Step 1: Defining the Project Scope and Requirements
Before hiring a contractor, the condominium manager must clearly define:
The project scope – What work needs to be done?
Budget constraints – How much has been allocated for the project?
Project timeline – What are the expected start and completion dates?
Compliance requirements – Does the work require permits or approvals?
All project details should be documented to ensure transparency and clarity when obtaining bids.
Step 2: Obtaining Board Approval for Contractor Selection
A condominium manager cannot hire a contractor without board approval unless otherwise specified in the management contract. The approval process typically involves:
Presenting multiple bids (at least three) to the board.
Providing an evaluation of contractor qualifications, licensing, and insurance.
Confirming funding availability (operating fund or reserve fund).
Documenting the board’s decision in meeting minutes.
When is Board Approval Mandatory?
Board approval is always required for:
Major repairs or capital projects (e.g., roof replacements, elevator repairs).
Long-term service contracts (e.g., landscaping, security).
Contracts exceeding financial thresholds set in the corporation’s bylaws.
Exceptions Where Managers May Act Independently
A condominium manager may be permitted to hire contractors directly for:
Minor repairs and maintenance within a pre-approved budget.
Emergency repairs where waiting for board approval could cause further damage.
Step 3: Drafting and Signing a Legally Binding Contract
Once a contractor is selected, a formal written contract must be drafted. This document protects the condominium corporation by outlining:
Scope of Work and Deliverables
Exact details of the work to be completed.
Materials and equipment to be used.
Expected completion date.
Payment Terms and Pricing
Total project cost with a breakdown of labor and materials.
Payment schedule (e.g., deposits, milestone payments, final payment upon completion).
Holdback provisions (e.g., retaining a percentage of payment until final inspection).
Legal Protections and Compliance
Proof of liability insurance and Workers’ Compensation Board (WCB) coverage.
Warranties and guarantees for materials and workmanship.
Process for handling disputes or contract breaches.
According to the Real Estate Act Rules, condominium managers must ensure that all contractual agreements are in the best interest of the condominium corporation and free from conflicts of interest.
Step 4: Setting Up Payment Schedules and Performance Benchmarks
Establishing a Payment Schedule
To prevent financial risk, condominium managers should ensure:
Payments are linked to project milestones rather than upfront lump sums.
The board retains a holdback amount until final work is inspected and approved.
Invoices are reviewed for accuracy before issuing payments.
Monitoring Performance and Contract Compliance
The manager must:
Conduct regular inspections to ensure work meets contract specifications.
Keep the board informed about project progress and any delays.
Address deficiencies before approving final payment.
If contractors fail to meet contractual obligations, the condominium manager should document the issue, notify the board, and enforce contract terms.
