence or
represents owners of a residence.

(4) “Remediation” means the repair or replacement of some or all of
the defects described in an owner’s notice of defect sent under ORS
701.565.

(5) “Residence” means:

(a) A residential structure as defined in ORS 701.005;

(b) Common property as defined in ORS 94.550; and

(c) A common element as defined in ORS 100.005.

(6) “Secondary notice” means a copy of an owner’s notice of defect
that a contractor, subcontractor or supplier sends to another contractor,
subcontractor or supplier that may be responsible for a defect.

(7) “Subcontractor” means any person that performed services for
the construction, alteration or repair of a residence at the request or
direction of a contractor.

(8) “Supplier” means any person that furnished or manufactured the
systems, components or materials incorporated into a residence as part of
the construction, alteration or repair of the residence. [2003 c.660 §1]Note: 701.560 to 701.605 were enacted into law by the Legislative
Assembly but were not added to or made a part of ORS chapter 701 or any
series therein by legislative action. See Preface to Oregon Revised
Statutes for further explanation. (1) An
owner may not compel arbitration or commence a court action against a
contractor, subcontractor or supplier to assert a claim arising out of or
related to any defect in the construction, alteration or repair of a
residence or in any system, component or material incorporated into a
residence located in this state unless the owner has sent that
contractor, subcontractor or supplier a notice of defect as provided in
this section and has complied with ORS 701.575.

(2) An owner must send a notice of defect by registered mail,
return receipt requested. If a notice of defect is sent to a contractor
or subcontractor, the owner must send the notice to the last known
address for the contractor or subcontractor as shown in the records of
the Construction Contractors Board. If a notice of defect is sent to a
supplier, the owner must send the notice to the Oregon business address
of the supplier or, if none, to the registered agent of the supplier.

(3) A notice of defect sent by an owner must include:

(a) The name and mailing address of the owner or the owner’s legal
representative, if any;

(b) A statement that the owner may seek to compel arbitration or
bring a court action against the contractor, subcontractor or supplier;

(c) The address and location of the affected residence;

(d) A description of:

(A) Each defect;

(B) The remediation the owner believes is necessary; and

(C) Any incidental damage not curable by remediation as described
in subparagraph (B) of this paragraph; and

(e) Any report or other document evidencing the existence of the
defects and any incidental damage. [2003 c.660 §2]Note: See note under 701.560.(1) A contractor, subcontractor
or supplier that receives a notice of defect sent under ORS 701.565
shall, not later than 14 days after receiving the notice of defect, send
a secondary notice to any other known contractor, subcontractor or
supplier that may be responsible for some or all of the defects described
in the notice of defect. The contractor, subcontractor or supplier must
send the secondary notice by registered mail, return receipt requested,
to an address described in ORS 701.565 (2). The secondary notice must be
accompanied by a statement describing the basis for contending that the
other contractor, subcontractor or supplier may be responsible for some
or all of the defects.

(2) A contractor, subcontractor or supplier that receives a notice
of defect or secondary notice may send the owner a written request to
conduct a visual examination of the residence. The written request must
be sent not later than 14 days after the requesting contractor,
subcontractor or supplier receives a notice of defect or secondary
notice. The written request to conduct a visual examination of the
residence must state the estimated time required for the visual
examination.

(3) A contractor, subcontractor or supplier that receives a notice
of defect or secondary notice may send the owner a written request to
inspect the residence. The written request must be sent not later than 14
days after the requesting contractor, subcontractor or supplier conducted
a visual examination of the residence. The written request to inspect the
residence must state the nature and scope of the inspection, whether any
testing is to be performed and the estimated time required for the
inspection. The recipient of a secondary notice that requests to inspect
the residence shall send a copy of the request to the sender of the
secondary notice.

