2007 ORS 701.068¹
Bonding requirements
  • action against surety
  • rules

(1) An applicant for issuance or renewal of a contractor license shall file with the Construction Contractors Board a surety bond with one or more corporate sureties authorized to do business in this state in the amount set forth in ORS 701.081 (Residential contractors) or 701.084 (Commercial contractors).

(2) If an applicant for issuance, renewal or an additional endorsement of a license will hold endorsements as both a residential contractor and a commercial contractor, the applicant shall file with the board a surety bond for each endorsement in the amount set forth in ORS 701.081 (Residential contractors) or 701.084 (Commercial contractors).

(3) The surety bond must provide that the applicant, with regard to work subject to this chapter, will pay amounts ordered paid by the board under ORS 701.145 (Resolution of complaints involving work on residential structures or certain small commercial structures) or 701.146 (Resolution of complaints involving work on large commercial structures or certain small commercial structures). Bonds filed under this section shall remain in effect for at least one year or until depleted by payments under ORS 701.150 (Satisfaction of unpaid order from bond), 701.153 (Recording of order as lien) and 701.157 (Satisfaction of order against commercial contractor), unless the surety sooner cancels the bond. At the discretion of the surety the bond may be continued for an additional period by continuation certificate. Except as provided in subsection (4) of this section, the aggregate liability of the surety under the bond for complaints against the contractor may not exceed the penal sum of the bond no matter how many years the bond is in force. Except as provided in subsection (4) of this section, an extension by continuation certificate, reinstatement, reissue or renewal of the bond may not increase the liability of the surety.

(4) The board, by rule, may require a licensee to obtain a new surety bond if, pursuant to a board order for payment of a complaint described in ORS 701.140 (Types of allowable complaints), the surety pays an amount out of the bond of the licensee. The new surety bond must be in the applicable amount set forth in ORS 701.081 (Residential contractors) or 701.084 (Commercial contractors) unless a higher amount is required by a board condition or rule described in subsection (5) or (6) of this section. The board may allow a licensee to obtain, instead of a new bond, a certification that the surety remains liable for the full penal sum of the bond, notwithstanding payment by the surety on the complaint.

(5) If the amount the licensee must pay against the bond under subsection (3) of this section exceeds the amount of the bond, the board shall suspend the contractor’s license until the amount owed is paid. The board, as a condition of ending the suspension, may require a contractor requesting reinstatement of a license to file a bond of an amount up to five times as much as the amount required ordinarily of a licensee under ORS 701.081 (Residential contractors) or 701.084 (Commercial contractors).

(6) The board by rule may establish conditions for applicants or persons licensed under this chapter under which the applicant or licensee must file a bond of an amount up to five times as much as the amount required ordinarily of an applicant or licensee under ORS 701.081 (Residential contractors) or 701.084 (Commercial contractors). The board may reduce the amount of bond it would otherwise require if the contractor demonstrates satisfactory completion of approved elective classes on dispute resolution and prevention, basic accounting and record keeping or such other classes as the board may prescribe.

(7) The bond required under this section is for the exclusive purpose of payment of final orders and arbitration awards of the board in accordance with this chapter.

(8) Upon determination under ORS 701.145 (Resolution of complaints involving work on residential structures or certain small commercial structures) or 701.146 (Resolution of complaints involving work on large commercial structures or certain small commercial structures) of a complaint against a contractor who holds a bond required under this section, the board shall notify the surety on the bond of the final order in a manner determined by the board by rule. The notification shall include a list of all complaints upon which a final order has been issued.

(9) A court action may not be commenced against a surety on a bond required under this section until 30 days after the date that the surety is notified by the board under ORS 701.150 (Satisfaction of unpaid order from bond) that payment is due on the final order.

(10) In any action against a surety on a bond under this section that is based on the failure of the surety to pay a final order, the court may award:

(a) Costs;

(b) Reasonable attorney fees to the prevailing party as part of the costs; and

(c) Twice the amount of any damages that the board ordered the surety to pay on the complaint, if the surety arbitrarily and capriciously refused to pay upon order of the board. [Formerly 701.085]

Note: The amendments to 701.068 (Bonding requirements) (formerly 701.085) by section 22, chapter 648, Oregon Laws 2007, apply to applications for initial licenses received on or after January 1, 2008, and before July 1, 2008. See section 30, chapter 648, Oregon Laws 2007, and sections 61 and 70, chapter 836, Oregon Laws 2007. For surety bond amounts applicable to license renewals until July 1, 2008, see 701.085 (2005 Edition).

Note: The amendments to 701.068 (Bonding requirements) (formerly 701.085) by section 61, chapter 836, Oregon Laws 2007, become operative July 1, 2008, and apply to licenses issued or renewed on or after July 1, 2008. See section 70, chapter 836, Oregon Laws 2007. The text that is operative until July 1, 2008, including amendments by section 22, chapter 648, Oregon Laws 2007, and section 7, chapter 793, Oregon Laws 2007, is set forth for the user’s convenience.

