A bill that would further limit the time frame for condo owners to pursue developers for construction defects flew through the Oregon House of Representatives but faces more scrutiny in the Senate.

House Bill 3746 would reduce the statute of limitations for construction defect actions for planned community or condo units to seven years.

Supporters argue that the threat of lawsuits has essentially halted condo construction in Oregon.

“Oregon is facing an affordable homeownership crisis,” Kevin Cronin, policy and advocacy director of Housing Oregon, stated in written testimony. “Condominiums are a vital part of the solution, but outdated liability laws have virtually eliminated their production.”

The bill is among a wide range of legislation from Oregon Democrats intended to spark housing production.

The House voted 46-10 on April 22 to pass the bill. A public hearing was held on Monday by the Senate Housing and Development Committee, and another is scheduled for May 12, followed by a work session on May 19.

The bill has broad support from housing activists and some cities. In written testimony, city of Hillsboro lobbyist Ariel Nelson stated that the bill would encourage housing production.

“If Oregon does not address condo defect liability reform, a key component of entry-level homeownership opportunities will remain underrepresented in our state’s housing mix and out of reach for too many families,” Nelson wrote.

The insurance industry is mounting opposition to the bill. Sara Eanni, a board member of the Community Associations Institute‘s Oregon chapter and an insurance agent, said the bill would not produce more housing.

“This bill is looking to not reduce risk, as it states; it’s to just shift risk onto the homeowners themselves,” Eanni said in an interview. “Ultimately, that’s not going to create affordable housing.”

The bill would reduce the window for condo owners to pursue a defects suit from 10 years to seven.

“Developers aren’t being held to a higher standard to create less defective product; they are just wanting to shift the risk onto the owners to say it is now your responsibility if there is a defect,” Eanni said. “And if you don’t catch it in a timely manner … we’re not going to be held accountable anymore. And that’s just not right for the consumer.”

Other states that have limited construction defect lawsuits, such as Colorado and Nevada, have not seen lower insurance rates, Eanni said.

Eli Spevak, a Portland developer of small condominium projects, testified that the bill could make it easier to build large-scale condo projects at the expense of smaller ones.

HB 3746 would require condo boards to have independent moisture inspections conducted two and six years after construction completion. Such inspections would cost from $4,600 to $6,000 depending on the size of the project, Spevak stated, citing quotes he obtained from an inspection company.

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