(4) A contractor, subcontractor or supplier that sends a secondary
notice and intends to hold the recipient of the secondary notice liable
for a defect described in a notice of defect shall coordinate the
scheduling of any inspection with the owner and all recipients of a
secondary notice from the contractor, subcontractor or supplier. The
contractor, subcontractor or supplier shall deliver a copy of any written
request to inspect the residence to each recipient of the secondary
notice in time to provide the recipient with an opportunity to attend the
requested inspection and to participate in any remediation. The sender of
a secondary notice shall give reasonable advance notice to the owner or
the owner’s legal representative, if any, of the identity of any
contractor, subcontractor or supplier who will attend the inspection.

(5) Unless otherwise agreed to by the owner, a contractor,
subcontractor or supplier that receives a notice of defect or secondary
notice shall send a written response to the owner not later than 90 days
after the contractor, subcontractor or supplier receives a notice of
defect or secondary notice. A contractor, subcontractor or supplier that
receives a secondary notice also shall send a copy of the written
response to the sender of the secondary notice. The written response must
be sent by registered mail, return receipt requested. The written
response must include:

(a) One or more of the following for each defect described in the
notice of defect or secondary notice or discovered during the course of
any visual examination or inspection:

(A) An acknowledgment of the existence, nature and extent of the
defect without regard to responsibility for the defect.

(B) A statement describing the existence of a defect different in
nature or extent from the defect described in the notice of defect or
secondary notice, without regard to responsibility for the defect.

(C) A denial of the existence of the defect.

(b) A copy of the documents described in ORS 701.575 (4).

(c) One or more of the following:

(A) An offer to perform some or all of the remediation. The offer
must specify the date by which the offered remediation will be completed.

(B) An offer to pay a stated amount of monetary compensation to the
owner for some or all of the acknowledged defects and any incidental
damage. The offer must specify the date by which payment will be made.

(C) A denial of responsibility for some or all of the acknowledged
defects or incidental damage. [2003 c.660 §3]Note: See note under 701.560.(1) An owner sending a notice of defect under ORS
701.565 shall make the residence available for visual examination
pursuant to any written request sent under ORS 701.570. The owner shall
make the residence available for visual examination, during normal
business hours or as otherwise agreed, not later than 20 days after
receiving the written request for visual examination.

(2) An owner sending a notice of defect under ORS 701.565 shall
make the residence available for an inspection pursuant to any written
request sent under ORS 701.570. The owner shall make the residence
available for inspection during normal business hours or at a time that
is mutually agreeable to the owner and the requester.

(3) An inspection by a contractor, subcontractor or supplier may
include any reasonable measures, including testing, for determining the
nature, cause and extent of the defects described in the notice of defect
or incidental damage and the nature and extent of the necessary
remediation. Unless the contractor, subcontractor or supplier conducting
the inspection and the owner agree otherwise, the contractor,
subcontractor or supplier conducting the inspection shall repair any
damage caused by the inspection. Any damage caused by the inspection that
is not repaired may be sought as incidental damage in any subsequent
arbitration or court action by an owner against the contractor,
subcontractor or supplier conducting the inspection.

(4) A contractor, subcontractor or supplier that requests to
inspect a residence must include as part of the written response of the
contractor, subcontractor or supplier under ORS 701.570, a written report
or other document evidencing the result of the inspection and the
existence or nonexistence of the defects described in the notice of
defect or discovered during the inspection. [2003 c.660 §4]Note: See note under 701.560.(1) An owner may accept
an offer contained in a written response under ORS 701.570 by delivering
a written acceptance to the offering contractor, subcontractor or
supplier within 30 days after receiving the offer. If an owner fails to
accept an offer within 30 days after receipt, the offer is deemed
rejected.

(2) If the owner accepts a contractor, subcontractor or supplier’s
offer to perform remediation or to pay monetary compensation, completion
of the remediation or payment satisfies the claims by the owner for those
defects included in the offer for which remediation was performed or
compensation paid, but not for any other defect. Except as provided in
subsection (3) of this section, if the owner accepts an offer by a
contractor, subcontractor or supplier that received a secondary notice,
completion of the remediation or payment satisfies claims for those
defects included in the offer for which remediation was performed or
compensation paid, including claims by the owner and claims for
contribution or indemnity against the contractor, subcontractor or
supplier by the sender of the secondary notice, but not for any other
defect.

