An Interview with an Insurance Adjuster
|Reno A. Contasti, P.Eng. CIP||RC Adjusting |
- Describe your educational background and qualifications.
I graduated from McMaster University in 1978 with a professional engineering designation. I have worked in the insurance industry for the past 32 years as a loss prevention consultant and independent insurance adjuster. For the past nine years, I have handled title claims. My other experiences include handling multi-million dollar commercial losses, builder's risk claims and assisting with hurricane catastrophe losses in the Caribbean.
- After moving in to their recently purchased homes, owners are discovering that renovations and repairs completed by the previous owners were done in a substandard fashion, often creating structural issues that need to be fixed. Why is this happening?
As we are all aware, there are speculators who will purchase a dwelling, complete renovations and then "flip" the property for a profit. These speculators try to minimize their costs wherever possible. While cosmetic renovations are usually completed to give the appearance of quality workmanship and to increase resale value, structural, plumbing and electrical components are usually substandard. Another cost saving shortcut is to complete renovations without the benefit of a building permit - to avoid the cost of the permit fees, permit plans are seldom prepared. Other cost saving measures may include using substandard material and labour.
- What can potential home buyers look for to help determine if work was done without a permit?
When potential home buyers are inspecting a property, they should be aware of any work that does not appear to meet standard construction features in Ontario. It is very difficult to verify if the structural components meet code requirements based on visual inspection only. However, if the heights of the rooms, doors or clearances above stairwells do not conform to the general construction features of a building, that should raise immediate concerns that the work may have been completed without a building permit. In addition, if stairs are not uniform rise and run, guards and railings are missing, the dwelling lacks smoke or carbon monoxide detectors or the floors are uneven, potential home buyers should be wary.
Other visual signs that could trigger concern would be the proximity of decks or structures to the property line, the lack of proper grading around an addition or the lack of heating in an addition.
An unfinished basement can provide important details with respect to the construction features of a home, such as information on the first floor structure, foundation walls and heating system. If plumbing or electrical wiring are exposed and the workmanship appears substandard, further investigation should be performed.
Usually the MLS listing will include information about renovations or additions to a property. Additions can be identified by noting different types of building materials used from the original construction of the home. This can include different trim, windows, drywall versus plaster finish or different types of exterior cladding. Once the potential home buyer identifies that renovations have been performed, they should always check with the vendor to verify whether a building permit was obtained and obtain copies of the permit documents for review.
Potential home buyers should always request, from the sellers, copies of the permit drawings that were submitted to the Building Department. If the sellers do not have the permit drawings, it is likely that a permit was never obtained.
- What is a Building Department work order, who issues them and why?
Whenever a Building Department is alerted to construction that is being performed without the benefit of a building permit, it will issue an Order to Comply, a Stop Work Order or an Unsafe Building Order.
If the construction is ongoing at the time of notification to the Building Department, it will usually issue a Stop Work Order until plans have been submitted, reviewed and the permit is issued. If the work is already completed when the Building Department discovers the infraction, it will usually issue an Order to Comply request that a building permit be applied for. Once the permit has been issued, the Building Department will normally require that the interior finishes be exposed for inspection. The Building Department may request that a qualified engineer or architect inspect the work and provide a report to verify code compliance. Exposure of the foundation wall and footings and drainage layer by excavation is usually required as part of the inspection process. An Unsafe Building Order is usually issued whenever the Building Department feels the building is unsafe for occupancy due to a serious structural issue.
- When should a building permit be applied for?
The majority of municipalities in Ontario provide information on their websites as to when building permits are required.
In general, a building permit is required for the following:
- constructing a new building or adding an addition to an existing structure;
- structural alterations to a building or change to a building's use;
- changes to partition or load-bearing interior walls;
- creating new openings for doors or windows, including a basement entrance;
- constructing a garage, balcony or deck;
- excavating a basement;
- constructing a foundation;
- modifying heating, plumbing or air conditioning systems; or
- installing or reconstructing a chimney, fireplace or wood burning stove.
A permit is generally not required for the following:
- wood decks with no roofs where the finished deck is not greater than 24 inches above the adjacent finished grade;
- an accessory structure, such as a garden shed less than 108 square feet in area;
- re-roofing (unless structural repair is necessary);
- repair or replacement of plumbing fixtures;
- minor repairs such as insulation of chimney caps and liners;
- re-pointing of brick work; or
- installation of vinyl siding (with non-combustible material), excluding brick or stone veneer.
When in doubt, contact your local municipality to verify when a permit is required.
- What is the process and cost to apply for a building permit?
In order to apply for a building permit, scaled plans of the dwelling and proposed alterations are required. The plans must include a site plan, a floor plan, elevation drawings and cross-sections. The plans can be prepared by the home owner or their authorized representative, such as their designer (with a BCIN number), an engineering consultant or an architect.
