The Dangers of Hiring Unlicensed Professionals

Stephanie L. Sutherland, B.A.S.(Hons.), LL.B

Cohen Highley LLP

While it may be tempting for a Condominium Corporation to hire unlicensed professionals – they are, after all, usually the less expensive alternative – there are several reasons why the lower cost is not sufficient to justify the potential dangers of dealing with unlicensed professionals.

Competency

While this first point may seem obvious, it is still important. Generally speaking, if a profession has a licensing option, that means there are some qualifications or competencies that an individual must demonstrate in order to obtain a licence within that profession. Some regulatory organization has assessed that person’s education, experience, and/or ability, and found it to be sufficiently satisfactory to issue a licence to that person.

The fact that an individual is not licensed does not automatically mean that they do not have the necessary education, experience, or ability; however, the Board members making the hiring decisions would generally have no way of knowing whether that person is qualified or not, without the benefit of the relevant regulatory organization having carried out its own assessment. continued…

Insurance

In many, if not all, of the licensed trades and professions with which a Condominium Corporation may deal, the holding of proper insurance (including workplace safety insurance) is one of the requirements that an individual must satisfy in order to obtain a licence.

There are many ways in which a Condominium Corporation could incur significant financial damages as a result of a hired professional not being properly insured: an employee of that individual could be injured while working on the Condominium’s property, or the work done by the unlicensed and uninsured professional could end up not meeting legal requirements, to name just a couple of potentially dangerous situations. If a professional hired by a Condominium Corporation is not properly insured, the Condominium could potentially be ‘on the hook’, so to speak, for damages that would otherwise have been covered by a properly insured and licensed professional’s insurance.

The issue of insurance leads to the third, and perhaps most important, reason why Condominium Corporations should avoid hiring unlicensed professionals: due diligence and section 37 of the Condominium Act.

Due Diligence and Entitlement to Rely on Professional Opinions – Section 37 of the Condominium Act, 1998, SO 1998, c 19

Pursuant to section 37(1) of the Condominium Act, 1998 (the “Act”), directors and officers of a Condominium Corporation are required to (among other things) carry out due diligence when exercising their duties, including the hiring of professionals on behalf of the Condominium Corporation.

Section 37(3) of the Act states that a director will not have breached his or her duty of due diligence if the director has, in good faith, relied upon the report or opinion of a professional. “ ...it is relatively easy to create fake names and business cards when an individual is operating outside of the licensed realm of their profession. ”

If a Board of Directors makes the decision to hire a professional, and a problem arises along the way, the Board members may have a difficult time arguing that they exercised their duty of due diligence and relied in good faith upon the opinion of that professional, if that professional is not properly licensed under the relevant regulatory organization. Once a director or officer has been found to have breached the duty of due diligence, that director or officer will not be covered by their Directors’ and Officers’ Insurance, and could end up being personally liable for financial damages if the Condominium Corporation has a legal action brought against it as a result of problems arising from the unlicensed professional’s work for the Condominium.

Licensed Professionals are ‘Locatable’

Unfortunately, a common problem that arises in a legal action is the inability to locate a party. You can sue someone and obtain a Judgment against them, but if you can’t find them, there is little likelihood of you being able to enforce that Judgment and actually recover your damages. One benefit to hiring a licensed professional is that as soon as an individual is licensed, there is a formal record of that individual, their contact information, and their business interests. An individual is unlikely to be able to give untrue or inaccurate information about him- or herself and the business to a regulatory organization, whereas it is relatively easy to create fake names and business cards when an individual is operating outside of the licensed realm of their profession.

If a Condominium Corporation does hire a professional and a problem does arise which requires legal action by the Condominium, the chances of successfully obtaining and enforcing a Judgment increase significantly when dealing with a properly licensed and on-record professional.

Summary

In summary, there are several potential dangers associated with hiring an unlicensed professional, and the damages that a Condominium Corporation or Board of Directors could incur if a problem were to arise with an unlicensed professional far outweigh any savings to be had. A quick review of most Canadian Condominium Institute publications will provide a list of professionals who are not only properly licensed, but also are aware of the specific needs of Condominium Corporations. Hiring a licensed professional with experience in the condominium industry will provide the peace of mind of knowing that the best, and safest, decision has been made for your Condominium Corporation.

Stephanie L. Sutherland, B.A.S.(Hons.), LL.B., is a lawyer with Cohen Highley LLP in their Kitchener office. Stephanie practices in the area of condominium law, helping condominium corporations, Board, property manager, and unit owners to navigate disputes that arise within their condominium communities. Stephanie can be reached at ssutherland@cohenhighley.com. This article was prepared with the generous assistance of Michelle L. Kelly, B.Comm., LL.B.