(1) At least 10 days prior to instituting any litigation or administrative proceeding to recover damages under ORS 94.630 (1)(e)(E), the homeowners association shall provide written notice to each affected owner of the associations intent to seek damages on behalf of the owner. The notice shall, at a minimum: (a) Be mailed to the mailing address of each lot or to the mailing address designated in writing to the association by the owner; (b) Inform each owner of the general nature of the litigation or proceeding; (c) Describe the specific nature of the damages to be sought on the owners behalf; (d) Set forth the terms under which the association is willing to seek damages on the owners behalf, including any mechanism proposed for the determination and distribution of any damages recovered; (e) Inform each owner of the owners right not to have the damages sought on the owners behalf and specify the procedure for exercising the right; and (f) Inform the owner that exercising the owners right not to have damages sought on the owners behalf: (A) Relieves the association of its duty to reimburse or indemnify the owner for the damages; (B) Does not relieve the owner from the owners obligation to pay dues or assessments relating to the litigation or proceeding; (C) Does not impair any easement owned or possessed by the association; and (D) Does not interfere with the associations right to make repairs to common areas. (2) Within 10 days of the mailing of the notice described in this section, any owner may request in writing that the association not seek damages on the owners behalf. If an owner makes such a request, the association may not make or continue any claim or action for damages with regard to the objecting owners lot and shall be relieved of any duty to reimburse or indemnify the owner for damages under the litigation or proceeding. (3)(a) A homeowners association may only initiate or intervene in litigation or an administrative proceeding under ORS 94.630 (1)(e)(E) to recover damages for a claim regarding a matter that results from a defect as defined in ORS 701.560, or damage arising from a defect, if approved by the board at a meeting held pursuant to ORS 94.644. (b) The meeting held under paragraph (a) of this subsection must occur: (A) At least 90 days after the homeowners association first sends a notice described in paragraph (c) of this subsection to each owner; (B) After sending a second notice by first class mail with certificate of mailing; and (C) At least 15 days after sending a third notice by first class mail. (c) In addition to the contents described in subsection (1) of this section, a notice given under this subsection must: (A) State that the association believes that a defect in the common property exists; (B) Provide a detailed description of the defect; (C) Identify the parties the association considers responsible for the defect; (D) Include the names of each board member and a method by which each member may be contacted electronically or by mail; and (E) Include a warning in substantially the following form: ______________________________________________________________________________ WARNING: If the board decides to proceed with the proposed litigation or administrative proceeding, your ability to sell your lot in this planned community may be limited while the litigation or proceeding is pending. If you have opinions or information that you wish the board to consider in making its decision, you are advised to contact the board promptly. ______________________________________________________________________________ (d) The association shall send a copy of the notice by certified mail to each person identified in the notice as a party the association considers responsible for the defect. The requirement for sending notice under this subsection is in addition to the notice of defect requirement in ORS 701.565 and does not initiate the procedure described in ORS 701.560 to 701.595.
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