b'INSURANCE COLUMNCONDO RISKS & TIPS for Design ProfessionalsBy Rob McLeod, Metrix Professional Insurance Brokers Inc.Article provided by Professional LiabilityBut, unfortunately, these multi-residentActivities such as construction observation Agents Network (PLAN). complexescondos specificallyare by farare often cut from the designers scope, the riskiest type of structure to design whenand this increases the risks substantially.The following material is provided for infor- it comes to professional liability.mational purposes only. Before taking any 4. Below-par construction. Just as devel- action that could have legal or other impor- WHATS ALL THE opers may slash design services from the tant consequences, speak with a qualifieddesigners scope of work, they may also professional who can provide guidance thatWORRY ABOUT? scrimp on materials and construction considers your own unique circumstances. Why do condominium projects present suchservices. Its not unusual for developers a conundrum for designers? Here are ourand their contractors to demand material R esidential design and construc- top 10 worries: substitutions that are cheaper and of lower quality. They are quick to value tion is booming across many1.Highly leveraged developers. Notengineer the project as a cost-cutting parts of the nation. A recov- all condominium developers are highlyeffort, which usually takes further from ering economy and shortageleveraged, but a disproportionate numberthe quality of construction. That leads to of housing has led to goodare. Its not surprising to discover that aconstruction defects and claims.times for home designerscondo developer operates through a shell and builders. corporation and, should they get into5. Duplicative construction, dupli- Within the residential sector, condominiums,financial trouble or face a claim, there arecative liabilities. With many large townhouses and similar multi-residentfew assets to be found. This often meanscondominium projects, a lead architect complexes have been in particularly highdesigners, contractors and others will beis hired to design a few basic condo-demand. Baby boomers are downsizing asbrought into any dispute or suit regardingminium units and those designs are then they reach retirement and seek a smallerthe project.constructed many times over throughout living space and a low-maintenance environ- the complex. This results in a low fee for ment. At the same time, millennials are 2. Low design fees. To save costs andthe designs and substantial liabilities if a choosing multi-unit housing for their initialmaximize profits, developers often lookdesign or construction error is replicated real estate purchases due to the high cost offor low-bid designers and contractorsthroughout the entire project.single-family homes and the many amenitiesto work on their projects. That means residential complexes can provide. design fees are low and the designers 6. Unsophisticated buyers with unre- profit margins squeezed. The risk versusalistic expectations. As mentioned For architects and engineers, this construc- reward ratio can be way out of balance. previously, elderly retirees and young tion boom presents a double-edgedfirst-time home buyers are two of the sword. Many residential designers are 3. Narrow scope of services. Condoprimary markets for condominiums. finding a big demand for their services,developers often cut costs by only payingThese unsophisticated real estate inves-which means added business and income.for the most basic of design services.tors are often wooed by the developers 10 BCBEC ELEMENTSA BCBEC PUBLICATION'