House Bill 3746—effective January 1, 2026—changes Oregon law governing construction-defect claims and certain condominium/planned-community governance duties. Its central reforms are:
- Shortened statute of ultimate repose for construction-defect causes of action involving condominiums and planned communities from 10 years to 7 years (with limited discovery exceptions);
- Mandatory moisture-intrusion inspections for condominium projects—timed at roughly the two-year and six-year marks—and related notice obligations to unit owners; and
- Procedural, notice, and voting requirements governing when homeowners or associations may bring or join construction-defect claims.
What Do Proponents and Critics Say About HB 3746?
Proponents frame HB 3746 as housing-supply policy: by reducing developer liability exposure and creating clearer, shorter windows for latent-defect litigation, the bill aims to lower the perceived legal risk of building condominiums and planned communities, thereby encouraging more condo construction—an entry-level ownership product—and easing Oregon’s housing shortage. The combination of a shorter repose period and required early moisture inspections is intended to balance developer certainty with consumer protections.
Critics, however, say HB 3746 narrows homeowners’ remedies and may shift costs where structural problems appear after the truncated repose period.
Breaking Down the Three Central Reforms of the Bill
1. Shortened Statute of Ultimate Repose
First, HB 3746 amends the period of ultimate repose. The period of ultimate repose refers to a specific time limit within which a lawsuit must be filed, often triggered by a particular event, such as the completion of a construction project or the sale of a product. Statutes of repose are designed to provide a definitive end to liability for potential defendants, ensuring that they are not held accountable for past actions. Under HB 3746 the period of ultimate repose for condominiums created on or after January 1, 2026 is reduced from ten years to seven years. There are limited exceptions (for example, certain discovery extensions and actions against parties in actual possession at the accrual date).
2. Mandatory Moisture-Intrusion Inspections and Owner Notice
HB 3746 requires condominium boards of directors to arrange independent moisture-intrusion inspections at specified intervals—near year two and near year six—and to provide certain notices to owners about inspection results and the availability/timing of defect claims. These operational duties are intended to detect issues earlier.
3. Procedural Notice and Voting Requirements
HB 3746 adds new notice duties on homeowners’ associations and associations of unit owners. Before initiating litigation, the association must notify each affected owner at least 10 days before doing so. The notice must be mailed to each lot or unit owner’s mailing address (or designated address). It must describe the general nature of the litigation, the specific damages to be sought, and the terms under which the association is willing to act on the owner’s behalf. It must also inform each owner of the right to opt out (“right not to have damages sought on the owner’s behalf”). If an owner opts out, the association “may not” pursue claims on that owner’s behalf and has no duty to reimburse or indemnify the owner for those damages. Also, there must be board approval to initiate defect litigation, with a meeting held after the notices have been distributed.
Implications of the Bill
Taken together, HB 3746 shortens the window for construction defect lawsuits involving condominiums and planned communities, while adding mandated inspections intended to find problems earlier with heightened notice provisions. The bill seeks to balance developer certainty with consumer protection for condominiums and planned communities created on or after January 1, 2026.
For more clarity on HB 3746 and its implications, please consult with one of our Construction attorneys.
This article is provided for informational purposes only—it does not constitute legal advice and does not create an attorney-client relationship between the firm and the reader. Readers should consult legal counsel before taking action relating to the subject matter of this article.
