The Oregon Legislature recently passed House Bill 3746, a sweeping change to how condominium and planned community associations may pursue construction defect claims. Set to take effect January 1, 2026, the law shortens the time available to bring claims and adds new procedural requirements for boards and managers. While its stated goal is to encourage more condominium development, it also significantly affects the rights and responsibilities of existing community associations.
A Shorter Window for Claims
One of the most important changes is a reduction in the statute of repose for construction defect claims. Under prior law, associations had up to 10 years after “substantial completion” of a building to bring claims. HB 3746 reduces that period to 7 years, with a limited one-year extension if a defect is discovered in the 6th or 7th year.
For boards, this means there is now less time to discover, investigate, and pursue claims. Latent defects that might previously have been actionable in years 8–10 will now likely be barred. Associations will need to be more proactive about inspections and evaluations of their buildings—especially as they approach the six-year mark.
New Procedural Hurdles
The bill also changes how associations may initiate or join a construction defect action. Before filing, boards must now:
- Provide written notice to owners describing the alleged defect, potential responsible parties, and estimated costs.
- Hold a meeting of owners to discuss the proposed claim.
- Obtain approval from a majority of unit owners within 60 days of notice before proceeding.
- Send certified mail notices to potentially responsible contractors, designers, and developers.
In short, associations cannot act unilaterally. The law requires direct owner involvement and support before claims can move forward.
For community association leaders, this adds new layers of communication and logistics. Preparing detailed notices, coordinating meetings, and tracking votes will be critical. Boards that skip or mishandle these steps risk having their case dismissed on procedural grounds.
Moisture Inspections
Another new feature of HB 3746 is the requirement for moisture intrusion inspections. At turnover, the declarant must deliver an independent inspection report to the association. Associations must also conduct their own inspections at the end of the 2nd and 6th years after substantial completion. These inspections are intended to catch water-related issues early, but they also create additional responsibilities and costs for boards.
What Boards Should Do Now
Even though HB 3746 does not take effect until 2026, boards and managers should begin planning:
- Review building timelines to understand when the 7-year clock will apply.
- Schedule regular inspections and budgeting for required moisture testing.
- Update governance procedures to ensure owner meetings, notices, and votes can be conducted efficiently.
- Consult with legal counsel early when defects are suspected, so that deadlines and procedural steps are not missed.
Bottom line: HB 3746 is a significant shift in Oregon construction defect law. Associations will have less time to bring claims and more procedures to follow before doing so. Boards and managers that understand these new requirements—and act proactively—will be best positioned to protect their communities.
