Bill Text: OR HB2823 | 2013 | Regular Session | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Relating to communities governed by declaration.

Spectrum: Committee Bill

Status: (Enrolled - Dead) 2013-07-08 - In conference committee upon adjournment. [HB2823 Detail]

Download: Oregon-2013-HB2823-Amended.html

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     77th OREGON LEGISLATIVE ASSEMBLY--2013 Regular Session

HA to HB 2823

LC 2946/HB 2823-2

                       HOUSE AMENDMENTS TO
                         HOUSE BILL 2823

  By COMMITTEE ON CONSUMER PROTECTION AND GOVERNMENT EFFICIENCY

                            April 17

  On page 1 of the printed bill, line 3, after '94.550, ' insert
'94.572, 94.595, 94.616,' and after '100.005,' insert ' 100.175,
100.210,'.
  Delete lines 6 through 28 and delete pages 2 through 19 and
insert:
  '  { +  SECTION 1. + } ORS 94.550 is amended to read:
  ' 94.550. As used in ORS 94.550 to 94.783:
  ' (1) 'Assessment' means any charge imposed or levied by a
homeowners association on or against an owner or lot pursuant to
the provisions of the declaration or the bylaws of the planned
community or provisions of ORS 94.550 to 94.783.
  '  { +  (2) 'Association account' means an operating account or
a reserve account.
  ' (3) 'Association account holder' means an individual:
  ' (a) Who is designated and authorized to use an association
account to transact business on behalf of a homeowners
association; and
  ' (b) Whose signature is on file with the financial
institution, as defined in ORS 706.008, other than an
extranational institution at which the association account is
established. + }
  '  { - (2) - }   { + (4) + } 'Blanket encumbrance' means a
trust deed or mortgage or any other lien or encumbrance,
mechanic's lien or otherwise, securing or evidencing the payment
of money and affecting more than one lot in a planned community,
or an agreement affecting more than one lot by which the
developer holds such planned community under an option, contract
to sell or trust agreement.
  '  { - (3) - }   { + (5) + } 'Class I planned community' means
a planned community that:
  ' (a) Contains at least 13 lots or in which the declarant has
reserved the right to increase the total number of lots beyond
12; and
  ' (b) Has an estimated annual assessment, including an amount
required for reserves under ORS 94.595, exceeding $10,000 for all
lots or $100 per lot, whichever is greater, based on:
  ' (A) For a planned community created on or after January 1,
2002, the initial estimated annual assessment, including a
constructive assessment based on a subsidy of the association
through a contribution of funds, goods or services by the
declarant; or
  ' (B) For a planned community created before January 1, 2002, a
reasonable estimate of the cost of fulfilling existing
obligations imposed by the declaration, bylaws or other governing
document as of January 1, 2002.
  '  { - (4) - }   { + (6)  + } ' Class II planned community'
means a planned community that:
  ' (a) Is not a Class I planned community;
  ' (b) Contains at least five lots; and

  ' (c) Has an estimated annual assessment exceeding $1,000 for
all lots based on:
  ' (A) For a planned community created on or after January 1,
2002, the initial estimated annual assessment, including a
constructive assessment based on a subsidy of the association
through a contribution of funds, goods or services by the
declarant; or
  ' (B) For a planned community created before January 1, 2002, a
reasonable estimate of the cost of fulfilling existing
obligations imposed by the declaration, bylaws or other governing
document as of January 1, 2002.
  '  { - (5) - }   { + (7) + } 'Class III planned community'
means a planned community that is not a Class I or II planned
community.
  '  { - (6) - }   { + (8) + } 'Common expenses' means
expenditures made by or financial liabilities incurred by the
homeowners association and includes any allocations to the
reserve account under ORS 94.595.
  '  { - (7) - }   { + (9) + } 'Common property' means any real
property or interest in real property within a planned community
which is owned, held or leased by the homeowners association or
owned as tenants in common by the lot owners, or designated in
the declaration or the plat for transfer to the association.
  '  { - (8) - }   { + (10) + } 'Condominium' means property
submitted to the provisions of ORS chapter 100.
  '  { - (9) - }   { + (11) + } 'Declarant' means any person who
creates a planned community under ORS 94.550 to 94.785.
  '  { - (10) - }   { + (12) + } 'Declarant control' means any
special declarant right relating to administrative control of a
homeowners association, including but not limited to:
  ' (a) The right of the declarant or person designated by the
declarant to appoint or remove an officer or a member of the
board of directors;
  ' (b) Any weighted vote or special voting right granted to a
declarant or to units owned by the declarant so that the
declarant will hold a majority of the voting rights in the
association by virtue of such weighted vote or special voting
right; and
  ' (c) The right of the declarant to exercise powers and
responsibilities otherwise assigned by the declaration or bylaws
or by the provisions of ORS 94.550 to 94.783 to the association,
officers of the association or board of directors of the
association.
  '  { - (11) - }   { + (13) + } 'Declaration' means the
instrument described in ORS 94.580 which establishes a planned
community, and any amendments to the instrument.
  '  { - (12) - }   { + (14) + } 'Governing document' means an
instrument or plat relating to common ownership or common
maintenance of a portion of a planned community and that is
binding upon lots within the planned community.
  '  { - (13) - }   { + (15) + } 'Homeowners association' or
'association' means the organization of owners of lots in a
planned community, created under ORS 94.625, required by a
governing document or formed under ORS 94.572.
  '  { - (14) - }   { + (16) + } 'Majority' or 'majority of
votes' or 'majority of owners' means more than 50 percent of the
votes in the planned community.
  '  { - (15) - }   { + (17) + } 'Mortgagee' means any person who
is:
  ' (a) A mortgagee under a mortgage;
  ' (b) A beneficiary under a trust deed; or
  ' (c) The vendor under a land sale contract.
  '  { +  (18) 'Operating account' means an account established
and maintained by the homeowners association, as required by
section 3 of this 2013 Act, to hold moneys of the association