(3) If the owner accepts an offer by a contractor, subcontractor or
supplier that received a secondary notice to perform remediation or to
pay monetary compensation and the contractor, subcontractor or supplier
fails to perform in accordance with the accepted offer, then the sender
of the secondary notice may perform the remediation or pay the monetary
compensation offered by the nonperforming contractor, subcontractor or
supplier.

(4) An owner that sends a notice of defect under ORS 701.565 may
compel arbitration or commence a court action against a contractor,
subcontractor or supplier if:

(a) The contractor, subcontractor or supplier that receives the
notice of defect sent under ORS 701.565 does not send a timely written
response under ORS 701.570;

(b) The written response of the contractor, subcontractor or
supplier that received the notice of defect or a secondary notice does
not offer remediation or monetary compensation;

(c) The owner rejects a written offer, or any part thereof, made by
the contractor, subcontractor or supplier; or

(d) The contractor, subcontractor or supplier fails to perform in
accordance with an accepted offer.

(5) A notice of defect and the documents described in ORS 701.575
(4) are admissible in any arbitration or court action between or among an
owner, contractor, subcontractor or supplier arising out of or related to
the construction, alteration or repair of the residence.

(6) Except as provided in this subsection, a written response
containing an offer to perform remediation or pay monetary compensation
made under ORS 701.570 (5) that is not accepted by the owner, and any
reply by an owner, unless the reply contains a counteroffer accepted by a
contractor, subcontractor or supplier, are not admissible during any
subsequent arbitration or court action. A response or reply described in
this subsection is admissible solely for the purpose of proving that an
owner is qualified to compel arbitration or commence a court action under
subsection (4)(c) of this section or determining the timeliness of an
action under ORS 701.585. [2003 c.660 §5]Note: See note under 701.560.(1) If an owner sends a contractor, subcontractor or supplier a
notice of defect within the time allowed for the owner to commence a
court action against that contractor, subcontractor or supplier for a
claim described in ORS 701.565, the time for the owner to commence the
action shall be extended, notwithstanding any statute of limitation or
statute of ultimate repose, until the later of:

(a) One hundred and twenty days after the owner receives a written
response from the contractor, subcontractor or supplier that received the
notice of defect if the written response does not contain a written offer
to perform remediation or pay monetary compensation for one or more of
the defects or incidental damage described in the notice of defect;

(b) One hundred and twenty days after the owner rejects a written
offer by any contractor, subcontractor or supplier to perform remediation
or pay monetary compensation for one or more of the defects or incidental
damage described in the notice of defect; or

(c) Thirty days after the date specified in an accepted written
offer by which the offering contractor, subcontractor or supplier is to
complete the remediation or complete payment of monetary compensation for
one or more of the defects and any incidental damage described in the
notice of defect.

(2) Subsection (1) of this section does not shorten or terminate
the time for bringing a claim in accordance with applicable statutes of
ultimate repose and statutes of limitation.

(3) Delivery of a secondary notice sent by a contractor,
subcontractor or supplier under ORS 701.570 does not act to toll the
expiration of any right of the owner to commence a court action against
the recipient of the secondary notice.

(4) Any remediation performed pursuant to an accepted offer made
under ORS 701.570 does not constitute a new performance and, for purposes
of ORS 12.135, relates back to the earliest date of substantial
completion or abandonment of the construction, alteration or repair of
the improvement to real property. [2003 c.660 §6]Note: See note under 701.560. (1) A
contractor shall deliver a notice of the procedure contained in ORS
701.565 to 701.580 to an owner along with the consumer notification form
required to be delivered to an owner under ORS 701.055 (13). The notice
must be conspicuous and may be included as part of the underlying
contract.

