CONDOCENTRIC: Would You Like Fries With That?

Unfortunately it is not the exception in practice that we are asked to review contracts and other agreements on very short notice, often with the instant expectation that we will simply state that all is well. To practice in this way is irresponsible on the part of the lawyer, and unrealistic on the part of the client. Our strict practice is that we will not practice in this way, and if necessary and at the risk of compromising the working relationship, we will push back to ensure the work is done properly.

Review of the new CCDC Stipulated Price Contract is a prime example. While it is called a standard form contract,

1. it is now newly drafted;
2. it can be subject to much modification; and
3. it should be modified in certain instances to best protect the Condominium Corporation. In short, there is nothing “standard” about it.

The new CCDC 2 Stipulated Price Contract embodies approximately 1,600 changes in substance and form over the previous CCDC agreement. Given the age of the contract and how the construction industry had seen the old version in play, it was time for a redraft. The new version is more logical and cleaner but it also creates certain new obligations for the parties. It is important to remember for Condominium Corporations that the CCDC contract does not contemplate automatically the incorporation of material documents such as the Declaration, By-laws and Rules. Here are some of the more important changes:

• Interest on overdue accounts is now at the bank's prime rate, plus 2% for the first 60 days and 4% over the prime rate after 60 days.
• Notice may now be given by fax and e-mail.
• Many of the definitions have been updated, clarified and simply corrected to deal with the new realities of the construction industry.
• The responsibilities of who pays for tests to be conducted on the project have been revised.
• Specific shop drawings must be listed in the construction documents.
• A change order is required if the unit owner wishes to request the speeding up of the time to complete.
• If there is to be a change order, the additional costs that are to be included by the contract are specified in significant detail in the new standard contract. The percentage of mark up for profit and overhead is to be added to those costs.
• The provisions regarding delay are clarified and timely notice must be given by one party to the other along with particulars as to cost.
• Provisions dealing with toxic and hazardous substances have been set out in a new form to make it consistent with new developments in occupational health and safety.
• The new contract attempts to clarify responsibility for obtaining government approvals, permits, licenses, inspections and certificates.
• The insurance requirements have increased the minimum liability coverage to $5,000,000. There are now significant changes to the indemnification, waiver of claims and warranty claims setting out specific time limitations for which claims can be made or whether they are waived.

Thus, it is important to have the contract reviewed in a timely manner that allows for counsel to make proposed changes for implementation well before the construction project is to get underway.  Accordingly, the Condominium Corporation with its property manager must ensure adequate time is provided to the Condominium Corporation to ensure the contract is reviewed and amended without jeopardizing the work schedule.

From "Common Elements” - Fall 2008

All of the information contained in this article is of a general nature for informational purposes only, and is not intended to represent the definitive opinion of the firm of Elia Associates on any particular matter. Although every effort is made to ensure that the information contained in this newsletter is accurate and up-to-date, the reader should not act upon it without obtaining appropriate professional advice and assistance.

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