other than moneys the association is required to hold in a
reserve account. + }
  '  { - (16) - }   { + (19) + } 'Owner' means the owner of any
lot in a planned community, unless otherwise specified, but does
not include a person holding only a security interest in a lot.
  '  { - (17) - }   { + (20) + } 'Percent of owners' or
'percentage of owners ' means the owners representing the
specified voting rights as determined under ORS 94.658.
  '  { - (18)(a) - }   { + (21)(a)  + } ' Planned community'
means any subdivision under ORS 92.010 to 92.192 that results in
a pattern of ownership of real property and all the buildings,
improvements and rights located on or belonging to the real
property, in which the owners collectively are responsible for
the maintenance, operation, insurance or other expenses relating
to any property within the planned community, including common
property, if any, or for the exterior maintenance of any property
that is individually owned.
  ' (b) 'Planned community' does not mean:
  ' (A) A condominium under ORS chapter 100;
  ' (B) A planned community that is exclusively commercial or
industrial; or
  ' (C) A timeshare plan under ORS 94.803 to 94.945.
  '  { - (19) - }   { + (22) + } 'Purchaser' means any person
other than a declarant who, by means of a voluntary transfer,
acquires a legal or equitable interest in a lot, other than as
security for an obligation.
  '  { - (20) - }   { + (23) + } 'Purchaser for resale' means any
person who purchases from the declarant more than two lots for
the purpose of resale whether or not the purchaser for resale
makes improvements to the lots before reselling them.
  '  { +  (24) 'Reserve account' means an account established and
maintained by the homeowners association, as required by section
3 of this 2013 Act, to hold moneys of the association that the
association is required to hold as reserves. + }
  '  { - (21) - }   { + (25) + } 'Special declarant rights' means
any rights, in addition to the rights of the declarant as a lot
owner, reserved for the benefit of the declarant under the
declaration or ORS 94.550 to 94.783, including but not limited
to:
  ' (a) Constructing or completing construction of improvements
in the planned community which are described in the declaration;
  ' (b) Expanding the planned community or withdrawing property
from the planned community under ORS 94.580 (3) and (4);
  ' (c) Converting lots into common property;
  ' (d) Making the planned community subject to a master
association under ORS 94.695; or
  ' (e) Exercising any right of declarant control reserved under
ORS 94.600.
  '  { - (22) - }   { + (26) + } 'Successor declarant' means the
transferee of any special declarant right.
  '  { - (23) - }   { + (27) + } 'Turn over' means the act of
turning over administrative responsibility pursuant to ORS 94.609
and 94.616.
  '  { - (24) - }   { + (28) + } 'Unit' means a building or
portion of a building located upon a lot in a planned community
and designated for separate occupancy or ownership, but does not
include any building or portion of a building located on common
property.
  '  { - (25) - }   { + (29) + } 'Votes' means the votes
allocated to lots in the declaration under ORS 94.580 (2).
  '  { +  SECTION 2. + }  { + Sections 3 and 4 of this 2013 Act
are added to and made a part of ORS 94.550 to 94.783. + }
  '  { +  SECTION 3. + }  { + (1) All moneys of a homeowners
association, including assessments and declarant subsidies, must
be deposited and maintained in the name of the association in one
or more association accounts until disbursed.
  ' (2) All expenses of the association must be paid from an
association account.
  ' (3) An association account must be held in a federally
insured account, including a certificate of deposit, at a
financial institution, as defined in ORS 706.008, other than an
extranational institution.
  ' (4) An association may deposit assessments collected for
reserves required under ORS 94.595 in the association's operating
account, but must transfer the reserves to the association's
reserve account as soon as practicable.
  ' (5) An association may not maintain moneys in an account, or
at any one institution, in an amount that exceeds the insurance
limits applicable to the account or institution.
  ' (6) Except as provided in subsection (8) of this section, an
association may hold moneys in an association account only in:
  ' (a) Cash deposits;
  ' (b) Certificates of deposit; or
  ' (c) United States Treasury bills, notes or bonds.
  ' (7) The investment objectives of an association must be:
  ' (a) Preservation of capital; and
  ' (b) Maintenance of sufficient liquidity to meet the financial
obligations of the planned community.
  ' (8) After the effective date of this 2013 Act, the
association:
  ' (a) May maintain moneys in an investment established before
the effective date of this 2013 Act that does not conform to the
requirements of subsection (6) of this section until the
investment is sold or liquidated.
  ' (b) May not roll over a mature investment that does not
conform to the requirements of subsection (6) of this section or
reinvest the proceeds of a mature investment in an investment
that is not authorized by subsection (6) of this section. + }
  '  { +  SECTION 4. + }  { + (1) Notwithstanding a provision in
the declaration or bylaws of a planned community, unless a
resolution adopted by the board of directors of a homeowners
association provides otherwise, only the following individuals
may be an association account holder:
  ' (a) An individual who is a member of the board of directors,
in accordance with ORS 94.639.
  ' (b) An individual who is an officer of the association who is
either:
  ' (A) An owner or co-owner of a lot; or
  ' (B) A representative of an owner or co-owner of a lot, if the
individual meets the qualifications described in subsection (2)
of this section.
  ' (2) An individual who is an officer of the association under
subsection (1)(b)(B) of this section must meet one of the
following qualifications:
  ' (a) If a corporation, limited liability company or
partnership is the owner or co-owner of a lot, or owns an
interest in an entity that owns the lot, the officer of the
association representing the entity must be:
  ' (A) An officer, employee or agent of the corporation;
  ' (B) A member, manager, employee or agent of the limited
liability company; or
  ' (C) A partner, employee or agent of the partnership.
  ' (b) If a trustee holds legal title to a lot in trust for the
benefit of the owner of the beneficial interest in the lot, the
officer of the association representing the trust must be a
trustee.
  ' (c) If a court has appointed an executor, administrator,
guardian, conservator or other individual to serve in a fiduciary
capacity for an owner of a lot, the officer of the association
must be the executor, administrator, guardian, conservator or
other individual appointed by the court. If the court has
appointed an entity to serve in a fiduciary capacity for an owner
of a lot, the officer of the association must be an officer or
employee of the appointed entity.
  ' (3) An association account holder may not delegate the
holder's authority to use an association account to transact
business on behalf of the association. + }
  '  { +  SECTION 5. + } ORS 94.595 is amended to read:
  ' 94.595. (1) The declarant, on behalf of a homeowners
association, shall:
  ' (a) Conduct an initial reserve study as described in
subsection (3) of this section;
  ' (b) Prepare an initial maintenance plan as described in
subsection (4) of this section; and
  ' (c) Establish a reserve account as provided in subsection (2)
of this section.
  ' (2)(a) A reserve account shall be established to
 { - fund - }  { +  provide moneys for + } major maintenance,
repair or replacement of all items of common property
 { - which - }   { + that + } will normally require major
maintenance, repair or replacement, in whole or in part, in more
than one and less than 30 years, for exterior painting if the
common property includes exterior painted surfaces, for other
items, whether or not involving common property, if the
association has responsibility to maintain the items and for
other items required by the declaration or bylaws.
  '  { +  (b) + } The reserve account need not include reserves
for those items:
  ' (A) That can reasonably be   { - funded from the general
budget or other funds or - }   { + provided for with moneys in
operating + } accounts of the association; or
  ' (B) For which one or more, but less than all, owners are
responsible for maintenance and replacement under the provisions
of the declaration or bylaws.
  '  { - (b) - }   { + (c) + } The reserve account   { - shall be
established in the name of the homeowners association. The
association is responsible for administering the account and for
making periodic payments into the account - }  { +  must be
established and maintained as provided in section 3 of this 2013
Act + }.
  '  { - (c) - }   { + (d) + } The reserve portion of the initial
assessment determined by the declarant shall be based on:
  ' (A) The reserve study described in subsection (3) of this
section; or
  ' (B) Other reliable information.
  '  { - (d) - }   { + (e) + } A reserve account established
under this section
  { - must be funded by - }   { + may hold only moneys obtained
from + } assessments against the individual lots for which the
reserves are established.
  '  { - (e) - }   { + (f) + } Unless the declaration provides
otherwise, the assessments under this subsection begin accruing
for all lots from the date the first lot is conveyed.
  ' (3)(a) The board of directors of the association annually
shall conduct a reserve study or review and update an existing
study to determine the reserve account requirements. Subject to
subsection (8) of this section, after review of the reserve study
or reserve study update, the board of directors may, without any
action by owners:
  ' (A) Adjust the amount of payments as indicated by the study
or update; and
  ' (B) Provide for other reserve items that the board of
directors, in its discretion, may deem appropriate.
  ' (b) The reserve study shall:
  ' (A) Identify all items for which reserves are or will be
established;
  ' (B) Include the estimated remaining useful life of each item
as of the date of the reserve study; and
  ' (C) Include for each item, as applicable, an estimated cost
of maintenance and repair and replacement at the end of the
item's useful life.
  ' (4)(a) The board of directors shall prepare a maintenance
plan for the maintenance, repair and replacement of all property
for which the association has maintenance, repair or replacement
responsibility under the declaration or bylaws or ORS 94.550 to
94.783. The maintenance plan shall:
  ' (A) Describe the maintenance, repair and replacement to be
conducted;
  ' (B) Include a schedule for the maintenance, repair and
replacement;
  ' (C) Be appropriate for the size and complexity of the
maintenance, repair and replacement responsibility of the
association; and
  ' (D) Address issues that include but are not limited to
warranties and the useful life of the items for which the
association has maintenance, repair and replacement
responsibility.
  ' (b) The board of directors shall review and update the
maintenance plan described under this subsection as necessary.
  ' (5)(a) If the declaration or bylaws require a reserve
account, the reserve study requirements of subsection (3) of this
section and the maintenance plan requirements of subsection (4)
of this section first apply to the association of a subdivision
that meets the definition of a planned community under ORS 94.550
and is recorded prior to October 23, 1999, when:
  ' (A) The board of directors adopts a resolution in compliance
with the bylaws that applies the requirements of subsections (3)
and (4) of this section to the association; or
  ' (B) A petition signed by a majority of owners is submitted to
the board of directors mandating that the requirements of
subsections (3) and (4) of this section apply to the association.
  ' (b) A reserve study and maintenance plan shall be completed
within one year of adoption of the resolution or submission of
the petition to the board of directors.
  '  { - (6)(a) Except as provided in paragraph (b) of this
subsection, the reserve account may be used only for the purposes
for which reserves have been established and is to be kept
separate from other funds. - }
  '  { - (b) After the individual lot owners have assumed
responsibility for administration of the planned community under
ORS 94.616, if the board of directors has adopted a resolution,
which may be an annual continuing resolution, authorizing the
borrowing of funds: - }
  '  { - (A) The board of directors may borrow funds from the
reserve account to meet high seasonal demands on the regular
operating funds or to meet unexpected increases in expenses. - }
  '  { - (B) Not later than the adoption of the budget for the
following year, the board of directors shall adopt by resolution
a written payment plan providing for repayment of the borrowed
funds within a reasonable period. - }
  '  { - (7) The reserve account is subject to the requirements
and restrictions of ORS 94.670 and any additional restrictions or
requirements imposed by the declaration, bylaws or rules of the
homeowners association. - }
  '  { +  (6) Except as provided in section 3 (4) of this 2013
Act, moneys in a reserve account must be kept separate from other
moneys.
  ' (7) Except as provided in this subsection, moneys in a
reserve account may be used only for the purposes for which
reserves have been established. After owners assume
responsibility for administration of the planned community under
ORS 94.616, if the board of directors adopts a resolution, which
may be an annual continuing resolution, authorizing the borrowing
of moneys:
  ' (a) The board of directors may borrow moneys from the reserve
account and transfer the moneys to an operating account to meet
high seasonal demands or unexpected increases in operating
expenses; and
  ' (b) Not later than the adoption of the budget for the
following year, the board of directors shall adopt by resolution
a written payment plan providing for repayment of the borrowed
moneys within a reasonable period. + }
  ' (8)(a) Except as provided under paragraph (b) of this
subsection, unless the board of directors under subsection (3) of
this section determines that the reserve account will   { - be
adequately funded - }   { + have adequate reserves to meet the
requirement for reserves + } for the following year, the board of
directors or the owners may not vote to eliminate
 { - funding - }   { + assessment of lots for + } a reserve
account required under this section or under the declaration or
bylaws.
  ' (b) Following the turnover meeting described in ORS 94.609,
on an annual basis, the board of directors, with the approval of
all owners, may elect not to   { - fund the reserve account - }
 { + assess lots for reserves  + }for the following year.
  ' (9) Assessments paid into the reserve account are the
property of the association and are not refundable to sellers or
owners of lots.
  '  { +  SECTION 6. + } ORS 94.616 is amended to read:
  ' 94.616. (1) At the meeting called under ORS 94.609, the
declarant shall turn over to the homeowners association the
responsibility for the administration of the planned community,
and the association shall accept the administrative
responsibility from the declarant.
  ' (2) If a quorum of the owners is present, the owners shall
elect not fewer than the number of directors sufficient to
constitute a quorum of the board of directors in accordance with
the declaration or bylaws of the association.
  ' (3) At the meeting called under ORS 94.609, the declarant
shall deliver to the association { +  all of the following + }:
  ' (a) The original or a photocopy of the recorded declaration
and copies of the bylaws and the articles of incorporation, if
any, of the planned community and any supplements and amendments
to the articles or bylaws  { - ; - }  { + . + }
  ' (b) A deed to the common property in the planned community,
unless otherwise provided in the declaration  { - ; - }
 { + . + }
  ' (c) The minute books, including all minutes, and other books
and records of the association and the board of directors
 { - ; - }  { + . + }
  ' (d) All rules and regulations adopted by the declarant
 { - ; - }  { + . + }
  ' (e) Resignations of officers and members of the board of
directors who are required to resign because of the expiration of
any period of declarant control reserved pursuant to ORS 94.600
 { - ; - }  { + . + }
  ' (f) A financial statement. The financial statement:
  ' (A) Must consist of a balance sheet and an income and expense
statement for the preceding 12-month period or the period
following the recording of the declaration, whichever period is
shorter; and
  ' (B) Must be reviewed, in accordance with the Statements on
Standards for Accounting and Review Services issued by the
American Institute of Certified Public Accountants, by an
independent certified public accountant licensed in the State of
Oregon if the annual assessments of an association exceed $75,000
 { - ; - }  { + . + }
  '  { - (g) All funds of the association and control of the
funds, including all bank records; - }
  '  { +  (g) All moneys of the association, all documents and
records related to association accounts and all moneys due the
association from the declarant for the assessment of lots for
reserves as required under ORS 94.704. + }
  ' (h) All tangible personal property that is property of the
association, and an inventory of the property  { - ; - }
 { + . + }
  ' (i) Records of all property tax payments for the common
property to be administered by the association  { - ; - }
 { + . + }
  ' (j) Copies of any income tax returns filed by the declarant
in the name of the association, and supporting records for the
returns  { - ; - }  { + . + }
  ' (k)   { - All bank signature cards; - }  { +  Control of all
moneys and association accounts. + }
  ' (L) The reserve account established in the name of the
association under ORS 94.595  { - ; - }  { + . + }
  ' (m) The reserve study and the maintenance plan required under
ORS 94.595, including all updates and other sources of
information that serve as a basis for calculating reserves in
accordance with ORS 94.595  { - ; - }  { + . + }
  ' (n) An operating budget for the portion of the planned
community turned over to association administration and a budget
for replacement and maintenance of the common property  { - ; - }
 { + . + }
  ' (o) A copy of the following, if available:
  ' (A) The as-built architectural, structural, engineering,
mechanical, electrical and plumbing plans;
  ' (B) The original specifications, indicating all subsequent
material changes;
  ' (C) The plans for underground site service, site grading,
drainage and landscaping together with cable television drawings;
  ' (D) Any other plans and information relevant to future repair
or maintenance of the property; and
  ' (E) A list of the general contractor and the electrical,
heating and plumbing subcontractors responsible for construction
or installation of common property  { - ; - }  { + . + }
  ' (p) Insurance policies  { - ; - }  { + . + }
  ' (q) Copies of any occupancy permits issued for the planned
community  { - ; - }  { + . + }
  ' (r) Any other permits issued by governmental bodies
applicable to the planned community in force or issued within one
year before the date on which the owners assume administrative
responsibility  { - ; - }  { + . + }
  ' (s) A list of any written warranties on the common property
that are in effect and the names of the contractor, subcontractor
or supplier who made the installation for which the warranty is
in effect  { - ; - }  { + . + }
  ' (t) A roster of owners and their addresses and telephone
numbers, if known, as shown on the records of the declarant
 { - ; - }  { + . + }
  ' (u) Leases of the common property and any other leases to
which the association is a party  { - ; - }  { + . + }
  ' (v) Employment or service contracts in which the association
is one of the contracting parties or service contracts in which
the association or the owners have an obligation or
responsibility, directly or indirectly, to pay some or all of the
fee or charge of the person performing the service  { - ; and - }
 { + . + }
  ' (w) Any other contracts to which the homeowners association
is a party.
  ' (4)   { - In order - }  To facilitate an orderly transition,
during the three-month period following the turnover meeting, the
declarant or an informed representative shall be available to
meet with the board of directors on at least three mutually