(2) The notice required by subsection (1) of this section must be
in substantially the following form:

___________________________________________________________________________
___

OREGON LAW CONTAINS IMPORTANT REQUIREMENTS YOU MUST FOLLOW BEFORE
YOU MAY COMMENCE ARBITRATION OR A COURT ACTION AGAINST ANY CONTRACTOR,
SUBCONTRACTOR OR SUPPLIER FOR CONSTRUCTION DEFECTS. BEFORE YOU COMMENCE
ARBITRATION OR A COURT ACTION YOU MUST DELIVER A WRITTEN NOTICE OF ANY
CONDITIONS YOU ALLEGE ARE DEFECTIVE TO THE CONTRACTOR, SUBCONTRACTOR OR
SUPPLIER YOU BELIEVE IS RESPONSIBLE FOR THE ALLEGED DEFECT AND PROVIDE
THE CONTRACTOR, SUBCONTRACTOR OR SUPPLIER THE OPPORTUNITY TO MAKE AN
OFFER TO REPAIR OR PAY FOR THE DEFECTS. YOU ARE NOT OBLIGATED TO ACCEPT
ANY OFFER MADE BY THE CONTRACTOR, SUBCONTRACTOR OR SUPPLIER. THERE ARE
STRICT DEADLINES AND PROCEDURES UNDER STATE LAW. FAILURE TO MEET THOSE
DEADLINES OR FOLLOW THOSE PROCEDURES WILL AFFECT YOUR ABILITY TO COMMENCE
ARBITRATION OR A COURT ACTION.

___________________________________________________________________________
___ [2003 c.660 §7]Note: See note under 701.560. If an owner
compels arbitration or commences a court action against any contractor,
subcontractor or supplier to assert a claim arising out of or related to
the construction, alteration or repair of a residence located in this
state and the owner has not followed the procedure set forth in ORS
701.565 and 701.575, the arbitrator or court must dismiss the arbitration
or action without prejudice. The owner may not commence a new arbitration
or action unless the owner follows the procedure set forth in ORS 701.565
and 701.575. [2003 c.660 §8]Note: See note under 701.560. ORS
701.560 to 701.595 and 701.605 do not apply:

(1) To personal injury or death claims.

(2) To claims filed pursuant to ORS 671.703 or 701.139.

(3) To claims against a person licensed under ORS 671.010 to
671.220. [2003 c.660 §9]Note: See note under 701.560.WARRANTIES (1) To facilitate
the handling of warranty work or remediation of defects to a new
commercial or residential structure, a contractor who builds the
structure may present for recording in the deed records of the county in
which the new structure is built a written warranty agreement that:

(a) Is signed by the contractor and the original owner of the new
structure;

(b) Sets forth any express warranties furnished by the contractor;
and

(c) Contains the names of the contractor and the original property
owner, the title of the document, a legal description of the property and
acknowledgment of the signatures of the parties in the same manner as the
parties to a deed are acknowledged.

(2) The warranties set forth in the recorded warranty agreement:

(a) Benefit and burden subsequent owners of the structure.

(b) Cease to affect title to the property 10 years after the date
the instrument is recorded. [2005 c.169 §2]Note: See note under 701.560.CONSTRUCTION CONTRACT PAYMENTS As used in ORS
701.620 to 701.640:

(1) “Construction contract” means a written or oral construction
agreement, including all plans, specifications and addenda relating to:

(a) Excavating, landscaping, demolishing and detaching existing
structures, leveling, filling in and other preparation of land for the
making and placement of a building, structure or superstructure;

(b) Creation or making of a building, structure or superstructure;
and

(c) Alteration, partial construction and repairs done in and upon a
building, structure or superstructure.

(2) “Contractor” has the meaning given that term in ORS 87.005.

(3) “Days” means calendar days.

(4) “Material supplier” means any person providing materials or
products under a construction contract by any contractual means including
oral authorization, written contract, purchase order, price agreement or
rental agreement.

