Sunday, March 27, 2011

Condominium Unit Owners Comprehensive Form Insurance

Owners of condominium units are wise to obtain Condominium Unit Owners Comprehensive Form Insurance.  It is important to distinguish this type of insurance from the insurance which the condominium corporation is obliged to maintain by the Condominium Property Act and by the bylaws of the condominium corporation.  The insurance which condominium corporation's obtain usually do not extend to include the "improvements" made by owners to their individual units nor include any of the personal property of the owner of the individual condominium unit.  Moreover, Condominium Unit Owners Comprehensive Form Insurance can extend to protect owners of units from losses which result from fires.

In this regard I recently met Karen Sandeman of Glenmore Insurance Brokers Ltd.  at a condominium corporation's Annual General Meeting.  Ms. Sandeman is, without limitation, very knowledgeable in the area of condominium owner's insurance.  Ms. Sandeman pointed out that in addition to covering owner's improvements and owner's personal property, among other things, that Condominium Unit Owners Comprehensive Form Insurance should provide coverage if a special assessment is imposed to cover a short fall in condominium corporation insurance as a result of damages due to fire.  That is, if the amount of insurance obtained by the condominium corporation is insufficient to rebuilt the units after a fire then the insurer providing condominium owner's insurance would top up the shortfall which is imposed by a special assessment on the owners in the subject condominium corporation.  If the owners in the recent condominium fires in Calgary had this form of insurance these owner loss would have been reduced if not eliminated.

I would highly recommend that any owner looking to find a comprehensive condominium owner's insurance policy consider contacting Ms. Sandeman or their own insurance agent.  As I indicated above, to be without a comprehensive condominium owner's insurance policy is to risk eventualities which no owner would want to risk.

Morrison Hershfield; Presentation of Michael Ball to CCI-SAC on the Role of the Consultant in a Major Condominium Capital Project

Every once in a while the Canadian Condominium Institute - South Alberta Chapter will host a lunch speaker whose presentation is stellar.  This happened on March 23, 2011 when Michael Ball of Morrison Hershfield presented on the Role of the Consultant in Major Condominium Capital Projects.  Mr. Ball took those in attendance through the story of a very poorly built multi-unit condominium which had a total breakdown of the condominium's building envelope.  This multi-million dollar project exemplified the value in involving a consultant/engineer knowledgeable in the area in which the capital project is being done to avoid the ugliness and cost of capital expenditures being done improperly.  Without limitation, Mr. Ball indicated that an engineers as consultants could provide:
  1. Investigative services with respect to leakage (roof/walls/below grade/windows), premature deterioration of cladding/roofing, structural capacity, warranty claims, and indoor air quality (mold);
  2. Detailed design (technical specifications and drawings, best-practice design);
  3. Construction services (tendering, contract administration, quality assessment and quality control)
  4. Litigation support and expert witness services; and
  5. Non biased third party facilitation between owners and contractors.
Without limitation, Mr. Ball noted that no project should proceed without detailed technical drawings being produced.  On its own insisting that a set of instructions - detailed technical drawings - be provided and followed creates accountability which otherwise may not exist.  Notwithstanding this plethora of support services which an engineer can provide, many condominium corporations make large capital expenditures without any assistance from an engineer/consultant.  Instead condominium corporations, to save money, sometimes rely entirely on the services of a self interested contractor and unfortunately sometimes to their detriment.

In the writer's opinion the most important distinctions between many contractors and engineers are the fact that engineers go through a rigorous education and engineers are professionals who are obliged by their professional organization, APEGGA, to act ethicallyLawyers are similar bound to act ethically.  The Law Society of Alberta has endorsed a Code of Conduct which all lawyers must abide by in their relationships with their clients and with society at large.

Consultants without affiliation with an organization have no ethical obligation imposed upon them and may have insufficient education in the matters subject of the capital improvement.  It is imperative that condominium corporations ascertain this before proceeding with a capital project.  This is the heart of why I described contractors as potentially "self interested".  A less than knowledgeable contractor may recommend an intervention to a condominium corporation without a substantive basis for doing so simply because the contractor wants or needs the work or is ignorant.  Without an affiliation with a professional organization imposing an ethical obligation on the contractor a condominium corporation is relying entirely on the individual conscience of the contractor in respect of whether the intervention is necessary or if necessary if the contractor is sufficiently educated and skilled enough to conduct the capital improvement. 

The lesson demonstrated by Michael Ball to condominium corporations is to not be "penny wise and pound foolish" when it comes to dealing with contractors.  Obtaining the assistance of an engineer or similarly knowledgeable and skilled consultant will dramatically lessen the likelihood that condominium corporations will be taken advantage of by unscrupulous contractors.