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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.
Copyright ©
2007, Davis Wright Tremaine LLP.
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