(5) “Original contractor” has the meaning given that term in ORS
87.005.

(6) “Owner” has the meaning given that term in ORS 701.410.

(7) “Subcontractor” has the meaning given that term in ORS 87.005.
[2003 c.675 §54]Note: 701.620 to 701.645 were enacted into law by the Legislative
Assembly but were not added to or made a part of ORS chapter 701 or any
series therein by legislative action. See Preface to Oregon Revised
Statutes for further explanation.(1) By
mutual agreement with an original contractor, an owner may make progress
payments to the original contractor on a construction contract that is
anticipated to last less than 60 days. An owner shall make progress
payments to the original contractor on all other construction contracts.
Progress payments shall be made on the basis of a certified billing or
estimate for the work performed and the materials or products supplied
during the preceding 30-day billing cycle, or an alternate billing cycle
as stated in the construction contract. If billings or estimates are to
be submitted in alternate, rather than 30-day billing cycles, the
construction contract shall specify the alternate billing cycles in a
clear and conspicuous manner as prescribed in subsection (2) of this
section. Except as provided in subsection (3) of this section, the owner
shall make progress payments to the original contractor within 14 days
after the date the billing is submitted pursuant to subsection (4) of
this section.

(2) A construction contract may provide for an alternate billing
cycle if the plans and specifications specifically set forth that there
is an alternate billing cycle and the owner provides for each page of
plans and specifications a statement substantially similar to the
following statement:

___________________________________________________________________________
___

Notice of Alternate Billing CycleThe contract will allow the owner to require the submission of
billings or estimates in billing cycles other than 30-day cycles.
Billings or estimates for the contract shall be submitted as follows:

___________________________________________________________________________
___

___________________________________________________________________________
___

___________________________________________________________________________
___

___________________________________________________________________________
___

(3) An owner may make progress payments later than 14 days after
the date the billing or estimate is submitted if:

(a) The owner is responsible for providing plans and specifications
that expressly allow in a clear and conspicuous manner an extended
payment, defined by a specified number of days after the billing or
estimate is submitted; and

(b) The owner provides for each page of plans and specifications a
statement substantially similar to the following statement:

___________________________________________________________________________
___

Notice of Extended Payment ProvisionThe contract will allow the owner to make payment within _____ days
after the date a billing or estimate is submitted.

___________________________________________________________________________
___

(4) The owner is deemed to have received the billing or estimate
when the billing or estimate is submitted to any person designated by the
owner for the receipt, review or approval of the billing or estimate. A
billing or estimate is deemed to be certified 10 days after the owner
receives the billing or estimate, unless before that time the owner or
the owner’s agent prepares and issues a written statement detailing those
items in the billing or estimate that are not approved. An owner may
decline to approve a billing or estimate or portion of a billing or
estimate for:

(a) Unsatisfactory work progress;

(b) Defective construction work, materials or products not remedied;

(c) Disputed work, materials or products, not to exceed 150 percent
of the amount in dispute;

(d) Failure to comply with other material provisions of the
construction contract;

(e) Third party claims filed or reasonable evidence that such a
claim will be filed;

(f) Failure of the original contractor or a subcontractor to make
timely payments to subcontractors and material suppliers for labor,
equipment, materials and products;

(g) Damage to the owner;

(h) Reasonable evidence that the construction contract cannot be
completed for the unpaid balance of the construction contract sum; or

(i) Other items as allowed under the contract terms and conditions.

(5) An owner may withhold from a progress payment an amount that is
sufficient to pay the direct expenses the owner reasonably expects to
incur to correct any items set forth in writing pursuant to subsection
(4) of this section. The owner may also withhold a reasonable amount as
retainage as defined in ORS 701.410.