acceptable dates to review the documents delivered under
subsection (3) of this section.
  ' (5) If the declarant has complied with this section and
unless the declarant has sufficient voting rights as a lot owner
to control the association, the declarant is not responsible for
the failure of the owners to elect the number of directors
sufficient to constitute a quorum of the board of directors and
assume control of the association in accordance with subsection
(1) of this section. The declarant is relieved from further
responsibility for the administration of the association, except
as a lot owner.
  ' (6) If the owners present do not constitute a quorum or the
owners fail to elect the number of directors sufficient to
constitute a quorum of the board of directors at the turnover
meeting held in accordance with this section:
  ' (a) At any time before the election of the number of
directors sufficient to constitute a quorum, an owner or first
mortgagee may call a special meeting for the purpose of election
of directors and shall give notice of the meeting in accordance
with the notice requirements in the bylaws for special meetings.
The owners and first mortgagees present at the special meeting
shall select a person to preside over the meeting.
  ' (b) An owner or first mortgagee may request a court to
appoint a receiver as provided in ORS 94.642.
  '  { +  SECTION 7. + } ORS 94.640 is amended to read:
  ' 94.640. (1) The board of directors of an association may act
on behalf of the association except as limited by the declaration
and the bylaws. In the performance of their duties, officers and
members of the board of directors are governed by this section
and the applicable provisions of ORS 65.357, 65.361, 65.367,
65.369 and 65.377, whether or not the association is incorporated
under ORS chapter 65.
  ' (2) Subject to subsection (7) of this section, unless
otherwise provided in the bylaws, the board of directors may fill
vacancies in its membership for the unexpired portion of any
term.
  ' (3) At least annually, the board of directors of an
association shall review the insurance coverage of the
association.
  ' (4) The board of directors of the association annually shall
cause to be filed the necessary income tax returns for the
association.
  ' (5) The board of directors of the association may record a
statement of association information as provided in ORS 94.667.
  ' (6)(a) Unless otherwise provided in the declaration or
bylaws, at a meeting of the owners at which a quorum is present,
the owners may remove a director from the board of directors,
other than directors appointed by the declarant or individuals
who are ex officio directors, with or without cause, by a
majority vote of owners who are present and entitled to vote.
  ' (b) Notwithstanding contrary provisions in the declaration or
bylaws:
  ' (A) Before a vote to remove a director, owners must give the
director whose removal has been proposed an opportunity to be
heard at the meeting.
  ' (B) The owners must vote on the removal of each director
whose removal is proposed as a separate question.
  ' (C) Removal of a director by owners is effective only if the
matter of removal was an item on the agenda and was stated in the
notice of the meeting if notice is required under ORS 94.650.
  ' (c) A director who is removed by the owners remains a
director until a successor is elected by the owners or the
vacancy is filled as provided in subsection (7) of this section.
  ' (7) Unless the declaration or bylaws specifically prescribe a
different procedure for filling a vacancy created by the removal
of a director by owners, the owners shall fill a vacancy created
by the removal of a director by the owners at a meeting of
owners.  The notice of the meeting must state that filling a
vacancy is an item on the agenda.
  ' (8)(a) All meetings of the board of directors of the
association shall be open to owners, except that at the
discretion of the board, the board may close the meeting to
owners other than board members and meet in executive session to:
  ' (A) Consult with legal counsel.
  ' (B) Consider the following:
  ' (i) Personnel matters, including salary negotiations and
employee discipline;
  ' (ii) Negotiation of contracts with third parties; or
  ' (iii) Collection of unpaid assessments.
  ' (b) Except in the case of an emergency, the board of
directors of an association shall vote in an open meeting whether
to meet in executive session. If the board of directors votes to
meet in executive session, the presiding officer of the board of
directors shall state the general nature of the action to be
considered and, as precisely as possible, when and under what
circumstances the deliberations can be disclosed to owners. The
statement, motion or decision to meet in executive session must
be included in the minutes of the meeting.
  ' (c) A contract or an action considered in executive session
does not become effective unless the board of directors,
following the executive session, reconvenes in open meeting and
votes on the contract or an action, which must be reasonably
identified in the open meeting and included in the minutes.
  ' (9) The meeting and notice requirements in subsections (8)
and (10) of this section may not be circumvented by chance or
social meetings or by any other means.
  ' (10) In a planned community in which the majority of the lots
are the principal residences of the occupants, meetings of the
board of directors must comply with the following:
  ' (a) For other than emergency meetings, notice of board of
directors' meetings shall be posted at a place or places on the
property at least three days prior to the meeting or notice shall
be provided by a method otherwise reasonably calculated to inform
lot owners of such meetings;
  ' (b) Emergency meetings may be held without notice, if the
reason for the emergency is stated in the minutes of the meeting;
and
  ' (c) Only emergency meetings of the board of directors may be
conducted by telephonic communication or by the use of a means of
communication that allows all members of the board of directors
participating to hear each other simultaneously or otherwise to
be able to communicate during the meeting. A member of the board
of directors participating in a meeting by this means is deemed
to be present in person at the meeting.
  ' (11) The board of directors, in the name of the association,
shall maintain a current mailing address of the association.
  ' (12) The board of directors shall cause the information
required to enable the association to comply with ORS 94.670
 { - (8) - }  { + (9) + } to be maintained and kept current.
  ' (13) As used in this section, 'meeting' means a convening of
a quorum of members of the board of directors at which
association business is discussed, except a convening of a quorum
of members of the board of directors for the purpose of
participating in litigation, mediation or arbitration
proceedings.
  '  { +  SECTION 8. + } ORS 94.670 is amended to read:
  ' 94.670. (1) A homeowners association shall retain within this
state the documents, information and records delivered to the
association under ORS 94.616 and all other records of the
association for not less than the period specified for the record
in ORS 65.771 or any other applicable law except that:

  ' (a) The documents specified in ORS 94.616 (3)(o), if
received, must be retained as permanent records of the
association.
  ' (b) Proxies and ballots must be retained for one year from
the date of determination of the vote, except that proxies and
ballots relating to an amendment to the declaration, bylaws or
other governing document must be retained for one year from the
date the amendment is effective.
  '  { - (2)(a) All assessments, including declarant subsidies
and all other association funds, shall be deposited and
maintained in the name of the association in one or more separate
federally insured accounts, including certificates of deposit, at
a financial institution, as defined in ORS 706.008, other than an
extranational institution. Except as provided in paragraph (b) of
this subsection, funds must be maintained in an association
account until disbursed. - }
  '  { - (b) Subject to any limitations imposed by the
declaration or bylaws, funds of the association maintained in
accounts established under this subsection may be used to
purchase obligations of the United States government. - }
  '  { - (c) All expenses of the association shall be paid from
the association account. - }
  '  { - (3) - }   { + (2) + } The association shall keep
financial records { + , including all records of association
accounts, that are + } sufficiently detailed for proper
accounting purposes.
  '  { - (4) - }   { + (3) + } Within 90 days after the end of
the fiscal year, the board of directors shall:
  ' (a) Prepare or cause to be prepared an annual financial
statement consisting of a balance sheet and income and expenses
statement for the preceding fiscal year; and
  ' (b) Distribute to each owner and, upon written request, any
mortgagee of a lot, a copy of the annual financial statement.
  '  { - (5) - }   { + (4) + } Subject to section 24, chapter
803, Oregon Laws 2003, the association of a planned community
that has annual assessments   { - exceeding - }   { + greater
than + } $75,000  { + and less than $500,000 + } shall cause the
financial statement required under subsection   { - (4) - }
 { + (3) + } of this section to be reviewed  { + in the manner
required by subsection (8) of this section  + }within 180 days
after the end of   { - the - }   { + each + } fiscal year
 { - by an independent certified public accountant licensed in
the State of Oregon in accordance with the Statements on
Standards for Accounting and Review Services issued by the
American Institute of Certified Public Accountants - } .
  '  { - (6) - }   { + (5) Subject to section 24, chapter 803,
Oregon Laws 2003,  + }the association of a planned community
created on or after January 1, 2004, or the association of a
planned community described in ORS 94.572 that has annual
assessments of $75,000 or less { + , + } shall cause the most
recent financial statement required by subsection   { - (4) - }
 { + (3) + } of this section to be reviewed { + :
  ' (a) + } In the manner   { - described in subsection (5) - }
 { + required by subsection (8) + } of this section { + ; and
  ' (b) + } Within 180 days after the association receives a
petition   { - requesting review - }  signed by at least a
majority of the owners { +  that requests review of the most
recent financial statement required by subsection (3) of this
section + }.
  '  { +  (6) The association of a planned community that has
annual assessments of $500,000 or more shall cause the financial
statement required under subsection (3) of this section to be
audited within 180 days after the end of each fiscal year in the
manner required by subsection (8) of this section. + }
  ' (7) An association subject to the   { - requirements of
subsection (5) - }   { + review requirements of subsection
(4) + } of this section may elect, on an annual basis, not to
comply with the requirements   { - of subsection (5) of this
section - }  by an affirmative vote of at least 60 percent of the
owners, not including the votes of the declarant with respect to
lots owned by the declarant.
  '  { +  (8) The review of financial statements required under
subsection (4) or (5) of this section and the audits required
under subsection (6) of this section must be performed, in
accordance with standards issued by the American Institute of
Certified Public Accountants, by an independent certified public
accountant licensed in Oregon. + }
  '  { - (8)(a) - }   { + (9)(a) + } The association shall
provide, within 10 business days of receipt of a written request
from an owner, a written statement that provides:
  ' (A) The amount of assessments due from the owner and unpaid
at the time the request was received, including:
  ' (i) Regular and special assessments;
  ' (ii) Fines and other charges;
  ' (iii) Accrued interest; and
  ' (iv) Late payment charges.
  ' (B) The percentage rate at which interest accrues on
assessments that are not paid when due.
  ' (C) The percentage rate used to calculate the charges for
late payment or the amount of a fixed charge for late payment.
  ' (b) The association is not required to comply with paragraph
(a) of this subsection if the association has commenced
litigation by filing a complaint against the owner and the
litigation is pending when the statement would otherwise be due.
  '  { - (9)(a) - }   { + (10)(a) + } Except as provided in
paragraph (b) of this subsection, the association shall make the
documents, information and records described in subsections (1)
and   { - (4) - }   { + (3) + } of this section and all other
records of the association reasonably available for examination
and, upon written request, available for duplication by an owner
and any mortgagee of a lot that makes the request in good faith
for a proper purpose.
  ' (b) Records kept by or on behalf of the association may be
withheld from examination and duplication to the extent the
records concern:
  ' (A) Personnel matters relating to a specific identified
person or a person's medical records.
  ' (B) Contracts, leases and other business transactions that
are currently under negotiation to purchase or provide goods or
services.
  ' (C) Communications with legal counsel that relate to matters
specified in subparagraphs (A) and (B) of this paragraph and the
rights and duties of the association regarding existing or
potential litigation or criminal matters.
  ' (D) Disclosure of information in violation of law.
  ' (E) Documents, correspondence or management or board reports
compiled for or on behalf of the association or the board of
directors by its agents or committees for consideration by the
board of directors in executive session held in accordance with
ORS 94.640 (8).
  ' (F) Documents, correspondence or other matters considered by
the board of directors in executive session held in accordance
with ORS 94.640 (8).
  ' (G) Files of individual owners, other than those of a
requesting owner or requesting mortgagee of an individual owner,
including any individual owner's file kept by or on behalf of the
association.
  '  { - (10) - }   { + (11) + } The association shall maintain a
copy, suitable for the purpose of duplication, of the following:
  ' (a) The declaration and bylaws, including amendments or
supplements in effect, the recorded plat, if feasible, and the
association rules and regulations currently in effect.
  ' (b) The most recent financial statement prepared pursuant to
subsection   { - (4) - }   { + (3) + } of this section.
  ' (c) The current operating budget of the association.
  ' (d) The reserve study, if any, described in ORS 94.595.
  ' (e) Architectural standards and guidelines, if any.
  '  { - (11) - }   { + (12) + } The association, within 10
business days after receipt of a written request by an owner,
shall furnish the requested information required to be maintained
under subsection
  { - (10) - }  { +  (11) + } of this section.
  '  { - (12) - }   { + (13) + } The board of directors, by
resolution, may adopt reasonable rules governing the frequency,
time, location, notice and manner of examination and duplication
of association records and the imposition of a reasonable fee for
furnishing copies of any documents, information or records
described in this section. The fee may include reasonable
personnel costs for furnishing the documents, information or
records.
  '  { +  SECTION 9. + } ORS 94.680 is amended to read:
  ' 94.680. (1) If a declaration or bylaws provide that the
homeowners association has the sole authority to decide whether
to repair or reconstruct a unit that has suffered damage or
whether a unit must be repaired or reconstructed, the board of
directors { +  of the association + } shall obtain blanket
all-risk insurance for the full replacement cost of all
structures in the planned community.  Cost of the coverage shall
be a common expense to the association.
  ' (2) If the declaration or bylaws contain a provision
described in subsection (1) of this section, the declaration or
bylaws also shall provide:
  ' (a) Requirements of or limitations on repairing or
reconstructing damaged or destroyed property;
  ' (b) The time within which the repair or reconstruction must
begin; and
  ' (c) The actions the board of directors must take if:
  ' (A) Damage or destruction is not repaired or replaced; or
  ' (B) Insurance proceeds exceed or fall short of the costs of
repair or reconstruction.
  '  { +  (3) Notwithstanding a provision in the declaration or
bylaws, the board of directors, or a declarant as provided in
subsection (4) of this section, shall obtain and maintain
insurance:
  ' (a) That covers acts of dishonesty, embezzlement and theft by
officers, directors, association employees, contracted community
association managers, bookkeepers and other persons authorized by
the association to handle moneys of the association; and
  ' (b) In an amount equal to or greater than the sum of
assessments on all lots for three months plus the total amount of
moneys in reserve accounts.
  ' (4) The declarant, on behalf of the association, shall obtain
insurance required under subsection (3) of this section within 30
days after the date of conveyance of the first lot in the planned
community and maintain the insurance until the declarant turns
over responsibility for the administration of the planned
community under ORS 94.616. + }
  '  { +  SECTION 10. + } Section 24, chapter 803, Oregon Laws
2003, as amended by section 38, chapter 641, Oregon Laws 2009, is
amended to read:
  '  { +  Sec. 24. + } The requirements of ORS 94.670  { + (4)
and + } (5) first apply:
  ' (1) Commencing with the fiscal year following the turnover
meeting required by ORS 94.616 for the association of a planned
community created under ORS 94.550 to 94.783 prior to January 1,
2004, if the turnover meeting has not yet occurred on January 1,
2004.

