As the construction industry makes a comeback in Central Oregon, officials at the state Construction Contractors Board anticipate an eventual increase in complaints against licensed contractors alleging unresolved defects and poor workmanship.
Many of those complaints will end up in the courts, CCB officials said, thanks to a change in state law that took from the state agency the authority to make final decisions on complaints through arbitration hearings.
The change took effect in July 2011 and requires complainants, which can include prime contractors, subcontractors, employees and suppliers, as well as homeowners, to submit instead to mediation by the CCB.
If the two sides cannot reach an agreement, they may take the complaint to state court.
“I don’t think it’s made a lot of difference in terms of a lot of complaints filed,” said Stan Jessup, interim manager of CCB dispute resolution services. “It gave homeowners an incentive to resolve their disputes in mediation.”
The Legislature made the change, he said, to cut the cost of CCB hearings. Rather than increase license fees on contractors in a struggling economy to fund the approximately $1.2 million biennial cost of arbitration hearings in 2011-13, lawmakers opted to include the courts in the complaint process, Jessup said.
Homeowners have a year to file complaints about unresolved problems involving contractors. The number of all complaints declined from 1,628 in 2010 to 934 last year, according to data supplied by the CCB. Complaints filed by homeowners statewide between 2010 and 2013 fell steadily from 766 to 570.
The state requires residential contractors to have a minimum $20,000 performance bond, an amount that sometimes discourages homeowners from filing a complaint with the CCB, said Jacob Zahniser, a lawyer with Ball Janik LLP who specializes in construction defects.
Most claims exceed that amount, he said.
“The CCB has only really been effective to resolve small-money claims,” said Zahniser, who has represented homeowners in Bend. “It has never been an effective mechanism to resolve larger claims.”
Often, the dispute between homeowner and homebuilder has festered long enough that neither side is talking to the other and mediation becomes difficult; that’s when lawyers get involved, Zahniser said. The dispute will usually center on money, not the contractor remedying the problem, he said.
“The (mediation) process has a place, and I’ve used it,” Zahniser said. “It does protect a homeowner, but only up to a certain point, and after a certain point it just doesn’t protect the homeowner.”
Filing a complaint with the CCB serves another purpose, however. It allows the CCB to retain authority over the contractor’s license in the event of a judgment against the contractor. Plus, filing even a large claim through the board preserves the homeowner’s place in line to collect on the contractor’s bond in the event others make similar claims.
The CCB will impose an order, in addition to any court judgment, that allows the state to suspend the contractor’s license if restitution goes unmet. The board may suspend a contractor’s license even if the complaint is never filed with the board but the homeowner files suit, instead, said Bruce Ehrlich, a CCB compliance specialist.
In that event, homeowners who prevail in court need to provide the CCB with a certified copy of the judgment, he said.
“When the amount of construction is fairly slow and reasonable, contractors are doing the work themselves, so complaints are few and far between,” Ehrlich said.
“If things get really crazy, if it picks up, we’ll expect to see a shortage of (subcontractors) and unlicensed people start creeping in. We’ll start to see complaints pick up again.”
Andy High, staff vice president of government affairs for the Central Oregon Builders Association, said the organization focuses on giving consumers information they need to ensure they choose reputable contractors. When complaints arise, mediation may resolve conflicts between homeowners and contractors faster, he said.
“We like to stress that the more that the consumer researches the contractor, (the better),” High said. “If (contractors) don’t want to give references, hand over the license or show the bond, you need to be cautious.”
Policing job sites against unlicensed contractors is part of the Construction Contractors Board’s mission. For example, a CCB sweep of 99 job sites this week in Eastern and Central Oregon turned up 19 violations, Jessup said.
Working without a contractor’s license may draw a $1,000 fine on the first offense, and $5,000 for each subsequent offense. Unlicensed work that damages property may draw a $5,000 fine immediately, he said.
Nearly 400 complaints against unlicensed contractors advertising on Craigslist were filed between January and June, Jessup said.
“It’s a big issue,” he said. “Especially with places like Craigslist, where they’re advertising but not licensed.”
— Reporter: 541-617-7815, email@example.com
Editor’s note: This story has been corrected. Information from Jeff Hall, Deschutes County Circuit Court trial court administrator, has been removed.
The Bulletin regrets the error.