(6) An owner may extend the period within which the billing or
estimate may be certified if:

(a) The owner is responsible for providing plans and specifications
that expressly allow in a clear and conspicuous manner an extended period
within which a billing or estimate may be certified; and

(b) The owner provides for each page of plans and specifications,
including bid plans and construction plans, a statement substantially
similar to the following statement:

___________________________________________________________________________
___

Notice of

Extended Certification Period ProvisionThe contract will allow the owner to certify billings and estimates
within _____ days after the billings and estimates are received from the
original contractor.

___________________________________________________________________________
___

(7) After a subcontractor or material supplier submits a bid or
proposal or other written pricing information to an original contractor,
an owner and the original contractor may change the specified number of
days after certification during which the owner may make payment to the
original contractor or within which the owner must certify a billing or
estimate. Any original contractor, subcontractor or material supplier
that does not provide written consent to the change will continue to be
paid as indicated in the plans and specifications.

(8) When an original contractor completes and an owner approves all
work under a construction contract, the owner shall make payment in full
of all remaining amounts due on the construction contract within seven
days. When an original contractor completes and an owner approves all
work under a portion of a construction contract for which the contract
states a separate price, the owner shall make payment in full of all
remaining amounts due on that portion of the construction contract,
subject to the satisfaction of any issue described in subsection (4) of
this section or ORS 701.630 (4).

(9) Payment is not required under this section unless the original
contractor provides the owner with a billing or estimate for the work
performed or the materials or products supplied in accordance with the
terms of the construction contract between the parties.

(10) A construction contract may not alter the right of any
original contractor, subcontractor or material supplier to receive prompt
and timely progress payments as provided under this section.

(11) If an owner or a person designated by the owner as responsible
for making progress payments on a construction contract does not make a
timely payment under this section, the owner shall pay the original
contractor interest on the unpaid balance at the rate of one and one-half
percent a month or fraction of a month, or at a higher rate as the
parties to the construction contract may agree.

(12) On the written request of a subcontractor, the owner shall
notify the subcontractor within five days after the issuance of a
progress payment to the original contractor. On the written request of a
subcontractor, the owner shall notify the subcontractor within five days
after the owner makes the final payment to the original contractor on the
construction contract.

(13) In any action, claim or arbitration brought to collect
payments or interest pursuant to this section, the prevailing party shall
be awarded reasonable costs and attorney fees.

(14) If the owner and original contractor are a single entity, that
entity shall pay subcontractors and material suppliers within 14 days
after the billing or estimate is received unless the deadlines for
certification or payment have been modified pursuant to subsection (3) or
(6) of this section. [2003 c.675 §55]Note: See note under 701.620.(1) Performance by an
original contractor, subcontractor or material supplier in accordance
with the provisions of a construction contract entitles the original
contractor, subcontractor or material supplier to payment from the party
with whom the original contractor, subcontractor or material supplier
contracts.

(2) If a subcontractor or material supplier has performed in
accordance with the provisions of a construction contract, the original
contractor shall pay to the subcontractor or material supplier, and each
subcontractor shall pay to its subcontractors or material suppliers, the
full amount received for such subcontractor’s work and for materials and
products supplied based on the subcontract or purchase order terms and
conditions within seven days of receipt by the original contractor or
subcontractor of a progress payment or final payment. Payment is not
required under this subsection unless a subcontractor or material
supplier provides to the original contractor or subcontractor a billing
or invoice for the work performed or materials or products supplied in
compliance with the terms of the contract between the parties. Each
subcontractor or material supplier must provide an appropriate waiver of
any mechanic’s or materialman’s lien in accordance with subcontract or
purchase order terms and conditions. The original contractor or
subcontractor may require that such waivers of lien be notarized.

(3) Any failure to reasonably account for the application or use of
payments, as proven in a legal proceeding authorized under the terms of
the construction contract, may constitute grounds for disciplinary action
by the Construction Contractors Board under ORS 701.135.