  ' (2) Commencing with the fiscal year beginning in calendar
year 2004 for the association of a planned community created
under ORS 94.550 to 94.783 if the turnover meeting required by
ORS 94.616 has occurred on or before January 1, 2004.
  ' (3) Commencing with the fiscal year following the turnover
meeting required by ORS 94.616 for the association of a planned
community created under ORS 94.550 to 94.783 on or after January
1, 2004.
  ' (4) Commencing with the fiscal year following the year in
which owners assume responsibility for administration of a
planned community described in ORS 94.572 if the owners have not
assumed responsibility for administration of the planned
community on January 1, 2004.
  ' (5) Commencing with the fiscal year beginning in calendar
year 2004 for the association of a planned community described in
ORS 94.572 if the owners have assumed responsibility for
administration of the planned community on or before January 1,
2004.
  '  { +  SECTION 11. + } ORS 94.572 is amended to read:
  ' 94.572. (1)(a) A Class I or Class II planned community
created before January 1, 2002, that was not created under ORS
94.550 to 94.783 is subject to this section and ORS 94.550,
94.590, 94.595 (5) to (9), 94.625, 94.626, 94.630 (1), (3) and
(4), 94.639, 94.640, 94.641, 94.642, 94.645, 94.647, 94.650,
94.652, 94.655, 94.657, 94.658, 94.660, 94.661, 94.662, 94.665,
94.670, 94.675, 94.676, 94.680, 94.690, 94.695, 94.704, 94.709,
94.712, 94.716, 94.719, 94.723, 94.728, 94.733, 94.770, 94.775,
94.777 and 94.780  { + and sections 3 and 4 of this 2013 Act
 + }to the extent that those statutes are consistent with any
governing documents. If the governing documents do not provide
for the formation of an association, the requirements of this
subsection are not effective until the formation of an
association in accordance with paragraph (b) of this subsection.
If a provision of the governing documents is inconsistent with
this subsection, the owners may amend the governing documents
using the procedures in this subsection:
  ' (A) In accordance with the procedures for the adoption of
amendments in the governing documents and subject to any
limitations in the governing documents, the owners may amend the
inconsistent provisions of the governing documents to conform to
the extent feasible with this section and ORS 94.550, 94.590,
94.595 (5) to (9), 94.625, 94.626, 94.630 (1), (3) and (4),
94.639, 94.640, 94.641, 94.642, 94.645, 94.647, 94.650, 94.652,
94.655, 94.657, 94.658, 94.660, 94.661, 94.662, 94.665, 94.670,
94.675, 94.676, 94.680, 94.690, 94.695, 94.704, 94.709, 94.712,
94.716, 94.719, 94.723, 94.728, 94.733, 94.770, 94.775, 94.777
and 94.780  { + and sections 3 and 4 of this 2013 Act + }.
Nothing in this paragraph requires the owners to amend a
declaration or bylaws to include the information required by ORS
94.580 or 94.635.
  ' (B) If there are no procedures for amendment in the governing
documents:
  ' (i) For an amendment to a recorded governing document other
than bylaws, the owners may amend the inconsistent provisions of
the document to conform to this section and ORS 94.550, 94.590,
94.595 (5) to (9), 94.625, 94.626, 94.630 (1), (3) and (4),
94.639, 94.640, 94.641, 94.642, 94.645, 94.647, 94.650, 94.652,
94.655, 94.657, 94.658, 94.660, 94.661, 94.662, 94.665, 94.670,
94.675, 94.676, 94.680, 94.690, 94.695, 94.704, 94.709, 94.712,
94.716, 94.719, 94.723, 94.728, 94.733, 94.770, 94.775, 94.777
and 94.780  { + and sections 3 and 4 of this 2013 Act + } by a
vote of at least 75 percent of the owners in the planned
community.
  ' (ii) For an amendment to the bylaws, the owners may amend the
inconsistent provisions of the bylaws to conform to this section
and ORS 94.550, 94.590, 94.595 (5) to (9), 94.625, 94.626, 94.630
(1), (3) and (4), 94.639, 94.640, 94.641, 94.642, 94.645, 94.647,
94.650, 94.652, 94.655, 94.657, 94.658, 94.660, 94.661, 94.662,
94.665, 94.670, 94.675, 94.676, 94.680, 94.690, 94.695, 94.704,
94.709, 94.712, 94.716, 94.719, 94.723, 94.728, 94.733, 94.770,
94.775, 94.777 and 94.780  { + and sections 3 and 4 of this 2013
Act + } by a vote of at least a majority of the owners in the
planned community.
  ' (iii) An amendment may be adopted at a meeting held in
accordance with the governing documents or by another procedure
permitted by the governing documents following the procedures
prescribed in ORS 94.647, 94.650 or 94.660.
  ' (iv) An amendment to a recorded declaration shall be
executed, certified and recorded as provided in ORS 94.590 (2)
and (3) and shall be subject to ORS 94.590 (5). An amendment to
the bylaws and any other governing document shall be executed and
certified as provided in ORS 94.590 (3) and shall be recorded in
the office of the recording officer of every county in which the
planned community is located if the bylaws or other governing
document to which the amendment relates were recorded.
  ' (C) An amendment adopted pursuant to this paragraph shall
include:
  ' (i) A reference to the recording index numbers and date of
recording of the declaration or other governing document, if
recorded, to which the amendment relates; and
  ' (ii) A statement that the amendment is adopted pursuant to
the applicable subparagraph of this paragraph.
  ' (b)(A) If the governing documents do not provide for the
formation of an association of owners, at least 10 percent of the
owners in the planned community or any governing entity may
initiate the formation of an association as provided in this
paragraph. The owners or the governing entity initiating the
association formation shall call an organizational meeting for
the purpose of voting whether to form an association described in
ORS 94.625. The notice of the meeting shall:
  ' (i) Name the initiating owners or governing entity;
  ' (ii) State that the organizational meeting is for the purpose
of voting whether to form an association in accordance with the
proposed articles of incorporation;
  ' (iii) State that if the owners vote to form an association,
the owners may elect the initial board of directors provided for
in the articles of incorporation and may adopt the initial
bylaws;
  ' (iv) State that to form an association requires an
affirmative vote of at least a majority of the owners in the
planned community, or, if a larger percentage is specified in the
applicable governing document, the larger percentage;
  ' (v) State that to adopt articles of incorporation, to elect
the initial board of directors pursuant to the articles of
incorporation or to adopt the initial bylaws requires an
affirmative vote of at least a majority of the owners present;
  ' (vi) State that if the initial board of directors is not
elected, an interim board of directors shall be elected pursuant
to bylaws adopted as provided in subparagraph (C) of this
paragraph;
  ' (vii) State that a copy of the proposed articles of
incorporation and bylaws will be available at least five business
days before the meeting and state the method of requesting a
copy; and
  ' (viii) Be delivered in accordance with the declaration and
bylaws. If there is no governing document or the document does
not include applicable provisions, the owners or governing entity
shall follow the procedures prescribed in ORS 94.650 (4).
  ' (B) At least five business days before the organizational
meeting, the initiating owners or governing entity shall cause
articles of incorporation and bylaws to be drafted. The bylaws

