Oregon housing bill 'strips away the rights of poor families'

SALEM, Ore. (KOIN) — It's long been a goal of Oregon's elected leaders to increase home construction as a way to mitigate the homeless problem and get others into affordable home ownership. The current Oregon legislature is debating House Bill 3746, which would shorten the window to sue developers for construction defects from 10 years to 7 years.

Supporters of HB 3746 include developers, insurers, realtors and Habitat for Humanity, claiming it would help boost affordable housing. Critics, though warn it could leave vulnerable homeowners paying the price.

On Monday, lawmakers in Salem heard testimony on the bill from supporters like Morgan Greenfield of the Central Oregon Builders Association and opponents such as attorney Michael Vial and Habitat for Humanity homeowner Lacey Sutton.

"By reducing litigation risk and providing certainty for builders and developers," Greenwood testified, "this bill will increase opportunities for condo development."

Sutton recently bought a Habitat for Humanity home at Cherry Blossom Townhomes in Southeast Portland. A KOIN 6 News investigation exposed multiple fire code issues at the complex, potentially putting lives at risk in an emergency.

"I thought you might be interested to know what a developer does when they're shielded from accountability," Sutton told the lawmakers. "Habitat builds homes exclusively for low-income families like ours, mostly BIPOC, immigrants and refugees. It's a noble mission, but it guarantees that the people they hurt are the least likely to be able to do anything about it. People so desperate for a house, we signed contracts agreeing not to sue them for anything, even fraud."

Vial, a Lake Oswego attorney, told the lawmakers similar laws in states like Colorado and Nevada have not increased construction and have made housing even less affordable. He said many home defects, like water intrusion, aren't detectable through standard inspections and can take years to surface, especially in Oregon's climate.

"The sponsors of this bill are trying to strip away the rights of our most vulnerable home buyers in Oregon," Vial said. "And this committee needs to see that and they need to stop it."

Oregon isn’t unusual.  Vial said 28 states, including Oregon, agree that developers and their insurers should have some liability exposure for damages caused by shoddy construction for at least 10 years. 

"There’s no evidence showing any connection between state-level construction defect laws and housing production," he said.

He thinks that we need this kind of consumer protection in Oregon.

"We either need to have a 10 year period to discover hidden defects, or we needed to require developers to do more work during construction to avoid those defects," Vial said. "If we're not going to do either, we're putting consumers in a terrible position."

Others like Jeremy Hershman of Northwest Bank also stand in strong opposition to this bill. He said his experience as a banker working with homeowners associations has given him firsthand experience into how detrimental these construction defect cases can be to Oregonian's finances.

"Oftentimes when these construction defects are found, even if litigation is pursued, the recovery for the homeowners association not does not cover the full cost of the repair to actually get the building back into code, back up to snuff, back into a livable condition," Hershman said.

In a statement to KOIN 6 News, the Oregon Realtors group said they strongly support the bill: "Far fewer condominiums are produced in Oregon compared to the rest of the U.S. One reason is Oregon’s lengthy statute of repose for construction defect claims, which increases the cost and risk of building condominiums. Condominiums are a critical form of affordable homeownership, especially for first time homebuyers."

Officials with Habitat for Humanity did not respond to a KOIN 6 News request for comment on this story. Neither did State Sen. Khanh Pham, who is leading the committee on this issue.

HB 3746, attorney Vial said, puts low-income families at risk of having to pay tens of thousands of dollars to fix developer defects.

And that is something first-time buyers—like Lacey Sutton—can't possibly afford.

"Habitat for Humanity is a powerful multi-billion dollar organization with a spotless public image," Sutton said. "They have been brazenly trying to convince you that a bill that literally strips away the rights of poor families of color is a good thing.

"Please don't take away what little power we have."