Condo Smarts: Is bonding worth the investment on major project?

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A valuable business practice to consider: If contractors or consultants can't qualify for bonding or provide credible insurance for construction and liability, why are you hiring them?

Dear Tony: Our strata is about to proceed with a membrane repair that is estimated around 2.5 million. We have exercised as much prudence as possible. As we are negotiating the contracting process the issue of bonding has come up. Our council is divided over the issue, as we are trying to minimize cost but don’t want to reduce our exposure to liability. We get mixed answers from our consultant and property manager to verify the value of bonding.

Sat Harwood of Lesperance Mendes Lawyers explains “Construction bonds can be grouped into two major categories: 1) Performance bonds which help secure the performance of the contract by the general contractor, and 2) labour and materials bonds which help secure payment for work done by sub-trades, and therefore reduce the risk that liens will be filed on your property. Construction bonds are an important safety measure for owners entering into larger construction projects.

As volunteer council members we rely on our professionals to advise us to make the most prudent decisions. There are occasions where a strata council has to make decisions that affect cost, timing and material choices. Our obligation is to replace like for like when it comes to standards and values.

 

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