Development Law Group Update: Large Commercial and High Rise Residential Property Owners and Developers Beware!
Oregon House Bill 2434 Threatens to Cut Off Large Commercial and High Rise Residential Defect Claims.
All large commercial property owners and developers should be aware of a substantial risk that Oregon's statute of repose for construction and design defect claims may be shortened from 10 years to 6 years if HB 2434 passes. HB 2434 (available here) is a repeat attempt by its contractor sponsors to lower the time period for which contractors and designers can be liable for defect claims. Though similar bills were unsuccessful in years past, this year the sponsors have carved out publicly-owned buildings and low rise residential to avoid clashing with these well-represented interests.
Commercial property owners appear to have no representation on these issues in Salem.
"Large commercial structures" are generally defined as any residential structure (including apartments or for-sale units) over 4 stories and any commercial structure over 10,000 - 12,000 square feet and/or that cost over $250,000 to build.
Research shows that as many as 20% of defect claims are not discovered until after the 6th year from substantial completion, because damage resides in walls and other areas not readily observable. Defects discovered at these later stages are often significant and in some cases catastrophic because of the time period over which damage has occurred. The building owner's property and liability insurance policies typically do not cover the losses, but contractor and design insurance policies often do extend coverage.
The most common repose period among the 50 states is 10 years. Several states' repose periods are longer than 10 years, but only 9 states have periods of 6 years or less.
HB 2434 has passed the Oregon House of Representatives and is sitting before the Senate Judiciary Committee Chaired by Senator Floyd Prozanski. Testimony was received yesterday and another work session is planned for today. Without significant opposition voiced to Senator Prozanski immediately, this bill may pass. If you are opposed to this bill, you may contact Senator Prozanski by telephone at 503.986.1704 or by email at firstname.lastname@example.org.
For more information on issues related to HB 2434, please contact: