by Elaine McCormack
As a lawyer, I work with strata managers, strata councils and individual owners on a daily basis. I have seen the law in BC evolve in response to the leaky condominium crisis and other challenges faced by the condominium community. However, one aspect of the law involving condominiums that still needs to be reformed is the law regarding the relationship between strata managers and strata corporations. In October 2000 a White Paper on the proposed licensing of strata managers was prepared and distributed by the Ministry of Social Development and Economic Security and the Ministry of Finance and Corporate Relations. The White Paper was intended to provide interested parties with the opportunity to comment on the licensing program and whether the Real Estate Council or the Homeowner Protection Office should administer the program. At the time of writing this article, strata managers are not required to be licensed in BC.
Although there are various professional designations that strata managers can obtain, it is not necessary to obtain any of them or have practical experience before offering strata management services to the public. In my opinion, individuals should have to complete required courses and successfully pass a qualification exam before offering strata management services. Those individuals who have worked in the industry for a number of years should have the opportunity to qualify as strata managers by challenging an exam. Strata managers should be governed by a regulatory body and they should be subject to trust audits and have errors and omissions insurance. Licensing procedures, if done properly, should give owners of strata lots, whether they are located in residential, commercial or mixed use developments, confidence that their financial and real estate assets are being managed by qualified professionals subject to the review of a regulatory body.
In BC, managers of rental property must be licensed by the Real Estate Council under the Real Estate Act, but managers of strata corporations are unregulated. As a result of the licensing provisions, managers of rental properties are subject to trust audits. However, strata managers, who sometimes hold millions of dollars in trust for strata corporations, are not subject to having their trust accounts audited by a regulatory body. It is important to consider that those who manage strata properties tend to hold a greater amount of trust funds for a longer period of time than those managing rental properties, especially when you take into account the monies held in contingency reserve funds for future repairs, and special levies that are collected from owners to pay for leaky condominium repairs.
Licensing may also rejuvenate the strata management industry. The industry has been burdened with too much work for too little money, partially because of increased obligations under the Strata Property Act to prepare documentation, and increased responsibilities to facilitate the repair of condominiums required as a result of building envelope failure. Also, there is often confusion amongst the owners in a strata corporation about the duties of the strata manager, who generally is not paid to attend the property on a daily basis. Licensing requirements may help define the responsibilities that strata managers have to strata corporations and increase the level of respect and the amount of remuneration received by strata managers, who are often asked to chair meetings, advise on bylaws and their enforcement, prepare budgets and financial statements, and manage construction projects.
Many strata managers I have talked to are in favour of licensing requirements, but they want to ensure that there is as little red tape and expense involved as possible. Many are already licensed by the Real Estate Council to manage rental properties and consider that licensing strata managers through the Real Estate Council is preferable to licensing them through the Homeowner Protection Office. If strata managers are licensed through the Real Estate Council those who manage both rental and strata properties may avoid the duplication of licensing fees and operating expenses associated with complying with licensing requirements under two separate entities. In my opinion, it is possible for licensing provisions to be developed that will offer protection to the public and will also be of assistance to strata managers.
Elaine McCormack is a Lawyer and Chartered Arbitrator.
This article was published in the February 2002 issue of BarTalk. © 2002 The Canadian Bar Association. All rights reserved.