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.
By: Miri Lebaher and Omri Nissany
Projects according to TAMA 38 are unique to the construction landscape in Israel. They are considered popular and constitute an effective solution for promoting the renewal of the urban space.
As of 2021, according to data from the Government Authority for Urban Renewal, there are approximately 200,000 housing units in Israel that are undergoing renewal processes within the framework of TAMA 38 and evacuation and construction. In the following short article, we will focus from an insurance perspective on one of the professional functions in these projects, which is the tenant inspector .
Who is the tenant inspector?
On "regular" construction sites consisting of a developer and an operating contractor, a construction supervisor is often appointed, who serves as the developer's long arm on the ground. In projects according to TAMA 38, where apartment owners are present in the equation, it is customary to also appoint a "tenant supervisor."
This is a supervisor who is usually an engineer or civil engineer who represents the interests of the tenants. His important role entails a conceptual and concrete duty of care between him and the apartment owners, and he may be exposed to claims for significant amounts.
A tenant inspector is appointed to fulfill a number of purposes, such as supervising the planning stages of the project before receiving a building permit, supervising the consistency between the planning procedures and the agreements made between the developer and the tenants, monitoring compliance with the schedules in accordance with the agreement, supervising the actual execution of the work (after receiving the permit), and ensuring that any damage or defects discovered that do not comply with the plans or engineering practice are repaired, transmitting ongoing reports to the tenants or property owners, etc. In most cases, the tenant inspector continues to serve the tenants after the project is completed at the apartment handover stage.
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.
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.
Exposure to lawsuit
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 inspector to purchase appropriate professional liability insurance, it is advisable for the tenants themselves to verify the existence of such liability insurance when engaging with the professional.
Furthermore, if the tenant inspector does not hold a professional liability insurance policy and/or purchases a policy that is not appropriate for the risk, to the extent that the tenants file a claim against the inspector and are found to be entitled to compensation, they may be faced with a broken trough and unable to be reimbursed.
It is recommended that tenants review the policy and not use it as a rubber stamp for professional liability insurance that does not provide the full range. Tenants should be sure to consult with an insurance advisor who specializes in professional liability insurance for the engineering professions, construction insurance in general, and urban renewal insurance in particular.
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.