(4) Nothing in this section prevents an original contractor when
submitting a bill or estimate to an owner, or a subcontractor when
submitting a bill or estimate to the original contractor, from omitting
from the bill estimate amounts withheld from payment to a subcontractor
or material supplier for:

(a) Unsatisfactory work progress;

(b) Defective construction work, materials or products not remedied;

(c) Disputed work, materials or products, not to exceed 150 percent
of the amount in dispute;

(d) Failure to comply with other material provisions of the
construction contract;

(e) Third party claims filed or reasonable evidence that such a
claim will be filed;

(f) Failure of the subcontractor to make timely payments to
subcontractors and material suppliers for labor, equipment, materials and
products;

(g) Damage to an original contractor, subcontractor or material
supplier;

(h) Reasonable evidence that the subcontract cannot be completed
for the unpaid balance of the subcontract sum;

(i) A reasonable amount for retainage, as defined in ORS 701.410,
that does not exceed the actual percentage allowed by the subcontract or
purchase order; or

(j) Other items as allowed under the subcontract or purchase order
terms and conditions.

(5) If a progress or final payment to a subcontractor or material
supplier is delayed by more than seven days after receipt of a progress
or final payment by an original contractor or subcontractor, the original
contractor or subcontractor shall pay its subcontractor or material
supplier interest beginning on the eighth day, except during periods of
time during which payment is withheld pursuant to subsection (4) of this
section, at the rate of one and one-half percent a month or a fraction of
a month on the unpaid balance or at such higher rate as the parties agree.

(6) In any action, claim or arbitration brought to collect payments
or interest under this section, the prevailing party shall be awarded
reasonable costs and attorney fees. [2003 c.675 §56]Note: See note under 701.620. (1) An original contractor may
suspend performance under a construction contract, or terminate a
construction contract if performance is suspended for longer than 30
days, for failure by the owner to make timely payment of the amount
certified under ORS 701.625. An original contractor shall provide written
notice to an owner at least seven days before the original contractor
suspends performance or terminates the contract, unless a shorter notice
period is prescribed in the contract. An original contractor may not be
deemed in breach of a construction contract for suspending performance or
terminating a construction contract pursuant to this subsection. A
construction contract may not extend the notice period under this
subsection.

(2) A subcontractor may suspend performance under a construction
contract, or terminate a construction contract if performance is
suspended for longer than 30 days, for failure by the owner to make
timely payment of amounts certified under ORS 701.625 or the
subcontractor fails to receive payment for the certified work under ORS
701.630 (2). A subcontractor shall provide written notice to the original
contractor and owner at least three days before the subcontractor
suspends performance or terminates the contract, unless a shorter notice
period is prescribed in the contract. A subcontractor may not be deemed
in breach of a construction contract for suspending performance or
terminating a contract pursuant to this subsection. A construction
contract may not extend the notice period under this subsection.

(3) A subcontractor may suspend performance under a construction
contract, or terminate a construction contract if performance is
suspended for longer than 30 days, if the owner makes timely payment of
amounts certified under ORS 701.625 for the subcontractor’s work but the
original contractor fails to pay the subcontractor for the certified
work. A subcontractor shall provide written notice to the original
contractor and owner at least seven days before the subcontractor
suspends performance or terminates the contract, unless a shorter notice
period is prescribed in the contract. A subcontractor may not be deemed
in breach of a construction contract for suspending performance or
terminating a contract pursuant to this subsection. A construction
contract may not extend the notice period under this subsection.

(4) A subcontractor may suspend performance under a construction
contract, or terminate a construction contract if performance is
suspended for longer than 30 days, if the owner fails to approve portions
of the contractor’s billing or estimate under ORS 701.625 for that
subcontractor’s work but the reasons for that failure are not the fault
of or directly related to the subcontractor’s work. A subcontractor shall
provide written notice to the original contractor and the owner at least
seven days before the subcontractor suspends performance or terminates
the contract, unless a shorter notice period is prescribed in the
contract. A subcontractor may not be deemed in breach of a construction
contract for suspending performance or terminating a contract pursuant to
this subsection. A construction contract may not extend the notice period
under this subsection.