701.068 (Bonding requirements). (1) An applicant for issuance or renewal of a contractor license shall file with the Construction Contractors Board a surety bond with one or more corporate sureties authorized to do business in this state in the amount set forth in subsections (2) to (5) of this section. The surety bond must provide that the applicant, with regard to work subject to this chapter, will pay amounts ordered paid by the board under ORS 701.145 (Resolution of complaints involving work on residential structures or certain small commercial structures) or 701.146 (Resolution of complaints involving work on large commercial structures or certain small commercial structures). Bonds filed under this subsection shall remain in effect for at least one year or until depleted by payments under ORS 701.150 (Satisfaction of unpaid order from bond), unless the surety sooner cancels the bond. At the discretion of the surety the bond may be continued for an additional period by continuation certificate. Except as provided in subsection (6) of this section, the aggregate liability of the surety under the bond for complaints against the contractor may not exceed the penal sum of the bond no matter how many years the bond is in force. Except as provided in subsection (6) of this section, an extension by continuation certificate, reinstatement, reissue or renewal of the bond may not increase the liability of the surety.

(2) A general contractor or licensed developer shall obtain a surety bond in the amount of $20,000.

(3) A specialty contractor shall obtain a surety bond in the amount of $15,000.

(4) An inspector shall obtain a surety bond in the amount of $15,000.

(5) The board may reduce the amount of the surety bond required by this section to $10,000 for a contractor upon a showing that the contractor does not perform work as a contractor exceeding $40,000 in gross annual volume and does not enter into contracts that exceed $5,000. The board shall designate the contractor as a limited contractor.

(6) The board, by rule, may require a licensee to obtain a new surety bond if, pursuant to a board order for payment of a complaint described in ORS 701.140 (Types of allowable complaints), the surety pays an amount out of the bond of the licensee. The new surety bond must be in the amount set forth in subsections (2) to (5) of this section unless a higher amount is required by a board condition or rule described in subsection (7) or (8) of this section. The board may allow a licensee to obtain, instead of a new bond, a certification that the surety remains liable for the full penal sum of the bond, notwithstanding payment by the surety on the complaint.

(7) If the amount the licensee must pay against the bond under this section exceeds the amount of the bond, the board shall suspend the contractor’s license until the amount owed is paid. The board, as a condition of ending the suspension, may require a contractor requesting reinstatement of a license to file a bond of an amount up to five times as much as the amount required ordinarily of a licensee under this section.

(8) The board by rule may establish conditions for applicants or persons licensed under this chapter under which the applicant or licensee must file a bond of an amount up to five times as much as the amount required ordinarily of an applicant or licensee under this section. The board may reduce the amount of bond it would otherwise require if the contractor demonstrates satisfactory completion of approved elective classes on dispute resolution and prevention, basic accounting and record keeping or such other classes as the board may prescribe.

(9) The bond required under this section is for the exclusive purpose of payment of final orders and arbitration awards of the board in accordance with this chapter.

(10) Upon determination under ORS 701.145 (Resolution of complaints involving work on residential structures or certain small commercial structures) or 701.146 (Resolution of complaints involving work on large commercial structures or certain small commercial structures) of a complaint against a contractor who holds a bond required under this section, the board shall notify the surety on the bond of the final order in a manner determined by the board by rule. The notification shall include a list of all complaints upon which a final order has been issued.

(11) A court action may not be commenced against a surety on a bond required under this section until 30 days after the date that the surety is notified by the board under ORS 701.150 (Satisfaction of unpaid order from bond) that payment is due on the final order.

(12) In any action against a surety on a bond under this section that is based on the failure of the surety to pay a final order, the court may award:

(a) Costs;

(b) Reasonable attorney fees to the prevailing party as part of the costs; and

(c) Twice the amount of any damages that the board ordered the surety to pay on the complaint, if the surety arbitrarily and capriciously refused to pay upon order of the board.

Chapter 701

Notes of Decisions

This is a remedial statute made for the protec­tion of the building business and of people dealing with builders who might be irresponsible; it should be read as a whole and liberally construed to accomplish its purpose. Robinson v. Builders Bd., 20 Or App 340, 531 P2d 752 (1975)

Atty. Gen. Opinions

Lack of authority for director to appoint executive secretary for board, (1971) Vol 35, p 930; inap­pli­ca­bil­i­ty of this chapter to business of construc­tion or installa­tion of fences, sidewalks, septic tanks, wells and underground sprinkling systems, (1972) Vol 35, p 1278; mobile home as per­sonal or real prop­erty under this chapter, (1972) Vol 36, p 41; applica­tion of Homebuilders Law to mobile homes, (1978) Vol 38, p 693

1 Legislative Counsel Committee, CHAPTER 701—Construction Contractors and Contracts, https://­www.­oregonlegislature.­gov/­bills_laws/­ors/­701.­html (2007) (last ac­cessed Feb. 12, 2009).
 
2 Legislative Counsel Committee, Annotations to the Oregon Revised Stat­utes, Cumulative Supplement - 2007, Chapter 701, https://­www.­oregonlegislature.­gov/­bills_laws/­ors/­701ano.­htm (2007) (last ac­cessed Feb. 12, 2009).
 
3 OregonLaws.org assembles these lists by analyzing references between Sections. Each listed item refers back to the current Section in its own text. The result reveals relationships in the code that may not have otherwise been apparent.