shall include, to the extent applicable, the information required
by ORS 94.635.
  ' (C) At the organizational meeting:
  ' (i) Representatives of the initiating owners or governing
entity shall, to the extent not inconsistent with the governing
documents, conduct the meeting according to Robert's Rules of
Order as provided in ORS 94.657.
  ' (ii) The initiating owners or governing entity shall make
available copies of the proposed articles of incorporation and
the proposed bylaws.
  ' (iii) The affirmative vote of at least a majority of the
owners of a planned community, or, if a larger percentage is
specified in the applicable governing document, the larger
percentage, is required to form an association under this
paragraph.
  ' (iv) If the owners vote to form an association, the owners
shall adopt articles of incorporation and may elect the initial
board of directors as provided in the articles of incorporation,
adopt bylaws and conduct any other authorized business by an
affirmative vote of at least a majority of the owners present. If
the owners do not elect the initial board of directors, owners
shall elect an interim board of directors by an affirmative vote
of at least a majority of the owners present to serve until the
initial board of directors is elected.
  ' (v) An owner may vote by proxy, or by written ballot, if
approved, in the discretion of a majority of the initiating
owners or governing entity.
  ' (D) Not later than 10 business days after the organizational
meeting, the board of directors shall:
  ' (i) Cause the articles of incorporation to be filed with the
Secretary of State under ORS chapter 65;
  ' (ii) Cause the notice of planned community described in
subsection (4) of this section to be prepared, executed and
recorded in accordance with subsection (4) of this section;
  ' (iii) Provide a copy of the notice of planned community to
each owner, together with a copy of the adopted articles of
incorporation and bylaws, if any, or a statement of the procedure
and method for adoption of bylaws described in subparagraph (C)
of this paragraph. The copies and any statement shall be
delivered to each lot, mailed to the mailing address of each lot
or mailed to the mailing addresses designated by the owners in
writing; and
  ' (iv) Cause a statement of association information to be
prepared, executed and recorded in accordance with ORS 94.667.
  ' (E) If the owners vote to form an association, all costs
incurred under this paragraph, including but not limited to the
preparation and filing of the articles of incorporation, drafting
of bylaws, preparation of notice of meeting and the drafting,
delivery and recording of all notices and statements shall be a
common expense of the owners and shall be allocated as provided
in the appropriate governing document or any amendment thereto.
  ' (2)(a) The owners of lots in a Class I or Class II planned
community that are subject to the provisions of ORS   { - chapter
94 - }  { + 94.550 to 94.783 + } specified in subsection (1) of
this section may elect to be subject to any other provisions of
ORS 94.550 to 94.783 upon compliance with the procedures
prescribed in subsection (1) of this section.
  ' (b) If the owners of lots in a Class I or Class II planned
community elect to be subject to additional provisions of ORS
94.550 to 94.783, unless the notice of planned community
otherwise required or permitted under subsection (4) of this
section includes a statement of the election pursuant to this
paragraph, the board of directors of the association shall cause
the notice of planned community described in subsection (4) of
this section to be prepared, executed and recorded in accordance
with subsection (4) of this section.
  ' (3)(a) The owners of lots in a Class III planned community
created before January 1, 2002, may elect to be subject to
provisions of ORS 94.550 to 94.783 upon compliance with the
applicable procedures in subsection (1) of this section.
  ' (b) If the owners of lots in a Class III planned community
elect to be subject to provisions of ORS 94.550 to 94.783, the
board of directors of the association shall cause the notice of
planned community described in subsection (4) of this section to
be prepared, executed and recorded in accordance with subsection
(4) of this section.
  ' (4) The notice of planned community required or permitted by
this section shall be:
  ' (a) Titled 'Notice of Planned Community under ORS 94.572';
  ' (b) Executed by the president and secretary of the
association; and
  ' (c) Recorded in the office of the recording officer of every
county in which the property is located.
  ' (5) The notice of planned community shall include:
  ' (a) The name of the planned community and association as
identified in the recorded declaration, conditions, covenants and
restrictions or other governing document and, if different, the
current name of the association;
  ' (b) A list of the properties, described as required for
recordation in ORS 93.600, within the jurisdiction of the
association;
  ' (c) Information identifying the recorded declaration,
conditions, covenants and restrictions or other governing
documents and a reference to the recording index numbers and date
of recording of the governing documents;
  ' (d) A statement that the property described in accordance
with paragraph (b) of this subsection is subject to specific
provisions of the Oregon Planned Community Act;
  ' (e) A reference to the specific provisions of the Oregon
Planned Community Act that apply to the subject property and a
reference to the subsection of this section under which the
application is made; and
  ' (f) If an association is formed under subsection (1)(b)(A) of
this section, a statement to that effect.
  ' (6) An amended statement shall include a reference to the
recording index numbers and the date of recording of prior
statements.
  ' (7) The county clerk may charge a fee for recording a
statement under this section according to the provisions of ORS
205.320 (4).
  ' (8) The board of directors of an association not otherwise
required to cause a notice of planned community described in
subsection (4) of this section to be prepared and recorded under
this section may cause a notice of planned community to be
prepared, executed and recorded as provided in subsection (4) of
this section.
  ' (9) Title to a unit, lot or common property in a Class I or
Class II planned community created before January 1, 2002, may
not be rendered unmarketable or otherwise affected by a failure
of the planned community to be in compliance with a requirement
of this section.
  ' (10) As used in this section:
  ' (a) 'Governing entity' means an incorporated or
unincorporated association, committee, person or any other entity
that has authority, under a governing document, to maintain
commonly maintained property, impose assessments on lots or to
act on behalf of lot owners within the planned community on
matters of common concern.
  ' (b) 'Recorded declaration' means an instrument recorded with
the county recording officer of the county in which the planned
community is located that contains conditions, covenants and

restrictions binding lots in the planned community or imposes
servitudes upon the real property.
  '  { +  SECTION 12. + } ORS 100.005 is amended to read:
  ' 100.005. As used in this chapter, unless the context requires
otherwise:
  ' (1) 'Assessment' means any charge imposed or levied by the
association of unit owners on or against a unit owner or unit
pursuant to provisions of the declaration or the bylaws of the
condominium or provisions of ORS 100.005 to 100.910.
  '  { +  (2) 'Association account' means an operating account or
a reserve account.
  ' (3) 'Association account holder' means an individual:
  ' (a) Who is designated and authorized to use an association
account to transact business on behalf of an association of unit
owners; and
  ' (b) Whose signature is on file with the financial
institution, as defined in ORS 706.008, other than an
extranational institution at which the account is
established. + }
  '  { - (2) - }   { + (4) + } 'Association of unit owners'  { +
or 'association' + } means the association provided for under ORS
100.405.
  '  { - (3) - }   { + (5) + } 'Association property' means any
real property or interest in real property acquired, held or
possessed by the association under ORS 100.405.
  '  { - (4) - }   { + (6) + } 'Blanket encumbrance' means a
trust deed or mortgage or any other lien or encumbrance,
mechanic's lien or otherwise, securing or evidencing the payment
of money and affecting more than one unit in a condominium, or an
agreement affecting more than one such unit by which the
developer holds such condominium under an option, contract to
sell or trust agreement.
  '  { - (5) - }   { + (7) + } 'Building' means a multiple-unit
building or single-unit buildings, or any combination thereof,
comprising a part of the property. 'Building' also includes a
floating structure described in ORS 100.020 (3)(b)(D).
  '  { - (6) - }   { + (8) + } 'Commissioner' means the Real
Estate Commissioner.
  '  { - (7) - }   { + (9) + } 'Common elements' means the
general common elements and the limited common elements.
  '  { - (8) - }   { + (10) + } 'Common expenses' means:
  ' (a) Expenses of administration, maintenance, repair or
replacement of the common elements;
  ' (b) Expenses agreed upon as common by all the unit owners;
and
  ' (c) Expenses declared common by ORS 100.005 to 100.625 or by
the declaration or the bylaws of the particular condominium.
  '  { - (9) - }   { + (11) + } 'Condominium' means:
  ' (a) With respect to property located within this state:
  ' (A) The land, if any, whether fee simple, leasehold, easement
or other interest or combination thereof, and whether contiguous
or noncontiguous;
  ' (B) Any buildings, improvements and structures on the
property; and
  ' (C) Any easements, rights and appurtenances belonging to the
property submitted to the provisions of ORS 100.005 to 100.625;
and
  ' (b) With respect to property located outside this state, the
property that has been committed to the condominium form of
ownership in accordance with the jurisdiction within which the
property is located.
  '  { - (10) - }   { + (12) + } 'Conversion condominium' means a
condominium in which there is a building, improvement or
structure that was occupied prior to any negotiation and that is:
  ' (a) Residential in nature, at least in part; and

  ' (b) Not wholly commercial or industrial, or commercial and
industrial, in nature.
  '  { - (11) - }   { + (13) + } 'Declarant' means a person who
records a declaration under ORS 100.100 or a supplemental
declaration under ORS 100.110.
  '  { - (12) - }   { + (14) + } 'Declaration' means the
instrument described in ORS 100.100 by which the condominium is
created and as modified by any amendment recorded in accordance
with ORS 100.135 or supplemental declaration recorded in
accordance with ORS 100.120.
  '  { - (13) - }   { + (15) + } 'Developer' means a declarant or
any person who purchases an interest in a condominium from
declarant, successor declarant or subsequent developer for the
primary purpose of resale.
  '  { - (14) - }   { + (16) + } 'Flexible condominium' means a
condominium containing property that may be reclassified or
withdrawn from the condominium pursuant to ORS 100.150 (1).
  '  { - (15) - }   { + (17) + } 'General common elements,'
unless otherwise provided in a declaration, means all portions of
the condominium that are not part of a unit or a limited common
element, including but not limited to the following:
  ' (a) The land, whether fee simple, leasehold, easement, other
interest or combination thereof, together with any rights and
appurtenances;
  ' (b) The foundations, columns, girders, beams, supports,
bearing and shear walls, windows, except glazing and screening,
unit access doors, except glazing and screening, roofs, halls,
corridors, lobbies, stairs, fire escapes, entrances and exits of
a building;
  ' (c) The basements, yards, gardens, parking areas and outside
storage spaces;
  ' (d) Installations of central services such as power, light,
gas, hot and cold water, heating, refrigeration, air
conditioning, waste disposal and incinerating;
  ' (e) The elevators, tanks, pumps, motors, fans, compressors,
ducts and in general all apparatus and installations existing for
common use;
  ' (f) The premises for the lodging of janitors or caretakers of
the property; and
  ' (g) All other elements of a building and the condominium
necessary or convenient to their existence, maintenance and
safety, or normally in common use.
  '  { - (16) - }   { + (18) + } 'Leasehold' means the interest
of a person, firm or corporation who is the lessee under a lease
from the owner in fee and who files a declaration creating a
condominium under ORS 100.100.
  '  { - (17) - }   { + (19) + } 'Limited common elements' means
those common elements designated in the declaration, as reserved
for the use of a certain unit or number of units, to the
exclusion of the other units.
  '  { - (18) - }   { + (20) + } 'Majority' or 'majority of unit
owners' means more than 50 percent of the voting rights allocated
to the units by the declaration.
  '  { - (19) - }   { + (21) + } 'Mortgagee' means any person who
is:
  ' (a) A mortgagee under a mortgage;
  ' (b) A beneficiary under a trust deed; or
  ' (c) The vendor under a land sale contract.
  '  { - (20) - }   { + (22) + } 'Negotiation' means any activity
preliminary to the execution by either developer or purchaser of
a unit sales agreement, including but not limited to advertising,
solicitation and promotion of the sale of a unit.
  '  { - (21) - }   { + (23) + } 'Nonwithdrawable property' means
property which pursuant to ORS 100.150 (1)(b):
  ' (a) Is designated nonwithdrawable in the declaration and on
the plat; and
  ' (b) Which may not be withdrawn from the condominium without
the consent of all of the unit owners.
  '  { +  (24) 'Operating account' means an account established
and maintained by the association of unit owners, as required by
section 14 of this 2013 Act, to hold moneys of the association
other than moneys the association is required to hold in a
reserve account. + }
  '  { - (22) - }   { + (25) + } 'Percent of owners' or
'percentage of owners ' means the percent of the voting rights
determined under ORS 100.525.
  '  { - (23) - }   { + (26) + } 'Purchaser' means an actual or
prospective purchaser of a condominium unit pursuant to a sale.
  '  { - (24) - }   { + (27) + } 'Recording officer' means the
county officer charged with the duty of filing and recording
deeds and mortgages or any other instruments or documents
affecting the title to real property.
  '  { - (25) - }   { + (28) + } 'Reservation agreement' means an
agreement relating to the future sale of a unit which is not
binding on the purchaser and which grants purchaser the right to
cancel the agreement without penalty and obtain a refund of any
funds deposited at any time until purchaser executes a unit sales
agreement.
  '  { +  (29) 'Reserve account' means an account established and
maintained by the association of unit owners, as required by
section 14 of this 2013 Act, to hold moneys of the association
that the association is required to hold as reserves. + }
  '  { - (26) - }   { + (30) + } 'Sale' includes every
disposition or transfer of a condominium unit, or an interest or
estate therein, by a developer, including the offering of the
property as a prize or gift when a monetary charge or
consideration for whatever purpose is required by the developer.
'Interest or estate' includes a lessee's interest in a unit for
more than three years or less than three years if the interest
may be renewed under the terms of the lease for a total period of
more than three years. 'Interest or estate' does not include any
interest held for security purposes or a timeshare regulated or
otherwise exempt under ORS 94.803 and 94.807 to 94.945.
  '  { - (27) - }   { + (31) + } 'Special declarant right' means
any right, in addition to the regular rights of the declarant as
a unit owner, reserved for the benefit of or created by the
declarant under the declaration, bylaws or the provisions of this
chapter.
  '  { - (28) - }   { + (32) + } 'Staged condominium' means a
condominium which provides for annexation of additional property
pursuant to ORS 100.115 and 100.120.
  '  { - (29) - }   { + (33) + } 'Successor declarant' means the
transferee of any special declarant right.
  '  { - (30) - }   { + (34) + } 'Termination date' means that
date described in ORS 100.105 (2)(b) or (7)(d).
  '  { - (31) - }   { + (35) + } 'Transitional committee' means
the committee provided for under ORS 100.205.
  '  { - (32) - }   { + (36) + } 'Turnover meeting' means the
meeting provided for under ORS 100.210.
  '  { - (33) - }   { + (37) + } 'Unit' or 'condominium unit'
means a part of the property which:
  ' (a) Is described in ORS 100.020 (3);
  ' (b) Is intended for any type of independent ownership; and
  ' (c) The boundaries of which are described pursuant to ORS
100.105 (1)(d).
  '  { - (34) - }   { + (38) + } 'Unit designation' means the
number, letter or combination thereof designating a unit in the
declaration and on the plat.
  '  { - (35) - }   { + (39) + } 'Unit owner' means, except to
the extent the declaration or bylaws provide otherwise, the
person owning fee simple interest in a unit, the holder of a
vendee's interest in a unit under a recorded installment contract
of sale and, in the case of a leasehold condominium, the holder
of the leasehold estate in a unit.
  '  { - (36) - }   { + (40) + } 'Unit sales agreement' means a
written offer or agreement for the sale of a condominium unit
which when fully executed will be binding on all parties. 'Unit
sales agreement ' includes but is not limited to an earnest money
receipt and agreement to purchase and other such agreements which
serve as an agreement of sale for a cash transaction or which are
preliminary to the execution of an installment contract of sale,
but does not include a reservation agreement.
  '  { - (37) - }   { + (41)  + } ' Variable property' means
property described in ORS 100.150 (2) and designated as variable
property in the declaration and on the plat.
  '  { - (38) - }   { + (42) + } 'Voting rights' means the
portion of the votes allocated to a unit by the declaration in
accordance with ORS 100.105 (1)(j).
  '  { +  SECTION 13. + }  { + Sections 14 and 15 of this 2013
Act are added to and made a part of ORS chapter 100. + }
  '  { +  SECTION 14. + }  { + (1) All moneys of an association
of unit owners, including assessments and declarant subsidies,
must be deposited and maintained in the name of the association
in one or more association accounts until disbursed.
  ' (2) All expenses of the association must be paid from an
association account.
  ' (3) An association account must be held in a federally
insured account, including a certificate of deposit, at a
financial institution, as defined in ORS 706.008, other than an
extranational institution.
  ' (4) An association may deposit assessments collected for
reserves required under ORS 100.175 in the association's
operating account, but must transfer the reserves to the
association's reserve account as soon as practicable.
  ' (5) The association may not maintain moneys in an account, or
at any one institution, in an amount that exceeds the insurance
limits applicable to the account or institution.
  ' (6) Except as provided in subsection (8) of this section, an
association may hold moneys in an association account only in:
  ' (a) Cash deposits;
  ' (b) Certificates of deposit; or
  ' (c) United States Treasury bills, notes or bonds.
  ' (7) The investment objectives of an association must be:
  ' (a) Preservation of capital; and
  ' (b) Maintenance of sufficient liquidity to meet the financial
obligations of the condominium.
  ' (8) After the effective date of this 2013 Act, the
association:
  ' (a) May maintain moneys in an investment established before
the effective date of this 2013 Act that does not conform to the
requirements of subsection (6) of this section until the
investment is sold or liquidated.
  ' (b) May not roll over a mature investment that does not
conform with the requirements of subsection (6) of this section
or reinvest the proceeds of a mature investment in an investment
that is not authorized by subsection (6) of this section. + }
  '  { +  SECTION 15. + }  { + (1) Notwithstanding a provision in
the declaration or bylaws of a condominium, unless a resolution
adopted by the board of directors of an association of unit
owners provides otherwise, only the following individuals may be
an association account holder:
  ' (a) An individual who is a member of the board of directors
in accordance with ORS 100.416; and
  ' (b) An individual who is an officer of the association who is
either:
  ' (A) An owner or co-owner of a unit; or

