With Oregon’s passage of House Bill 3746, community associations need to be especially mindful of the deadlines that govern construction defect claims. Two different legal concepts apply: the statute of limitations and the statute of repose. Together, they determine when a claim must be filed—and when it is too late.
The Two Clocks
1. Statute of Limitations – 2 Years from Discovery
Oregon law requires that most property damage claims, including construction defects, be filed within 2 years of the date the defect was discovered or reasonably should have been discovered. This is often called the “discovery rule.”
For example:
If water intrusion is discovered in March 2027, the association generally has until March 2029 to file suit—provided the repose period has not expired.
2. Statute of Repose – 7 Years from Substantial Completion
HB 3746 shortens the absolute cut-off for construction defect claims. Beginning January 1, 2026, no claim may be brought more than 7 years after substantial completion of construction, with a limited 1-year grace period if the defect is discovered in years 6 or 7.
This is a hard deadline. If the repose period has expired, claims are barred—even if the defect was just discovered and there is time remaining on the statute of limitations.
For example:
A condominium completed in 2020 will be outside the repose window after 2027 (or 2028 if a defect was discovered in year 7). If water intrusion is first discovered in 2029, it is too late to bring claims against responsible parties.
Why This Matters for Boards and Managers
- Earlier Action Required: Associations can no longer wait until year 8, 9, or 10 to identify and pursue claims.
- Inspection Planning: Regular building inspections, especially in years 2, 6, and 7, are now essential for catching problems while claims are still viable.
- Procedural Precision: Associations must also comply with HB 3746’s new notice and voting procedures before filing suit. Skipping steps could lead to dismissal.
- Budgeting and Reserves: Boards should factor the cost of professional inspections and potential legal action into their long-term financial planning.
Key Takeaway
Community associations in Oregon must operate under a two-part deadline system:
2 years from discovery (limitations period), but never more than 7 years (with up to 1 extra year) from substantial completion (repose period).
Boards and managers should work closely with counsel and engineers to monitor building conditions, schedule inspections, and act quickly when issues are found.