(5) A contractor or subcontractor may not submit a notice of
suspension under this section until the lawful period for payment to the
contractor or subcontractor has expired.

(6) An original contractor or subcontractor that suspends
performance as provided in this section is not required to furnish
further labor, materials, products or services until the original
contractor or subcontractor is paid the amount that was certified under
ORS 701.625, together with any documented, substantial and reasonably
incurred costs for mobilization resulting from the shutdown or start-up
of a project.

(7) In any action, claim or arbitration brought pursuant to this
section, the prevailing party shall be awarded reasonable costs and
attorney fees.

(8) Written notice required under this section is deemed to have
been provided if the notice:

(a) Is delivered in person to the owner, original contractor,
subcontractor or a person designated by the owner, original contractor or
subcontractor to receive notice; or

(b) Is delivered by certified mail, return receipt requested, or
other means that provides written, third party verification of delivery
to the last business address of the owner, original contractor or
subcontractor known to the party giving notice. [2003 c.675 §57]Note: See note under 701.620.(1) A construction contract may not include any provision,
covenant or clause that:

(a) Makes the contract subject to the laws of another state or that
requires any litigation, arbitration or other dispute resolution
proceeding arising from the contract to be conducted in another state; or

(b) States that a party to the contract cannot suspend performance
under the contract or terminate the contract if another party to the
contract fails to make prompt payments under the contract pursuant to ORS
701.620 to 701.640.

(2) Any provision, covenant or clause described in subsection (1)
of this section is void and unenforceable. [2003 c.675 §58]Note: See note under 701.620.

(1) A contract for the construction, alteration, repair,
maintenance, moving or demolition of a building that is subject to the
Low-Rise Residential Dwelling Code;

(2) A public contract under ORS 279.835 to 279.855 or ORS chapter
279A, 279B or 279C; or

(3) Housing in which all or part of the dwelling units are reserved
for rental to persons having an income equal to or less than 80 percent
of the median household income for the area as determined by the Housing
and Community Services Department. [2003 c.675 §59; 2003 c.794 §331d]Note: See note under 701.620.PENALTIES(1) Violation of ORS 701.055 (1) is a
Class A misdemeanor.

(2) The intentional use of a contractor’s license number without
the authorization of the licensed contractor is a Class A misdemeanor.

(3) Use of a contractor’s license number, with or without the
authorization of the licensed contractor, with the intent to deceive the
public is a Class A misdemeanor. [1971 c.740 §22; 1999 c.344 §7; 2001
c.104 §282; 2001 c.850 §7] (1)
Except as provided in subsections (4) and (5) of this section, any person
who violates any provision of this chapter or any rule adopted by the
Construction Contractors Board shall forfeit and pay into the General
Fund of the State Treasury a civil penalty in an amount determined by the
board of not more than $5,000 for each offense.

(2) Civil penalties under this section shall be imposed as provided
in ORS 183.745.

(3) The provisions of this section are in addition to and not in
lieu of any other penalty or sanction provided by law.

(4) The board shall impose sanctions for violation of ORS 701.135
(1)(g) on both the person to whom the contract is awarded and the person
who awards the contract as follows:

(a) A penalty not less than $500 nor more than $1,000 for the first
offense;

(b) A penalty not less than $1,000 nor more than $2,000 for the
second offense;

(c) Suspension of the person’s license for six months for a third
offense;

(d) Suspension of the person’s license for three years for a fourth
offense; and

(e) Revocation of the person’s license for a fifth offense.

(5) The board may impose a civil penalty not to exceed $100 for
each violation of ORS 87.007 (3). [1971 c.740 §21; 1979 c.874 §5; 1981
c.618 §14; 1983 c.616 §16; 1983 c.696 §27; 1991 c.734 §90; 1995 c.216 §4;
1995 c.771 §6; 1999 c.402 §41; 2003 c.14 §441; 2003 c.778 §7; 2005 c.432
§17]

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