Real Estate & Land Use Advisory Bulletin
Oregon Legislature Amends Oregon Condominium and
Planned Community Acts
By Eugene
L. Grant and Coni
S. Rathbone
Reprinted with permission from the
Daily Journal of Commerce
The Oregon Legislature has approved three pieces of
Condominium and Planned Community Act legislation and is expected
to approve a fourth any day. The collective legislation will make
a large number of changes. HB 2665 and 2666 cover many topics and
resulted from the efforts of a legislative action committee made
up of the Community Associations Institute, The Condominium HOA
Working Group, and the Oregon Washington Community Association Managers.
A coalition of apartment tenants sponsored HB 3186 tightening up
the condominium conversion requirements and this Bill is expected
to pass any day. Finally, Community Association Banc obtained passage
of SB 543 respecting the requirements for the deposit of association
funds in federally insured bank accounts. SB 543 has an emergency
clause and will be effective upon signing by the governor which
is expected soon. HB 2665 and 2666 will be effective on the 91st
day after adjournment of the legislature and HB 3186 will be effective
January 1, 2008. Those who deal with condominiums or planned communities
and their home owner associations will need to review and revise
documents and operating procedures to conform to these changes.
Board of Directors Appointments Eased
HB 2665 supplements the Planned Community Act and the Condominium
Act so that if a homeowner association fails to fill vacancies on
the board sufficient to constitute a quorum, an owner or its lender
may request the circuit court appoint a receiver to manage the affairs
of the association. The salary of the receiver would be a common
expense.
Previously there was no statutory remedy if members of a homeowner
association failed to elect a board to perform its duties. This
hampered developers in turning over association control to uncooperative
buyers. HB 2665 provides that if a home builder has complied with
its responsibilities and yet the owners still fail to elect the
directors and assume control the declarant is relieved from further
administrative responsibility.
The bill also simplifies the administrative process so that if
any meeting cannot be organized because of a lack of a quorum of
owners present in person or by proxy, the meeting may be adjourned
and a new meeting held, at which a much lower quorum requirement
will be applicable to facilitate a successful meeting.
Communications, Voting Expanded
HB 2665 also allows greater flexibility in the dissemination of
information and clarifies the process for association voting. At
discretion of the board, any required notice or information may
be e-mailed or faxed notwithstanding any requirement under the declaration
or bylaws.
However, electronic communications may not be used to give notice
of certain matters such as of failure to pay assessments, foreclosure
of an association’s lien or an action the association may
take against an owner.
Vote-by-mail has also been expanded to allow voting by e-mail,
but there is an opt-out provision so owners cannot be forced to
use e-mail for communications or voting.
Annual meetings still have to be held in person, except for second
home associations.
Maintenance Plan Clarified
In the previous legislative session a bill was passed to require
an annually updated condominium maintenance plan to avoid unnecessary
repair and replacement expense and disputes due to inadequate maintenance.
HB 2665 reflects the clarifications and changes needed based on
experience with this relatively new maintenance plan requirement.
It helps the association determine how much owners must pay into
the operating account for maintenance work and into the reserve
fund for the future repairs and replacements of the common elements
as they wear out.
Condominiums are exempted from these reserve and maintenance requirements
unless there are more than two units in the condominium. Most home
owner associations will, however, be subject to the reserve and
maintenance requirements.
Insurance Law Updated
HB 2665 updates the law on insurance for condominiums and planned
communities. If the declaration and bylaws do not assign payment
responsibility for the deductible in an association’s insurance
policy, the board may adopt a resolution to assign responsibility
to all owners or specific owners affected by the loss.
Among other insurance changes, the bill addresses the problem
of old documents having deductible limits too low due to not being
inflation indexed.
Last, the bill allows the board to exceed maximum deductibles
specified in bylaws if it is in the best interest of the association.
House Bill 2666 Amends Condo, Community Acts
HB 2666 covers a variety of unrelated clarifications, updates and
improvements to the Oregon Condominium and Planned Community acts
The bill, if passed, would enact several changes:
- An association would be incorporated prior to the recording
of a plat if the property is to be conveyed to the association.
- The sale of non-residential condominium units would be exempt
from the disclosure statement and other sales requirements intended
to protect residential unit purchasers.
- Associations would be incorporated if a condominium were to
consist of more than two units.
- Unit boundaries would be clarified with respect to windows and
doors.
- A sub-condominium could be created within a master condominium
unless prohibited by the declaration.
HB 2666 would amend the Oregon statutes governing condominiums
and planned communities, Oregon Revised Statute 94. It is expected
to be enacted into law with an effective date 90 days after the
legislative session ends.
HB 3186 Tightens Condo Conversion Requirements
HB 3186 was introduced at the request of the Community Alliance
of Tenants to tighten the requirements for conversion of apartment
buildings into condominiums. The increased conversion of apartments
to condominiums compelled the tenants to request greater protections.
This bill has passed the House and, if passed by the Senate, will
amend the current conversion requirements in the Condominium Act.
It will likely be effective January 1, 2008.
Developers currently must abide by a 120-day notice requirement
that will be changed. HB 3186 allows rehabilitation of apartments
during the 120-day notice period but only during normal business
hours.
Also, according to the bill, a landlord must assure each tenant
always has safe dwelling unit access during rehabilitation work.
During the 120-day notice period, a landlord may not terminate tenants
without cause. Also, during the 120-day period, landlords cannot
increase rents beyond the inflation rate.
A tenant may recover statutory penalties for violation of these
legal requirements. Tenants asserting these claims will, however,
have the burden of proof, and the prevailing party will be entitled
to attorney fees under the residential landlord/tenant statute.
SB 543 Guides Arizona Bank Into Oregon Market
Senate Bill 543 was introduced at the request of Community Association
Banc to require association funds to be deposited in Federal Deposit
Insurance Corp.-insured bank accounts but allowing the use of out-of-state
banks for such purposes. This bill would permit Oregon homeowner
associations to move their checking and savings accounts to Community
Association Banc, an Arizona bank that specializes in serving homeowner
associations around the United States and is entering the Oregon
market. Previously some associations have invested their funds in
questionable ways and have in some cases have lost all or part of
the association’s funds as a result.
SB 543 is expected to pass into law, and because it contains an
emergency clause, it will be effective immediately upon passage.
For more information, please contact:
This advisory is a publication of the Real Property Group of Davis
Wright Tremaine LLP. Our purpose in publishing this advisory is
to inform our clients and friends of recent legal developments.
It is not intended, nor should it be used, as a substitute for specific
legal advice as legal counsel may be given only in response to inquiries
regarding particular situations. Attorney Advertising. Prior results
do not guarantee a similar outcome. Thank you.
Copyright ©
2007, Davis Wright Tremaine LLP.
return to Advisory Bulletins
main page
|
