Legal

March 30, 2022 Published by London and Area Chapter - By Josh Gooding, Olivia Valiquette, Joe McGowan

Managing Your Common Elements Warranty

From the CCI Review 2021/2022-3 March 2022 issue of the CCI London Chapter

Managing your Common Elements Warranty

Welcome to your brand-new condominium! You’ve settled in and the Builder has turned over the complex to your new Board of Directors who are now responsible for the corporation’s operations. As a new Board, you are responsible to retain a professional engineer or architect to conduct a performance audit of the common elements under the Condominium Act. Common elements are the shared areas located outside of the boundaries of individual units and can include the building structure, roofs, walls, windows, doors, amenity rooms, roadways, parking garages, landscaping, etc., as stated in your condominium declaration. The purpose of the performance audit is for the auditor to provide a professional opinion to whether any deficiencies exist in the common elements after construction has been completed which may give rise to a claim under the Ontario New Warranties Plan Act.

Condominium Common Element Warranty Coverage

Tarion is responsible for administering the Ontario New Home Warranties Plan Act, which outlines the warranty protection that new home and condominium builders must provide, by law, to their customers. Common elements are protected with one-, two- and seven-year warranties. The warranty coverage periods for the common elements are measured from the day the condominium corporation is registered. It is important for condominium Board of Director’s to be educated on warranty coverage to properly manage the warranty resolution process. Note, vacant land and common element condominiums do not have this warranty coverage.

Period	What’s Covered:	What’s not Covered:
First Year	Defects in materials and workmanship. Ontario Building Code violations. Unauthorized substitutions. Defects that cause the home to be unfit for habitation	Normal wear and tear. Normal shrinkage of materials. Settling soil. Secondary damage to personal property. Damage from improper maintenance. Alterations, deletions, or additions made by the owner. Damaged from an act of God. Damage caused by municipal services or other utilities.
Second Year	Water penetration through the basement, foundation and building envelope. Defects in the electrical, plumbing and heating delivery distribution systems. Detachment, displacement, or deterioration of the exterior cladding. Ontario Building Code Health and Safety violations.	Same as first year coverage.
Seven Year	Defects that result in failure of a load-bearing portion of the building. Defects that materially and adversely affect the use of the building for the purpose of which it was intended	Same as first year coverage.

Making a Common Elements Warranty Claim

The Condominium Act requires that a performance audit of the common elements be conducted between six and ten months following the registration of the condominium. The audit determines if there are performance deficiencies in the common elements. The audit only deals with common element issues; unit owners are responsible for filing their own warranty claim for deficiencies in their individual units. The first step to ensure your warranty is protected, is for the corporation to retain a qualified engineer or architect to complete the audit. Your Property Manager will have recommendations for qualified performance auditors.

The performance auditor will complete a review of the turnover documents, conduct a survey of the unit owners, and complete a comprehensive site review of the condominium common elements. The objective of the survey is to determine if the unit owners have observed any evidence of damage or defects in the common elements. While on site, the auditor will identify any discrepancies between the turnover documents and as-built conditions and review reported concerns relayed by unit owners for the common elements. Identified deficiencies from site reviews and turnover documents will be compiled and added to the Performance Audit report and Tarion Tracking Summary (deficiency list). All performance audit documents should be submitted to Tarion before the first anniversary date of registration. It is crucial that the corporation tracks warranty deadlines as Tarion will not warrant late claims. The Tarion claims process for common elements is outlined in Tarion’s Registrar Bulletin No. 02 Claims Process – Condominium Common Elements, which can be found at Tarion.com.

In addition to the first-year performance audit, the corporation can also complete review for the two- and seven-year warranties for enhanced protection; however, these are not mandated in the Condominium Act.

Managing the Builder Repair Period

The first anniversary of registration marks the start of the “Initial Builder Repair Period”. This is an eighteen month period that the builder is expected to rectify deficiencies identified in the performance audit. The first step after the performance audit has been submitted is for the corporation to assign a Designate by submitting an appointment of designate form to Tarion. The Designate is an individual selected by the Board of Directors to act as the contact between the corporation and Tarion, manage warranty timelines, update the performance audit tracking summary (deficiency list), and drive the warranty resolution process for the corporation.

Corporations can adopt different warranty resolution strategies for managing the initial builder repair period. Some Boards will act as the Designate, while others will assign their property manager or performance auditor as the Designate. Managing the warranty resolution process is challenging and requires in depth knowledge of Tarion warranty processes and timelines, the cost risks associated with each deficiency, and strategies for navigating the warranty process with Owners, Builders and Tarion.

To set the stage for a successful initial builder repair period, corporations should coordinate a meeting with Tarion to visit the complex and chair a meeting with the Board, property manager and the builder. This is a good opportunity for Board Directors to be come educated on the warranty resolution process and to set expectations with all parties for the next eighteen months.

Periodic updates, at least every 90 days are required during the initial repair period from both the condominium corporation and the builder. The updates from the condominium corporation are managed by the Designate and include reviewing and responding to repairs completed by the builder. Responses include accepting completed repairs, rejecting unacceptable repairs, and completing further investigation to substantiate claims. Typically, the Board and property manager will review smaller deficiency repairs (e.g., interior finishes or cosmetic issues) and will use engineering consultants in reviewing larger issues (e.g., code compliance, items requiring an engineering judgement or hard-to-access areas).

Conciliation

If there are unresolved deficiencies at the end of the eighteen month “Initial Builder Repair Period”, the corporation may complete a “Condominium Corporation Request for Conciliation” from Tarion to determine whether the remaining items are covered by the warranty. The condominium corporation’s request for conciliation can be made at any time within 60 days following the end of the initial builder repair period. Once a request for conciliation has been made, the builder then has an additional ninety days to address all the outstanding items during the “Pre-Conciliation Repair Period”. If the builder does not resolve the outstanding items, Tarion will initiate the “Conciliation Process” and conduct an inspection. Any items Tarion deems warrantable will begin the “Post-Conciliation Repair Period” where the builder has up to ninety days to again resolve these items. Should any outstanding warrantable items exist after this phase, then Tarion will conduct a claim inspection and work directly with the corporation to complete the repairs and settle the claim.

Conciliation is a challenging process for all parties involved and it is best to encourage a collaborative relationship between the Builder and Corporation to resolve claims during the “Initial Builder Repair Period”. In some cases, Builders can be uncooperative, and it is critical for the corporation to protect your claim and follow the Tarion process.

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If you have any questions, please contact
Josh Gooding (jgooding@edisonengineers.ca) or Olivia Valiquette (ovaliquette@edisonengineers.ca).

Edison is a communication-focused professional engineering and project management firm specializing in the repair and restoration of existing buildings. Over 60% of our services are for Condominiums. We specialize in Restoration work and leverage that knowledge and experience to help our clients through the Performance Audit and Tarion warranty processes.

For more information or technical references please contact Joe McGowan at jmcgowan@edisonengineers.ca , or 519-878-5177 at your convenience.