Tenant Supervisor in TAMA 38 – Professional Responsibility
Mar 25, 2021
By: Miri Lahav and Omri Nisani
TAMA 38 projects are unique to Israel’s construction landscape. They are considered popular and serve as an effective solution for promoting urban renewal.
As of 2021, according to data from the Government Authority for Urban Renewal, there are approximately 200,000 housing units in Israel undergoing renewal processes under TAMA 38 and evacuation-and-construction projects. In the following brief article, we will focus, from an insurance perspective, on one of the professional roles in these projects: the tenant supervisor.
Who is the tenant inspector?
On “regular” construction sites, typically consisting of a developer and a main contractor, a construction supervisor is often appointed to act as the developer’s on-site representative. In projects under TAMA 38 (urban renewal projects), where apartment owners are involved, it is customary to also appoint a “tenant supervisor.”
This supervisor is usually an engineer or technical engineer who represents the interests of the apartment owners. The role carries significant responsibility, encompassing both conceptual and concrete duties of care toward the owners, and the supervisor may be exposed to substantial liability claims.
A tenant supervisor is appointed to achieve several objectives, such as:
Supervising the project’s planning stages before obtaining a building permit.
Ensuring alignment between the planning process and agreements reached between the developer and the apartment owners.
Monitoring adherence to project timelines according to the agreement.
Supervising the actual execution of construction works (after permit approval).
Verifying correction of damages or defects that are inconsistent with plans or engineering practices.
Providing ongoing reports to the apartment owners or property holders.
Typically, the tenant supervisor continues to serve the owners even after the project is completed, during the handover of the apartments.
Exposure to lawsuit
There may be various situations in which a tort claim can be filed against the tenants' supervisor. For example, failures that caused delays in schedules, difficulty in obtaining Form 4, harmful and accidental events at the construction site, and so on.
Experience shows that although the tenant inspector will not necessarily be solely responsible, in the event of a claim being filed, he will almost always find himself among the defendants. Reality even shows that in many cases he will also be held liable for compensation. Whether in "thin" amounts of 5%-10% of the total damage, or in much more significant amounts.
It is also important to emphasize that many tenant inspectors do not work on single projects but rather work on 3-4 different projects simultaneously. Therefore, their level of exposure is doubled and multiplied.
Various circumstances may give rise to a tort claim against the residents’ construction supervisor. Examples include failures resulting in delays, difficulties obtaining an occupancy certificate (Form 4), incidents causing injury or damage on the construction site, and similar situations.
Experience shows that although the residents’ supervisor will not necessarily bear sole responsibility, they will almost always be named among the defendants when a claim is filed. In practice, they are also frequently held liable for compensation, whether for a relatively small share of 5% to 10% of the total damage or for a substantially larger proportion.
It is also important to emphasize that many residents’ supervisors oversee three or four projects simultaneously rather than working on a single project. Their exposure is therefore multiplied accordingly.
The only way for a residents’ construction supervisor to protect themselves adequately is to obtain a carefully selected professional indemnity insurance policy. Unfortunately, we frequently encounter supervisors who fail to appreciate the full extent of their exposure and leave themselves inadequately protected, whether by purchasing no policy at all or by obtaining coverage that is insufficiently comprehensive.
What does this mean in practice? First, professional indemnity insurance must provide appropriate liability limits. Residents’ supervisors must understand that claims against them can reach substantial sums. These may include claims for serious bodily injuries resulting from safety failures that they allegedly should have identified and addressed in advance.
Second, professional indemnity insurance operates on a “claims made” basis. Coverage depends on a policy being in place both when the incident occurs and when the claim is made.
Supervisors must therefore renew their policies continuously, including after retirement or ceasing professional practice. Claims may be brought many years after the events concerned. It is also important to ensure that retroactive coverage is provided for past projects.
Professional liability policy, compulsory insurance
The only way for a tenant inspector to protect himself properly is by purchasing a proper and accurate professional liability policy . Unfortunately, we encounter quite a few tenant inspectors who do not internalize the full risk that lies ahead of them and "fall" as a result. Whether in exceptional situations of not purchasing a policy at all, or by purchasing professional liability insurance that is not comprehensive and complete enough.
What are these things supposed to mean? First, one must be careful to purchase professional liability insurance with liability limits in appropriate amounts. The tenant inspector must understand that claims filed against him can escalate to high amounts. For example, claims for serious bodily injury caused by safety failures that he allegedly should have identified and provided a response to in advance.
Second, a professional liability policy is a "Claims Made" type of insurance. Its validity is subject to both its existence at the time of the event and the date the claim is filed.
The inspector must therefore be careful to renew the policy regularly, including after his retirement and resignation. Claims can be filed even many years after the events. It is also important to pay attention to retroactive coverage for projects carried out in the past.
Responsibility also for the tenants themselves
Alongside the clear need for the tenant supervisor to obtain professional liability insurance, it is advisable that the apartment owners themselves verify the existence of such insurance when contracting with the professional.
Moreover, if the tenant supervisor does not hold a professional liability policy and/or purchases a policy that does not adequately cover the risk, then in the event that the owners file a claim against the supervisor and are found entitled to compensation, they may face an empty recourse and have no means of recovery.
It is recommended that the owners carefully review the policy and not serve as a rubber stamp for a professional liability insurance that does not provide full coverage. Those who wish to be thorough should consult an insurance advisor specializing in professional liability for engineering professions, construction insurance in general, and urban renewal insurance in particular.
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