  ' (B) A representative of an owner or co-owner of a unit, if
the individual meets the qualifications described in subsection
(2) of this section.
  ' (2) An individual who is an officer of the association under
subsection (1)(b)(B) of this section must meet one of the
following qualifications:
  ' (a) If a corporation, limited liability company or
partnership is the owner or co-owner of a unit, or owns an
interest in an entity that owns the unit, the officer of the
association representing the entity must be:
  ' (A) An officer, employee or agent of the corporation;
  ' (B) A member, manager, employee or agent of the limited
liability company; or
  ' (C) A partner, employee or agent of the partnership.
  ' (b) If a trustee holds legal title to a unit in trust for the
benefit of the owner of the beneficial interest in the unit, the
officer of the association representing the trust must be a
trustee.
  ' (c) If a court has appointed an executor, administrator,
guardian, conservator or other individual to serve in a fiduciary
capacity for a unit owner, the officer of the association must be
the executor, administrator, guardian, conservator or other
individual appointed by the court. If the court appointed an
entity to serve in a fiduciary capacity for a unit owner, the
officer of the association must be an officer or employee of the
appointed entity.
  ' (3) An association account holder may not delegate the
holder's authority to use an association account to transact
business on behalf of the association. + }
  '  { +  SECTION 16. + } ORS 100.175 is amended to read:
  ' 100.175. (1) The declarant, on behalf of the association of
unit owners, shall:
  ' (a) Conduct an initial reserve study as described in
subsection (3) of this section;
  ' (b) Prepare an initial maintenance plan as described in
subsection (4) of this section; and
  ' (c) Establish a reserve account as provided in subsection (2)
of this section.
  ' (2)(a) A reserve account shall be established to
 { - fund - }  { +  provide moneys for + } major maintenance,
repair or replacement of those common elements all or part of
which will normally require major maintenance, repair or
replacement in more than one and less than 30 years, for exterior
painting if the common elements include exterior painted
surfaces, and for such other items as may be required by the
declaration or bylaws.
  '  { +  (b) + } The reserve account need not include:
  ' (A)  { + Reserves for those + } items that can reasonably be
 { - funded from the general budget or other funds or - }
 { + provided for with moneys in operating + } accounts of the
association; or
  ' (B) A reserve for limited common elements for which
maintenance and replacement are the responsibility of one or
more, but less than all, unit owners under the provisions of the
declaration or bylaws.
  '  { - (b) - }   { + (c) + } The reserve account   { - shall be
established in the name of the association of unit owners. The
association is responsible for administering the account and for
making periodic payments into the account - }  { +  must be
established and maintained as provided in section 14 of this 2013
Act + }.
  '  { - (c) - }   { + (d) + } The reserve portion of the initial
assessment determined by the declarant shall be based on:
  ' (A) The reserve study described in subsection (3) of this
section;

  ' (B) In the case of a conversion condominium, the statement
described in ORS 100.655 (1)(g); or
  ' (C) Other reliable information.
  '  { - (d) - }   { + (e) + } The reserve account   { - must be
funded by - }   { + may hold only moneys obtained from + }
assessments against the individual units for the purposes for
which the reserve account is established.
  '  { - (e) - }   { + (f) + } The assessment under this
subsection accrues from the time of the conveyance of the first
individual unit assessed as provided in ORS 100.530.
  ' (3)(a) The board of directors of the association annually
shall conduct a reserve study or review and update an existing
study to determine the reserve account requirements. Subject to
subsection (10) of this section, after a review of the reserve
study or the reserve study update, the board may, without any
action by the unit owners:
  ' (A) Adjust the amount of payments in accordance with the
study or review; and
  ' (B) Provide for other reserve items that the board of
directors, in its discretion, may deem appropriate.
  ' (b) The reserve study shall:
  ' (A) Identify all items for which reserves are or will be
established;
  ' (B) Include the estimated remaining useful life of each item
as of the date of the reserve study; and
  ' (C) Include for each item, as applicable, an estimated cost
of maintenance and repair and replacement at the end of the
item's useful life.
  ' (4)(a) The board of directors shall prepare a maintenance
plan for the maintenance, repair and replacement of all property
for which the association has maintenance, repair or replacement
responsibility under the declaration or bylaws or this chapter.
The maintenance plan shall:
  ' (A) Describe the maintenance, repair and replacement to be
conducted;
  ' (B) Include a schedule for the maintenance, repair and
replacement;
  ' (C) Be appropriate for the size and complexity of the
maintenance, repair and replacement responsibility of the
association; and
  ' (D) Address issues that include but are not limited to
warranties and the useful life of the items for which the
association has maintenance, repair or replacement
responsibility.
  ' (b) The board of directors shall review and update the
maintenance plan described under this subsection as necessary.
  ' (5)(a) Except as provided in paragraph (b) of this
subsection, the reserve study requirements under subsection (3)
of this section and the maintenance plan requirements under
subsection (4) of this section do not apply to a condominium
consisting of one or two units, excluding units used for parking,
storage or other uses ancillary to a unit:
  ' (A) After the sale of the first unit to a person other than a
successor declarant, if the condominium is created on or after
September 27, 2007; or
  ' (B) If the condominium was created before September 27, 2007,
notwithstanding any requirement in the declaration or bylaws.
  ' (b) The reserve study requirements under subsection (3) of
this section and the maintenance plan requirements under
subsection (4) of this section apply to a flexible condominium or
a staged condominium created on or after September 27, 2007, if
the condominium might in the future consist of more than two
units.
  ' (6)(a) If the declaration or bylaws require a reserve
account, the reserve study requirements of subsection (3) of this
section and the maintenance plan requirements of subsection (4)
of this section first apply to the association of a condominium
recorded prior to October 23, 1999:
  ' (A) Upon adoption of a resolution by the board of directors
in accordance with the bylaws providing that the requirements of
subsections (3) and (4) of this section apply to the association;
or
  ' (B) Upon submission to the board of directors of a petition
signed by a majority of unit owners mandating that the
requirements of subsections (3) and (4) of this section apply to
the association.
  ' (b) The reserve study and the maintenance plan shall be
completed within one year of the date of adoption of the
resolution or submission of the petition to the board of
directors.
  '  { - (7)(a) Except as provided in paragraph (b) of this
subsection, the reserve account is to be used only for the
purposes for which reserves have been established and is to be
kept separate from other funds. - }
  '  { - (b) After the individual unit owners have assumed
administrative responsibility for the association under ORS
100.210, if the board of directors has adopted a resolution,
which may be an annual continuing resolution, authorizing the
borrowing of funds: - }
  '  { - (A) The board of directors may borrow funds from the
reserve account to meet high seasonal demands on the regular
operating funds or to meet unexpected increases in expenses. - }
  '  { - (B) Not later than the adoption of the budget for the
following year, the board of directors shall adopt by resolution
a written payment plan providing for repayment of the borrowed
funds within a reasonable period. - }
  '  { - (8) The reserve account is subject to the requirements
and restrictions of ORS 100.480 and any additional requirements
or restrictions imposed by the declaration, bylaws or rules of
the association of unit owners. - }
  '  { +  (7) Except as provided in section 14 (4) of this 2013
Act, moneys in a reserve account must be kept separate from other
moneys.
  ' (8) Except as provided in this subsection, moneys in a
reserve account may be used only for the purposes for which
reserves have been established. After unit owners assume
responsibility for administration of the association under ORS
100.210, if the board of directors adopts a resolution, which may
be an annual continuing resolution, authorizing the borrowing of
moneys:
  ' (a) The board of directors may borrow moneys from the reserve
account and transfer the moneys to an operating account to meet
high seasonal demands or unexpected increases in operating
expenses; and
  ' (b) Not later than the adoption of the budget for the
following year, the board of directors shall adopt by resolution
a written payment plan providing for repayment of the borrowed
moneys within a reasonable period. + }
  ' (9) Assessments paid into the reserve account are the
property of the association of unit owners and are not refundable
to sellers of units.
  ' (10)(a) Except as provided under paragraph (b) of this
subsection, unless the board of directors under subsection (3) of
this section determines that the reserve account will   { - be
adequately funded - }   { + have adequate reserves to meet the
requirement for reserves + } for the following year, the board of
directors or the  { +  unit + } owners may not vote to eliminate
 { - funding - }   { + assessment of units for + } a reserve
account required under this section or under the declaration or
bylaws.
  ' (b) Following the turnover meeting described in ORS 100.210,
on an annual basis, the board of directors, with the approval of
all  { + unit + } owners, may elect not to   { - fund the reserve
account - }   { + assess units for reserves  + }for the following
year.
  '  { +  SECTION 17. + } ORS 100.210 is amended to read:
  ' 100.210. (1) A turnover meeting shall be called by the
declarant within 90 days of the expiration of any period of
declarant control reserved in the declaration or bylaws under ORS
100.200. If no control has been reserved, the declarant shall
call the turnover meeting within 90 days of the earlier of:
  ' (a) In a single stage condominium, three years from the date
of conveyance of the first unit to a person other than a
successor declarant or conveyance of 50 percent of the units.
  ' (b) In a staged or flexible condominium, seven years from the
date of conveyance of the first unit to a person other than the
declarant or conveyance to persons other than a successor
declarant of 50 percent of the total number of units which the
declarant may submit to the provisions of this chapter under ORS
100.125 or 100.150.
  ' (2) The declarant shall give notice of the turnover meeting
in accordance with the bylaws of the condominium to each unit
owner at least 10 but not more than 50 days prior to the meeting.
The notice shall state the purpose of the meeting and the time
and place where it is to be held.
  ' (3) If the meeting required under subsection (1) of this
section is not called by the declarant within the time specified,
the meeting may be called and notice given by a unit owner or any
first mortgagee of a unit.
  ' (4) At the turnover meeting:
  ' (a) The declarant shall relinquish control of the
administration of the association of unit owners and the unit
owners shall assume the control;
  ' (b) If a quorum of the unit owners is present, the unit
owners shall elect not fewer than the number of directors
sufficient to constitute a quorum of the board of directors in
accordance with the declaration or bylaws of the condominium; and
  ' (c) The declarant shall deliver to the association the items
specified in subsection (5) of this section.
  ' (5) At the turnover meeting the declarant shall deliver to
the association all property of the unit owners and the
association of unit owners held or controlled by the declarant
including, but not limited to, the following items, if
applicable:
  ' (a) The original or a photocopy of the recorded declaration
and bylaws of the condominium and any supplements and amendments
thereto.
  ' (b) A copy of the articles of incorporation.
  ' (c) The minute books, including all minutes, and other books
and records of the association.
  ' (d) The reserve study, the maintenance plan and all updates
described in ORS 100.175 and other sources of information that
serve as a basis for calculating reserves in accordance with ORS
100.175.
  ' (e) Any rules and regulations which have been promulgated.
  ' (f) Resignations of officers and members of the board of
directors who are required to resign because of the expiration of
any period of declarant control reserved under ORS 100.200.
  ' (g) A financial statement. The financial statement:
  ' (A) Must consist of a balance sheet and an income and expense
statement for the preceding 12-month period or the period
following the recording of the declaration, whichever period is
shorter.
  ' (B) Must be reviewed, in accordance with the Statements on
Standards for Accounting and Review Services issued by the
American Institute of Certified Public Accountants, by an
independent certified public accountant licensed in the State of

