Oregon cut association defect claims from 10 years to 7
Oregon cut association defect claims from 10 years to 7
2026-09-15 · Oregon · Legislation
An Oregon homeowners association or condominium association that discovers defective construction now has seven years from substantial completion to sue, not ten. House Bill 3746 took effect January 1, 2026 as chapter 578, Oregon Laws 2025, and it is the largest change to association litigation rights Oregon has made in years.1
The bill passed the House 46–10 on April 22, 2025 and the Senate 24–4 on June 16; the House concurred in Senate amendments and repassed it 42–7 on June 20. Governor Kotek signed it on July 24, 2025.
The new clock
New ORS 12.135(4) reads:
“Notwithstanding subsection (2) of this section, the period of limitation for a tort action by a homeowners association or association of unit owners arising from the defective construction, alteration or repair of a structure or unit is: (a) Seven years after substantial completion or abandonment of the construction, alteration or repair of the structure; or (b) If a construction defect described in this subsection is discovered more than six but less than seven years after substantial completion or abandonment, one year after discovery of the defect.”2
Paragraph (b) is a narrow safety valve, and it is narrower than it reads. It applies only where discovery falls in the window after year six and before year seven. A defect discovered in year five carries no extension; the association still has until year seven and no longer. A defect discovered in year eight is outside the statute entirely.
The bill also struck the old language in ORS 12.135(1)(b) that had pulled association-owned large commercial structures into the ten-year bucket — the deleted words being “or a large commercial structure, as defined in ORS 701.005, that is owned or maintained by a homeowners association, as defined in ORS 94.550, or that is owned or maintained by an association of unit owners, as defined in ORS 100.005.” The same deletion was made in the design-professional subsection.
The date that decides which clock applies
This is the part most coverage gets loose about. Section 2 of the Act is explicit:
“The amendments to ORS 12.135 by section 1 of this 2025 Act apply only to the construction, alteration or repair of a structure for which the declaration, as defined in ORS 94.550 or 100.005, has first been recorded on or after the effective date of this 2025 Act.”2
The trigger is when the declaration was first recorded. Not when the building was finished, not when the association was incorporated, and not when the community was “created” in any looser sense. A declaration first recorded before January 1, 2026 keeps the ten-year repose for the structures it covers. A declaration first recorded on or after that date gets seven.
What it means for an association today
For the overwhelming majority of existing Oregon communities, the answer in 2026 is: nothing changed. Their declarations were recorded years or decades ago, and ORS 12.135 continues to run for ten years as to them. The seven-year rule is a forward-looking rule that will take a decade to become the general case.
For a board in a community whose declaration was recorded on or after January 1, 2026 — a newly platted subdivision, a new condominium, a recently converted project — the practical consequence is a compressed investigation schedule. Under the old rule a board had a comfortable margin to get through the second and third owner-elected boards before the question became urgent. Under the new one, a defect that surfaces in year six leaves roughly twelve months to investigate, notice, meet, vote and file.
That is not an abstract concern in Oregon, because the same bill layered a mandatory pre-suit process on top of the shortened clock. The board meeting required before an association may initiate defect litigation cannot occur less than 90 days after the first notice to owners, and not less than 15 days after a third notice. Those steps sit inside the seven years, not outside them.
The carve-out nobody is covering
New ORS 100.538, created by the same bill, reads in full:
“Inapplicability of moisture intrusion inspection requirements and reduced statute of limitations to units under full owner responsibility. ORS 12.135 (4), 100.210 (5)(r) and 100.417 (8) do not apply to a condominium for which each unit owner is responsible for the interior and exterior of the owner's unit.”2
Site condominiums and detached condominiums — the form where owners are responsible inside and out — get neither the seven-year repose nor the mandatory moisture inspections. They stay on the ten-year clock. In a state where detached condominium platting is a common workaround for lot-size and density constraints, that is a meaningful population sitting under the older, longer rule.
Definitional change worth noting
HB 3746 moved the definition of “substantial completion” into a new ORS 12.135(1)(e), and in doing so changed subparagraph (C) from “The date when the owner uses or occupies the improvement for its intended purpose” to “The date when the owner occupies the improvement or uses it for its intended purpose.” The reordering separates occupancy from use as independent triggers rather than a compound one. On a phased project where buildings are occupied well before the amenities are in service, which event starts the clock is now a question with a different answer than it had in 2025.
What to watch next
Whether the seven-year rule shows up in the marketing of new Oregon condominium projects. The declared legislative purpose of shortening the repose was to make condominium development financeable again after years of constrained supply, and a declarant's exposure window is now three years shorter for any project whose declaration is recorded from 2026 onward. Our Oregon resale and disclosure page covers what a buyer in such a project is entitled to be told.
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