surprise levy: Overbudget project is causing property values to plummet
Tony Gioventu
Province
Dear Condo Smarts: A year ago, our strata council engaged a contractor to remove the landscaping and waterproof our parking deck and replant our grounds.
The project is still not complete, the costs have run over by 30 per cent and we’re now being asked to pay another special levy, which none of us can afford.
The whole point of seeking bids from different contractors was to find a reliable company for the project and to guarantee this mess wouldn’t happen. Now we’re left with plummeting property values because of the mess and the overruns, and the contractor won’t continue unless we pay another $200,000 advance.
One of the reasons that we chose this company was because they advertised that they were fully insured and fully bonded. That seems to have been totally for nothing.
How do we get out of this disaster?
— MK, Burnaby
Dear MK: You have two issues going on here: construction procedures and the bonding/insurance issue.
The first task is to get a competent construction manager to sort out the construction mess and at the same time have your lawyer review the contracts to find out if the contractor is meeting his agreed terms and conditions.
The sooner your council understands the scope of the work and the terms of the contract, the sooner you can put an end to the nightmare.
Just having contractors bid on a contract is not sufficient to protect your interests as a consumer, unless you have a qualified third party write the specifications for the scope of work.
Make sure the terms and conditions of the contracting process and the subsequent contract format are part of the bidding process.
I have yet to see the downside of sound, tendered specifications or well-negotiated construction management contracts.
When you publish competent specifications along with the contractual expectations, you will achieve a good level of security in the outcome of the project and what you end up paying.
Now for bonding and insurance.
There are many types of bonds. Construction bonds are basically insurance policies to protect you or the contractor in the bidding and performance of a contract.
All bonds have specific terms and conditions that must be in writing and should be reviewed as part of your contract process by your lawyer, before you issue tenders or sign the contracts.
Fidelity/employee bonds are often for employees or staff where there may be an issue around theft of money or products.
Once again, if the contractor claims his staff is fully bonded, get a copy of the bond to verify what it implies, the validity of the bond and who it protects.
The same conditions apply to the term “fully insured.”
Obtain copies of the insurance policy if the implication is that you, as the consumer, will be protected by the insurance, and find out if the insurance is valid, who it covers, what the limitations are, what the exclusions are and how you file a claim in the event you have to gain access to the insurance.
Any legitimate consultant or contractor will gladly provide verification of their insurance and bonding as part of the contractual process.
This is just a thumbnail summary of a complex part of the industry, so remember: Get everything in writing.
Verify accuracy and validity, and seek legal advice before you start the process. Whether your project is $25,000 or $2.5 million, do it right.
There is no protection in 20/20 hindsight.
Tony Gioventu is executive director of the Condominium Home Owners’ Association. E-mail: [email protected]
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