Oregon if the annual assessments of an association of unit owners
exceed $75,000.
  '  { - (h) Association funds or control thereof, including, but
not limited to, funds for reserve required under ORS 100.530
(3)(b) and any bank signature cards. - }
  '  { +  (h) All moneys of the association and control of all
moneys and association accounts, all documents and records
related to association accounts and all moneys due the
association from the declarant for the assessment of units for
reserves as required under ORS 100.530. + }
  ' (i) All tangible personal property that is property of the
association and an inventory of such property.
  ' (j) A copy of the following, if available:
  ' (A) The as-built architectural, structural, engineering,
mechanical, electrical and plumbing plans.
  ' (B) The original specifications indicating thereon all
material changes.
  ' (C) The plans for underground site service, site grading,
drainage and landscaping together with cable television drawings.
  ' (D) Any other plans and information relevant to future repair
or maintenance of the property.
  ' (k) Insurance policies.
  ' (L) Copies of any occupancy permits which have been issued
for the condominium.
  ' (m) Any other permits issued by governmental bodies
applicable to the condominium in force or issued within one year
prior to the date the unit owners assume control of the
administration of the association of unit owners.
  ' (n) A list of the general contractor and the subcontractors
responsible for construction or installation of the major
plumbing, electrical, mechanical and structural components of the
common elements.
  ' (o) A roster of unit owners and their addresses and telephone
numbers, if known, as shown on the records of the declarant.
  ' (p) Leases of the common elements and any other leases to
which the association is a party.
  ' (q) Employment or service contracts in which the association
is one of the contracting parties or service contracts in which
the association or the unit owners have an obligation or
responsibility, directly or indirectly, to pay some or all of the
fee or charge of the person performing the service.
  ' (r) Any other contracts to which the association of unit
owners is a party.
  ' (6)   { - In order - }  To facilitate an orderly transition,
during the three-month period following the turnover meeting, the
declarant or an informed representative shall be available to
meet with the board of directors on at least three mutually
acceptable dates to review the documents delivered under
subsection (5) of this section.
  ' (7) If the declarant has complied with this section, unless
the declarant otherwise has sufficient voting rights as a unit
owner to control the association, the declarant is not
responsible for the failure of the unit owners to elect the
number of directors sufficient to constitute a quorum of the
board of directors and assume control of the association in
accordance with subsection (4) of this section. The declarant
shall be relieved of any further responsibility for the
administration of the association except as a unit owner of any
unsold unit.
  ' (8) If the unit owners present do not constitute a quorum or
the unit owners fail to elect the number of directors sufficient
to constitute a quorum of the board of directors at the turnover
meeting held in accordance with subsection (1) of this section:
  ' (a) At any time before the election of the number of
directors sufficient to constitute a quorum, a unit owner or
first mortgagee of a unit may call a special meeting for the
purpose of election of directors and shall give notice of the
meeting in accordance with the notice requirements in the bylaws
for special meetings. The unit owners and first mortgagees
present at the special meeting shall select a person to preside
over the meeting.
  ' (b) A unit owner or first mortgagee of a unit may request a
court to appoint a receiver as provided in ORS 100.418.
  '  { +  SECTION 18. + } ORS 100.417 is amended to read:
  ' 100.417. (1) The board of directors of an association of unit
owners may act on behalf of the association except as limited by
the declaration or bylaws. In the performance of their duties,
officers and members of the board of directors shall be governed
by this section and the applicable provisions of ORS 65.357,
65.361, 65.367, 65.369 and 65.377 whether or not the association
is incorporated under ORS chapter 65.
  ' (2) Subject to subsection (8) of this section, unless
otherwise provided in the bylaws, the board of directors of an
association may fill vacancies in its membership for the
unexpired portion of any term.
  ' (3) At least annually, the board of directors of an
association shall review the insurance coverage of the
association.
  ' (4) The board of directors of the association annually shall
cause to be filed the necessary income tax returns for the
association.
  ' (5) The board of directors of the association may record a
statement of association information as provided in ORS 94.667.
  ' (6) The board of directors, in the name of the association,
shall maintain a current mailing address.
  ' (7) The board of directors shall cause to be maintained and
kept current the information required to enable the association
to comply with ORS 100.480   { - (11) - }  { +  (12) + }.
  ' (8)(a) Unless otherwise provided in the declaration or
bylaws, at a meeting of the unit owners at which a quorum is
present, the unit owners may remove a director from the board of
directors, other than directors appointed by the declarant or
individuals who are ex officio directors, with or without cause,
by a majority vote of unit owners who are present and entitled to
vote.
  ' (b) Notwithstanding contrary provisions in the declaration or
bylaws:
  ' (A) Before a vote to remove a director, unit owners must give
the director whose removal has been proposed an opportunity to be
heard at the meeting.
  ' (B) The unit owners must vote on the removal of each director
whose removal is proposed as a separate question.
  ' (C) Removal of a director by unit owners is effective only if
the matter of removal was an item on the agenda and was stated in
the notice of the meeting required under ORS 100.407.
  ' (c) A director who is removed by the unit owners remains a
director until a successor is elected by the unit owners or the
vacancy is filled as provided in subsection (9) of this section.
  ' (9) Unless the declaration or bylaws specifically prescribe a
different procedure for filling a vacancy created by the removal
of a director by unit owners, the unit owners shall fill a
vacancy created by the removal of a director by the unit owners
at a meeting of unit owners. The notice of the meeting must state
that filling a vacancy is an item on the agenda.
  '  { +  SECTION 19. + } ORS 100.435 is amended to read:
  ' 100.435. (1) If the bylaws provide that   { - the - }
 { + an + } association of unit owners has the sole authority to
decide whether to repair or reconstruct a unit that has suffered
damage or that a unit must be repaired or reconstructed, the
board of directors  { + of the association + } shall
obtain { + , + }   { - and - }  maintain at all times and
 { - shall pay for - }   { + pay, + } out of the common expense
funds,  { +  for + } the following insurance covering both the
common elements and individual units:
  ' (a) Property insurance including, but not limited to, fire,
extended coverage, vandalism and malicious mischief; and
  ' (b) Insurance covering the legal liability of the association
of unit owners, the unit owners individually and the manager
including, but not limited to, the board of directors, the public
and the unit owners and their invitees or tenants, incident to
ownership, supervision, control or use of the property. There may
be excluded from the policy required under this paragraph,
coverage of a unit owner, other than coverage as a member of the
association of unit owners or board of directors, for liability
arising out of acts or omissions of that unit owner and liability
incident to the ownership or use of the part of the property as
to which that unit owner has the exclusive use or occupancy.
Liability insurance required under this paragraph shall be issued
on a comprehensive liability basis and shall provide a cross
liability indorsement providing that the rights of a named
insured under the policy do not prejudice any action against
another named insured.
  ' (2) If the bylaws require the individual unit owners to
obtain insurance for their units, the bylaws also shall contain a
provision requiring the board of directors to obtain the
following insurance covering the common elements:
  ' (a) Property insurance including, but not limited to, fire,
extended coverage, vandalism and malicious mischief; and
  ' (b) Insurance covering the legal liability of the association
of unit owners and the manager including, but not limited to, the
board of directors, to the public or the unit owners and their
invitees or tenants, incident to supervision, control or use of
the property.
  ' (3) The board of directors shall obtain, if reasonably
available, terms in insurance policies under this section that
provide a waiver of subrogation by the insurer as to any claims
against the board of directors of the association.
  ' (4) Notwithstanding a provision in the declaration or bylaws
of a condominium, including a condominium created before
September 27, 2007, that imposes a maximum deductible amount of
$10,000 or less in an association insurance policy, if the board
of directors determines that it is in the best interest of the
association of unit owners and of the unit owners, as provided in
subsection (5) of this section, the board may adopt a resolution
authorizing the association to obtain and maintain an insurance
policy with a deductible amount exceeding the specified maximum,
but not in excess of the greater of:
  ' (a) The maximum deductible acceptable to the Federal National
Mortgage Association; or
  ' (b) $10,000.
  ' (5) In making the determination under subsection (4) of this
section, the board of directors shall consider such factors as
the availability and cost of insurance and the loss experience of
the association.
  ' (6) If the declaration or bylaws of a condominium created
before September 27, 2007, do not assign the responsibility for
payment of the amount of the deductible in an association
insurance policy, the board of directors may adopt a resolution
that assigns the responsibility for payment of the amount of the
deductible. The resolution must include, but need not be limited
to:
  ' (a) The circumstances under which the deductible will be
charged against:
  ' (A) A unit owner or the unit owners affected by a loss; or
  ' (B) All unit owners;
  ' (b) The allocation of the deductible charged under paragraph
(a) of this subsection; and

