Condo Client

Condominium corporations are a fertile source of work for professional engineers. They also present some important challenges.

In the first year following its registration, a newly established condominium corporation will retain a professional engineer to prepare a Technical Audit of their building. The audit is a study of as-built drawings, plans and specifications, followed by a detailed inspection of the as-built structure. The result is a report listing building deficiencies.

Most condominiums are new construction, but in many of Canada’s cities conversions are popular. Old factories become funky lofts; commercial buildings are transformed into residences. Here too the condominium corporation is required to have a technical audit to assess the builder’s compliance with the warranties or the common elements in the agreements of purchase and sale.

In Ontario, the Ontario New Home Warranty Program reinforces builder warranties with a statutory warranty. The technical audit is filed with the program and it constitutes the ceiling of items for which the program will assume responsibility.

In all provinces the technical audit is given to the board of directors of the condominium corporation (or the council of a strata corporation). The board then opens negotiations with the developer/builder to have the deficiencies fixed. The corporation’s engineer often participates in the negotiations, and monitors the repairs.

The new Condominium Act in Ontario requires a corporation to commission a comprehensive Reserve Fund Study, again from a professional engineer. The study analyses the life span and cost of repairing or replacing all the major components of the physical structure. It also charts a funding plan, showing the corporation what contributions must be made to the reserve fund in order to undertake the anticipated repairs and maintain a positive balance over a 30 year period. The study must be updated every three years.

The legislation of other provinces does not mandate that condominum boards commission engineers to prepare a reserve fund study, but it does require them to ensure there is an adequate contingency fund for major repairs. This work often requires engineering input.

And, of course, when the repairs are to be undertaken, a professional engineer is again required, to provide specifications, review the proposals and oversee the work.

Condominium corporations are valuable clients, entitled to an engineer’s best skills and attention. But they also have special needs, and present important communication and ethical challenges for the engineer.

Often, the condominium board has little experience with home ownership, let alone with buildings the size of large highrises with elaborate recreational amenities. The client is the condominium corporation, embodied in a board of directors. Each member of the board may have a different set of priorities and concerns. The property manager, charged with taking care of the day to day financial and operational matters, may be knowledgeable (and often is). He or she may have the board’s confidence, but his or her authority to give directions may be limited (and often is).

The board is elected by the unit owners, and answerable to them. Ordinary turnover on the board can lead to a change in the corporation’s priorities and direction; infighting within the board or the corporation can lead to the board being completely replaced or the property manager being changed — creating a brand new set of relationship issues for the engineer.

Some advice

Here are some guidelines for engineers to avoid some of the pitfalls in dealing with this type of client.

You are not working for the property manager, nor for any officer or individual on the board. You can take instructions only from the board, acting by resolution. This does not mean that every conversation must be with the board, at a board meeting. It does mean that there should be a written retainer, signed by the board. That retainer should set out precisely what the engineer is retained to do and what the cost will be, or how the cost will be determined. When a task is expanded, the new scope should be set out in writing, and signed off by the board.

As work on the assignment progresses, you should provide interim written reports. These need not be elaborate or lengthy; they can simply record site visits and summarize areas worked on. If you communicate orally, and only to the property manager or a member of the board, your message may not be getting through clearly.

In preparing the technical audit, the engineer should have at least two objectives: on one hand, you must ensure that you list every minor issue in the technical audit. You must make the list comprehensive to ensure that the building receives maximum coverage from the Ontario home warranty program and to ensure that every deficiency is covered by the vendor’s warranty in the agreements of purchase and sale.

On the other hand, the board will be overwhelmed by a document two inches thick detailing all that is wrong with the building. Consider providing a summary report that distinguishes between the cosmetic issues and any real problems. The summary cannot be sent to the warranty program or to the builder, and perhaps it should not be sent directly to the condominium board (as it would then be available to the developer in litigation). The summary should be sent to the corporation’s lawyer for transmission to the board, so that it may be protected by privilege (a legal doctrine that protects communications from disclosure in certain circumstances). The summary should give the board a broadbrush picture of the state of the building and any major issues.

Remember that you should ultimately be serving the owners of the building. You will encounter board members who are angry with the developer and want to sue him at any costs. Don’t be swayed by personal agendas. Does an arguable deviation from the building code really present a problem or not? In my experience, engineers are very careful about restricting their liability in any report. Yet they are often terrified of potential liability if they tell the client that in their best judgment a technical deficiency is probably not a problem. Part of your role, in my view, is to help the board focus on the real issues.

In your reports, focus on communicating effectively with lay people. While it’s important for any client that you explain technical issues well, I believe it is crucial for condominium boards. They are looking at spending a great deal of other people’s money to fix problems. They have to report back to their owners. Do your utmost to ensure that they understand the problem, and the solution. Use words, pictures, diagrams, sound effects, whatever it takes. And once again, follow up in writing.

These are by no means the only guidelines. In my experience, they are some of the most important.

Patricia Conway is a lawyer with Miller Thomson LLP in Toronto. E-mail pconway@millerthomson.ca