Once the plans are submitted to the Building Department, an examiner will review the drawings for code compliance. The drawings will then be submitted to the Zoning Department to ensure the construction meets local by-law and zoning requirements. Specifically, the Zoning Department will review the plans for side, rear and front setbacks, lot coverage area, height of building, etc. In some circumstances, depending on the location of the property, the plans may require approval from the local Conservation Authority.
The fee for a building permit will vary by municipality and is usually based on a unit cost per square metre of construction. The fee also varies based on the type of occupancy. The cost can be verified by checking local municipality websites or contacting local Building Departments.
- What can my lawyer do to help determine if there are any outstanding permit issues in relation to the home that I am planning to purchase?
Your real estate lawyer can:
- request permit documents from the vendor;
- do a compliance check with the local municipality to determine whether building permits have been obtained for renovations to the property; or
- do a compliance check with the local municipality to determine if there are any outstanding work orders on the property due to work that was performed without the benefit of a permit.
Purchasers should ask their lawyer to conduct these checks, especially if the home they wish to purchase appears to have had recent renovations.
- If I obtain a home inspection, how reliable is the Home Inspection Report?
A home inspection can only provide an opinion based on visual observations performed during the inspection. Home inspectors are not allowed to move furniture and usually cannot inspect the structural features of the building other than inspecting attics, unfinished basements and decks. A qualified home inspector, however, can focus on other subtle visible features that could provide information on whether an addition or other work was constructed without the benefit of a building permit. For example, if the required roof vents are missing or plumbing vent stacks are lacking from a bathroom or kitchen renovation, that should raise concerns that the work was completed without the benefit of a permit.
In addition, a home inspector usually has equipment that can detect moisture problems within the wall cavity and should be able to inspect electrical and plumbing components that may be exposed in the basement of the home.
The Home Inspection Report, however, cannot confirm whether the work was completed with a permit without completing a compliance check on the property, nor can the inspection expose structural issues that may have been cosmetically repaired by the vendor.
- Do you have any examples of building/renovation problems you have seen?
On rare occasions, there have been entire residential buildings constructed without a building permit. This usually occurs in rural areas where "whistle blowing" to the local municipality by neighbours is less likely to occur. These buildings are usually constructed by the owner (handyman) and, in order to save costs, substandard material and construction techniques are used. Visible defects usually start to occur within the first 10 to 20 years of the building's life. I have inspected buildings where the entire first floor system deteriorated due to dry-rot caused by improper ventilation and lack of ground cover in crawl spaces. Dry-rot can cause the structure to shift one to two inches resulting in jammed doors and windows, cracked drywall, etc. Once the main floor structure is compromised there is no economic way of repairing the building without complete demolition.
I inspected a building where major interior renovations were performed including a new kitchen, domed and vaulted ceilings, relocation of interior partitions, enlarged windows and doors, and expensive interior floor, wall and ceiling finishes. Soon after the property was sold, the new home owner started to experience difficulties with the venting of appliances, electrical issues, jamming windows and doors, etc. A consultant was engaged to investigate. Once the interior finishes were exposed, numerous building code deficiencies were uncovered in the structure, including lack of lintels over the enlarged doors and windows, cut roof trusses, appliance venting which did not extend to the exterior of the building, improper exterior stucco installation, lack of roof venting, and numerous electrical deficiencies. The structural damage was so severe that economic repairs were not possible and a complete rebuild of the structure, from the foundation, was required.
The most common title claims I handle involve the construction of exterior entrances to basements, usually built to create a separate entrance for a basement apartment. These exterior basement entrances are seldom built to code requirements due to the cost involved. A properly constructed exterior basement entrance requires that the original foundation of the home be underpinned to a depth of four feet below the base of the footings. This is a very expensive process which requires the work to be performed in stages to prevent damage to the structure. The retaining wall must be designed to withstand the lateral pressure of the soil and also extend to a depth of four feet below the landing at the base of the exterior stairs. Due to the cost of constructing the exterior entrance to code compliance, the home owner seldom applies for a permit and simply excavates along the side of the foundation, constructs a block or timber retaining wall, removes a section of the foundation wall, and installs a door leading to the basement. Proper lintels are seldom installed above the opening that is created in the foundation wall. Ultimately, when the property is sold and the local municipality issues an Order to Comply, the entire entrance must be rebuilt due to lack of proper underpinning and foundation under the retaining wall.
To construct a basement apartment, the installation of a bathroom and kitchen is usually included. These require a plumbing permit. Claims involving basement bathrooms and kitchens constructed without the benefit of a permit usually involve exposing all plumbing lines and providing required venting of the fixtures.
Another common title claim I deal with involves decks that have been constructed without the benefit of a permit. Building Department requirements for a deck include concrete piers that must extend below the frost line and guards that must be able to withstand a lateral pressure of 200 pounds. Local municipalities usually provide home owners with drawings showing guidelines on the proper construction techniques required for a deck and setback requirements which could limit the size of the deck being constructed.