  ' (c) If a unit owner and the association have duplicate
insurance coverage, the insurance policy that is primary, unless
otherwise provided in the declaration or bylaws.
  ' (7) If the board of directors adopts a resolution described
in subsection (6) of this section, the resolution may require
that a unit owner, in addition to any other insurance required by
the declaration or bylaws, obtain and maintain:
  ' (a) An insurance policy that insures the unit owner's unit
and appurtenant limited common elements for not less than the
amount of the deductible in the association's insurance policy
for which the unit owner may be responsible and that insures the
unit owner's personal property for any loss or damage; and
  ' (b) Comprehensive liability insurance that includes, but is
not limited to, coverage for negligent acts of unit owners and
tenants, guests of unit owners and tenants and occupants of other
units for damage to the general and limited common elements, to
other units and to the personal property of other persons that is
located in other units or the common elements.
  ' (8) Unless otherwise provided in the declaration or bylaws,
the board of directors may adopt a resolution that:
  ' (a) Prescribes a procedure for processing insurance claims.
The procedure may require that all claims against the
association's insurance policy be processed through and
coordinated by the board of directors or the managing agent, if
authorized by the board.
  ' (b) Assigns the responsibility for payment of charges for
handling claims, including any charges by a managing agent.
  ' (9) Not later than 10 days after adoption of a resolution
under subsection (4), (6) or (8) of this section, the board of
directors shall ensure that a copy of the resolution and a notice
described in subsection (10) of this section are:
  ' (a) Delivered to each unit owner; or
  ' (b) Mailed to the mailing address of each unit owner or to
the mailing address designated in writing by the unit owner.
  ' (10) The notice required under subsection (9) of this section
shall:
  ' (a) Advise the unit owner to contact the unit owner's
insurance agent to determine the effect of the resolution on the
unit owner's individual insurance coverage; and
  ' (b) Be in a form and style reasonably calculated to inform
the unit owner of the importance of the notice.
  ' (11) Failure to provide a copy of a resolution or a notice
required under this section does not affect the responsibility of
a unit owner to comply with a resolution adopted under this
section.
  '  { +  (12) Notwithstanding a provision in the declaration or
bylaws, the board of directors of an association, or a declarant
as provided in subsection (13) of this section, shall obtain and
maintain insurance:
  ' (a) That covers acts of dishonesty, embezzlement and theft by
officers, directors, association employees, contracted community
association managers, bookkeepers and other persons authorized by
the association to handle moneys of the association; and
  ' (b) In an amount equal to or greater than the sum of
assessments on all units for three months plus the total amount
of moneys in reserve accounts.
  ' (13) The declarant, on behalf of the association, shall
obtain insurance required under subsection (12) of this section
within 30 days after the date of conveyance of the first unit in
the condominium and maintain the insurance until the declarant
relinquishes control of the administration of the association
under ORS 100.210. + }
  '  { +  SECTION 20. + } ORS 100.480 is amended to read:
  ' 100.480. (1) An association of unit owners shall retain
within this state the documents, information and records
delivered to the association under ORS 100.210 and all other
records of the association for not less than the period specified
for the record in ORS 65.771 or any other applicable law, except
that:
  ' (a) The documents specified in ORS 100.210 (5)(j), if
received, must be retained as permanent records of the
association.
  ' (b) Proxies and ballots must be retained for one year from
the date of determination of the vote, except proxies and ballots
relating to an amendment to the declaration, supplemental
declaration plat, supplemental plat or bylaws must be retained
for one year from the date the amendment is recorded.
  ' (2) The association of unit owners shall keep financial
records { + , including all records of association accounts, that
are + } sufficient for proper accounting purposes.
  '  { - (3)(a) All assessments and other association funds shall
be deposited and maintained in the name of the association in one
or more separate federally insured accounts, including
certificates of deposit, at a financial institution, as defined
in ORS 706.008, other than an extranational institution. Except
as provided in paragraph (b) of this subsection, funds must be
maintained in an association account until disbursed. - }
  '  { - (b) Subject to any limitations imposed by the
declaration or bylaws, association funds maintained in accounts
established under this subsection may be used to purchase
obligations issued by the United States government. - }
  '  { - (c) All expenses of the association shall be paid from
the association account. - }
  '  { - (4) - }   { + (3) + } Within 90 days after the end of
the fiscal year, the board of directors shall:
  ' (a) Prepare or cause to be prepared an annual financial
statement consisting of a balance sheet and income and expenses
statement for the preceding fiscal year; and
  ' (b) Distribute to each unit owner a copy of the annual
financial statement.
  '  { - (5) - }   { + (4) + } Subject to section 26, chapter
803, Oregon Laws 2003, the association of unit owners of a
condominium that has annual assessments   { - exceeding - }
 { + greater than + } $75,000  { + and less than $500,000 + }
shall cause the financial statement required under subsection
 { - (4) - }   { + (3) + } of this section to be reviewed { +  in
the manner required by subsection (8) of this section + } within
180 days after the end of   { - the - }   { + each + } fiscal
year   { - by an independent certified public accountant licensed
in the State of Oregon in accordance with the Statements on
Standards for Accounting and Review Services issued by the
American Institute of Certified Public Accountants - } .
  '  { - (6) - }   { + (5) Subject to section 26, chapter 803,
Oregon Laws 2003,  + }the association of unit owners of a
condominium that has annual assessments of $75,000 or less shall
cause the most recent financial statement required by subsection
 { - (4) - }   { + (3) + } of this section to be reviewed { + :
  ' (a) + } In the manner   { - described in subsection (5) - }
 { + required by subsection (8) + } of this section { + ; and
  ' (b) + } Within 180 days after the board of directors receives
the petition   { - requesting review - }  signed by at least a
majority of the owners { +  that requests review of the most
recent financial statement required by subsection (3) of this
section + }.
  '  { +  (6) The association of unit owners of a condominium
that has annual assessments of $500,000 or more shall cause the
financial statement required under subsection (3) of this section
to be audited within 180 days after the end of each fiscal year
in the manner required by subsection (8) of this section. + }
  ' (7) An association of unit owners subject to the
  { - requirements of subsection (5) - }   { + review
requirements of subsection (4)  + }of this section may elect, on
an annual basis, not to comply with the requirements   { - of
subsection (5) of this section - }  by an affirmative vote of at
least 60 percent of the owners, not including the votes of the
declarant with respect to units owned by the declarant.
  '  { +  (8) The review of financial statements required under
subsection (4) or (5) of this section and the audits required
under subsection (6) of this section must be performed, in
accordance with standards issued by the American Institute of
Certified Public Accountants, by an independent certified public
accountant licensed in Oregon. + }
  '  { - (8)(a) - }   { + (9)(a) + } The association shall
provide, within 10 business days of receipt of a written request
from an owner, a written statement that provides:
  ' (A) The amount of assessments due from the owner and unpaid
at the time the request was received, including:
  ' (i) Regular and special assessments;
  ' (ii) Fines and other charges;
  ' (iii) Accrued interest; and
  ' (iv) Late payment charges.
  ' (B) The percentage rate at which interest accrues on
assessments that are not paid when due.
  ' (C) The percentage rate used to calculate the charges for
late payment or the amount of a fixed charge for late payment.
  ' (b) The association is not required to comply with paragraph
(a) of this subsection if the association has commenced
litigation by filing a complaint against the owner and the
litigation is pending when the statement would otherwise be due.
  '  { - (9)(a) - }   { + (10)(a) + } Except as provided in
paragraph (b) of this subsection, the documents, information and
records described in subsections (1) to   { - (4) - }
 { + (3) + } of this section and all other records of the
association of unit owners must be reasonably available for
examination and, upon written request, available for duplication
by a unit owner and any mortgagee of a unit that makes the
request in good faith for a proper purpose.
  ' (b) Records kept by or on behalf of the association may be
withheld from examination and duplication to the extent the
records concern:
  ' (A) Personnel matters relating to a specific identified
person or a person's medical records.
  ' (B) Contracts, leases and other business transactions that
are currently under negotiation to purchase or provide goods or
services.
  ' (C) Communications with legal counsel that relate to matters
specified in subparagraphs (A) and (B) of this paragraph and the
rights and duties of the association regarding existing or
potential litigation or criminal matters.
  ' (D) Disclosure of information in violation of law.
  ' (E) Documents, correspondence or management or board reports
compiled for or behalf of the association or the board of
directors by its agents or committees for consideration by the
board of directors in executive session held in accordance with
ORS 100.420 (1) and (2).
  ' (F) Documents, correspondence or other matters considered by
the board of directors in executive session held in accordance
with ORS 100.420 (1) and (2).
  ' (G) Files of individual owners, other than those of a
requesting owner or requesting mortgagee of an individual owner,
including any individual owner's file kept by or on behalf of the
association.
  '  { - (10) - }   { + (11) + } The association of unit owners
shall maintain a copy, suitable for the purpose of duplication,
of the following:
  ' (a) The declaration and bylaws, including amendments or
supplements in effect, the recorded plat, if feasible, and the
association rules and regulations currently in effect;
  ' (b) The most recent annual financial statement prepared in
accordance with subsection   { - (4) - }   { + (3) + } of this
section;
  ' (c) The current operating budget of the association;
  ' (d) The reserve study, if any, described in ORS 100.175; and
  ' (e) Architectural standards and guidelines, if any.
  '  { - (11) - }   { + (12) + } The association, within 10
business days after receipt of a written request by an owner,
shall furnish the requested information required to be maintained
under subsection
  { - (10) - }  { +  (11) + } of this section.
  '  { - (12) - }   { + (13) + } The board of directors, by
resolution, may adopt reasonable rules governing the frequency,
time, location, notice and manner of examination and duplication
of association records and the imposition of a reasonable fee for
furnishing copies of any documents, information or records
described in this section. The fee may include reasonable
personnel costs incurred to furnish the information.
  '  { - (13) - }   { + (14) + } Subsection   { - (4) - }
 { + (3) + } of this section first applies to property submitted
to the provisions of this chapter before January 1, 1982, when
the board of directors of the association of unit owners receives
a written request from at least one unit owner that a copy of the
annual financial statement be distributed in accordance with
subsection   { - (4) - }   { + (3) + } of this section.
  '  { +  SECTION 21. + } Section 26, chapter 803, Oregon Laws
2003, as amended by section 39, chapter 641, Oregon Laws 2009, is
amended to read:
  '  { +  Sec. 26. + } The requirements of ORS 100.480  { + (4)
and + } (5) first apply:
  ' (1) Commencing with the fiscal year following the turnover
meeting for the association of unit owners of a condominium
created prior to January 1, 2004, if the turnover meeting has not
yet occurred on January 1, 2004.
  ' (2) Commencing with the fiscal year beginning in calendar
year 2004 for the association of unit owners of a condominium
created prior to January 1, 2004, if the turnover meeting has
occurred on or before January 1, 2004.
  ' (3) Commencing with the fiscal year following the turnover
meeting for the association of unit owners of a condominium
created on or after January 1, 2004.'.
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