What Condominium and Property Managers Need to Know About Construction Contracts: A Practical Guide to the CCDC 2 Contracts

If you are a condominium board member or a property manager in Ontario, you are already familiar with the constant need for repairs, upgrades, and capital projects. Whether it is replacing a roof, repairing balconies, updating a mechanical system, or waterproofing a garage, these projects are part of your legal responsibility. Under the Condominium Act, 1998, the condominium corporation is required to maintain the common elements in a state of good repair and to repair them after damage. This obligation appears clearly in section 89 of the Act. Section 90 adds another layer by requiring the corporation to replace components when necessary. These duties are not optional and failure to meet them can lead to liability, complaints from unit owners, and long-term financial consequences.

Once your consultant or engineer has scoped the project and prepared the specifications, the next critical step is hiring a contractor. But before the first shovel goes into the ground or the first scaffold is erected, you need a properly structured construction contract. One of the more commonly used form for major condo construction projects in Canada is the CCDC 2, a standard form contract published by the Canadian Construction Documents Committee. It is designed to govern fixed-price construction projects, which are the most typical type for condo work. While it is a strong starting point, the CCDC 2 is not customized for condominiums. That is where legal review becomes crucial.

The CCDC 2 sets out the key terms of the relationship between the owner and the contractor. In this context, the condominium corporation is the owner. The contract includes the price, the timeline, the payment structure, the rules for changes, and the dispute resolution process. It also assigns responsibilities to the consultant, who usually acts as the payment certifier. This means no payment is made to the contractor unless the consultant confirms that the corresponding portion of the work is complete. This offers some financial protection, but it does not replace the need for careful legal oversight.

One of the most important features of the CCDC 2 is that it assumes the work will be completed for a single, fixed price. This gives the board some predictability. However, the protection only works if the scope of work is clearly defined. If drawings are vague or incomplete, the contractor may argue that certain items were not included, leading to change orders and additional costs. Legal counsel can review the contract to make sure that any changes must be approved in writing by the board and that no costs are added unless those steps are followed.

Change orders are one of the most common sources of cost overruns. Under the standard CCDC 2, the contractor can propose changes in scope, and if approved by the consultant and the owner, the price is adjusted. But many boards discover after the fact that change orders were approved informally or verbally on site. Legal review can insert provisions that prevent unauthorized changes and require that any change must be approved by the board in writing. This keeps control of the project where it belongs, with the board of directors acting on advice from professionals.

Another key area is payment. The contract sets out a monthly progress payment structure, subject to a ten percent statutory holdback under Ontario’s Construction Act. This holdback is released after a certain period provided no liens are registered. However, Ontario’s prompt payment laws now require payments to be made within specific timeframes. If these timelines are not followed, the corporation could face adjudication or other claims. Legal review ensures that the CCDC 2 terms align with the Construction Act and that the payment schedule is clearly understood by all parties.

Warranty provisions also deserve special attention. The standard CCDC 2 includes a one-year correction period for defects. For many condominium projects, especially those involving waterproofing, roofing, or structural components, one year is not enough. Legal counsel often negotiates extended warranties or includes specific language requiring the contractor to pass on any manufacturer’s warranties. These simple changes can provide years of additional protection to the corporation and ultimately reduce long-term maintenance costs.

Delay clauses are another area where legal input makes a difference. The CCDC 2 allows contractors to request time extensions for delays beyond their control, such as severe weather or material shortages. However, the standard language is broad and open to interpretation. Legal counsel can narrow this language to clarify that only truly unforeseeable delays are covered and that poor planning, subcontractor issues, or supply chain failures are not valid reasons for extending the contract schedule. This protects the corporation from unjustified delays and helps hold the contractor accountable.

The contract also contains important provisions about insurance. While the CCDC 2 requires the contractor to maintain liability insurance and other policies, it does not automatically ensure that the condominium is properly named as an additional insured. Legal review typically involves confirming that the condominium corporation is included on all insurance certificates and that the coverage amounts are sufficient for the scope of the work. In larger projects, the lawyer may also coordinate with the corporation’s insurance broker to make sure there are no gaps in coverage between the contractor’s policies and the corporation’s existing property insurance.

Dispute resolution under the CCDC 2 begins with a decision by the consultant. If the issue cannot be resolved, it may proceed to mediation, arbitration, or adjudication depending on the nature of the dispute. Legal counsel often customizes these provisions so the condominium corporation retains control over how and when disputes are escalated. For example, the lawyer may revise the contract to allow the board to require mediation before arbitration or to include a mandatory cooling-off period. These provisions may seem small, but in the middle of a dispute, they can prevent unnecessary legal costs and help preserve relationships.

One of the more technical but equally important sections is the indemnification clause. The standard wording may not cover all situations that condominiums face, especially when work takes place in occupied buildings. Legal counsel can expand this clause to ensure that the contractor is responsible for any damage caused to units or common elements during construction, and that they must restore or pay for anything that is affected by their work. Without this language, the corporation could be left chasing the contractor after the fact or absorbing repair costs themselves.

Legal counsel also reviews termination clauses. If the contractor defaults or fails to perform, the corporation may need to terminate the agreement and hire a replacement. The CCDC 2 includes default termination provisions, but these may need to be expanded to reflect the unique risks faced by condominiums. For example, legal counsel may include language that allows the board to suspend work if owners raise safety concerns, or to delay the start of work without penalties if funding or financing is delayed.

Ultimately, using the CCDC 2 without legal review is like wearing a suit off the rack. It may fit, but it probably needs tailoring to serve you properly. Every condominium project is different. Some are small and straightforward, while others are complex and highly disruptive. The terms of your contract should reflect that. Legal counsel ensures that your corporation is not exposed to unnecessary risk and that the contract terms are not just industry standard but customized to protect the people you represent.

Condominium corporations exist to maintain shared property and protect unit owners’ investments. Construction projects represent some of the most significant spending decisions a board will ever make. Making sure those projects are governed by a fair, balanced, and customized contract is one of the most important steps in fulfilling your duty as a director or manager. The CCDC 2 is a powerful tool, but like any tool, it works best when it is used correctly and adjusted by someone who understands how to make it fit the job.  In construction, the blueprint builds the project, but the contract protects the people - make sure yours is built to last.