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Real Property & Development Review

Proposed Oregon Real Estate Legislation

Posted in Real Estate

As published in the Daily Journal of Commerce

Hang onto your hat, because the legislative winds are blowing! Here is a brief summary and my personal opinions on some of the bills in the hopper that relate to real estate.

Design and construction

HB 2090 would prohibit work on elevators in residences that would result in an elevator failing to meet minimum safety standards. Thumbs up for elevator safety.

HB 2481 would require housing materials be dried before coverings are installed. Thumbs up to avoid mold.

SB 384 and 890 would tighten up the prompt payment requirements for contracts. Owners and contractors will wrestle over these.

SB 421 would allow only a contracting party to sue the designer for defects. Thumbs up to overturning the judicial decision allowing successors and assigns to sue for negligence.

SB 612 would create claims against owners employing unlicensed contractors. Should owners have to be the police?

SB 657 would limit retainage to 1 percent. Thumbs down to an excessive restriction.

SB 704 would exempt ditch diggers and irrigation workers from licensing. That makes sense.

SB 893 would require a contractual obligation to construct to state code. This should be limited to transactions between consumers and home builders.

Sales

HB 2489 would require a two-year warranty for residential building envelopes. Thumbs up for protection of unsophisticated homebuyers.

HB 2485 and SB 707 would require septic system disclosure to home buyers. Thumbs up for the same reason as HB 2489.

HB 2518 would allow a transfer tax for higher-end home sales. Thumbs down because real estate markets have enough problems without a sales tax.

HB 2703 would restrict transfer fees to ordinary instances such as reasonable homeowner association fees. Thumbs up for full disclosure to unsophisticated buyers.

HB 2839 would require residential sellers to obtain and deliver an energy audit to buyers. Thumbs up for the same reason as HB 2703.

HB 3264 would require description of nonmonetary consideration in deeds. Thumbs down because of a waste of time.

HB 3269 is the Uniform Partition of Heirs Property Act. Thumbs up for a much better process to partition inherited property.

Loans

SB 484 would require lenders to attach documents evidencing beneficiary to notice of foreclosure sale. Thumbs up to solve the problem of unrecorded beneficiary assignments.

SB 492 would require a trustee to be a resident or registered to do business in Oregon, which makes sense.

SB 519 and 529 would give affordable housing covenant holders and local governments the first right to purchase affordable housing in foreclosure and would allow recording of short-form covenants. Thumbs up for affordable housing protection.

Environmental

HB 2082 would change the Prospective Purchaser program to foster economic redevelopment and environmental cleanup. Recent federal court decisions suggest Oregon’s law might allow so-called “direct” cost recovery claims against innocent purchasers. This was not the expectation when the original program was authorized. The bill would provide prospective purchasers who enter into a judicially-approved consent judgment explicit protection against direct cost recovery claims. Thumbs up to this legal fix.

HB 3400 and 3535 would require energy performance ratings for all buildings, but SB 630 would restrict who could see the ratings. Thumbs up for full disclosure and greener buildings, but should the information be a public record?

Brokers and managers

HB 2497 would allow broker commissions to be shared with parties to the sale or lease. Thumbs up because this is already common.

SB 156 would impose the same fiduciary and accounting duties on managers that brokers already have. Thumbs up for consistency.

Landlords and tenants

HB 2885 would require landlords to give voter registration forms to tenants. Thumbs down because landlords have enough obligations already.

SB 293 would require disclosure of all deposits and fees in applications. Thumbs up for full disclosure.

SB 294 would require large manufactured home projects to charge tenants based upon water usage. Thumbs up for a conservation incentive.

SB 481 and SB 491 would require lender disclosures to tenants of buildings whose owners were facing foreclosure. Thumbs up for full disclosure.

Land use

HB 2609 would require Metro and large cities to maintain a five-year, shovel-ready supply of a variety of housing and industrial land. Thumbs up because Oregon needs job growth, and land supply has been inadequate for certain types.

HB 3280 would specify winery uses allowed in EFU zones. Thumbs up for clarification and rural job growth.

HB 3290 would allow averaging annual income for justifying farm residences. Thumbs up for a longer term measure of farm income.

SB 476 would allow adoption of exceptions to statewide goals justified only by job creation. Thumbs down to job growth trumping all other land-use goals.

SB 766 and SB 839 would allow state permitting of regionally significant industrial projects. That sounds like more thorny issues about local control and fostering job growth.

SB 774 would void any land-use restrictions other than local government zoning laws. Thumbs down because this would completely overturn the long-standing law of private restrictive covenants and further monopolize local government control of land use.

Property associations

HB 3317 would improve several aspects of the Planned Community Act and the Condominium Act regarding the governance process, such as removing officers and directors and obtaining lender consents to amendments. Thumbs up for law improvement.

HB 3059 would void association rules against clotheslines. Thumbs down because associations should be free to protect the appearance of common areas.

SB 300 would make the condominium and planned community lien provisions consistent. Thumbs up for consistency subject to any lender concerns.

Surveyors

HB 2892 would provide detailed procedures for boundary agreements to resolve disputes. Thumbs up because these disputes are all too common, expensive and contentious.

HB 3386 would add a new category to lots and parcels on plats, which by amendment would likely be the traditional “tract” designation. Thumbs up if amended to define a tract consistent with customary usage.

Property taxes

HB 3017 and 3034 would extend enterprise zone tax abatements and relax job creation requirements during recessions. Thumbs up for this job growth incentive program.

HB 3167 would eliminate the discount for full payment and allow semiannual payment. Better get ready to pay a little more this November!

  • D. Michael Dale

    With all due respect, the description of SB 612 above is inaccurate. SB 612 requires labor brokers in construction to be licensed, but exempts traditional construction contractors from this licensing system. (Of course, these contractors still need to have a CCB license under current law.) Anyone who files building permits, provides materials or heavy equipment or has a direct relationship with the owner is specifically exempted from the requirements of this bill. See Section 1 of the bill, creating ORS 658.405(2)(a)(C). By definition, then, an owner who contracts with a contractor would be contracting with an exempt individual. That being so, an owner could never be liable for damages under this bill for using an unlicensed contractor.
    D. Michael Dale
    Northwest Workers’ Justice Project
    503 525-8454