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Date: 6/9/2009
On May 4, the Oregon House of Representatives passed House Bill 2366 A by a margin of 57–1. If it becomes law, it will disallow construction liens filed by subcontractors and material suppliers if the party with whom they have a contract (such as a general contractor) has been paid by the owner. The bill's sponsor, Rep. Wayne Krieger, explained its purpose in this way: "If a homeowner pays a general contractor for work, and that contractor refuses to pay his subcontractors, the burden should not be on the homeowner. This bill protects homeowners from liens filed against them if they have already paid the bill." In its current form, the bill appears to be limited to residential construction, but some ambiguities in the text leave room for the argument that it applies to commercial projects as well.
While protecting homeowners, the bill will make it more difficult for subcontractors and material suppliers to protect their interests. The bill would change Oregon from a direct lien state to a derivative lien state. In a direct lien state, a subcontractor or material supplier who has not been paid can file a lien, even if the entity with whom the person has a contract has been paid by the owner. But in a derivative lien state, those who have not been paid do not have lien rights if the person with whom they have a contract has been paid by the owner.
Before the bill becomes law, among other obstacles, it must be passed by the Oregon Senate and signed by Governor Kulongoski. A public hearing on the bill is scheduled for May 19, 2009.
To contact your OR state legislator, go to: http://www.leg.state.or.us/writelegsltr/
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