Manager got angry when asked about
25 May 2016
We have a new strata council this year. At our first council
meeting, we were presented with a document that authorized our
management company to receive commissions and fees from third parties.
We were told it was a standard form of document and every strata signs
it. When we started asking detailed questions, our manager become quite
angry with us and told us we were being unreasonable. When pressed for
more information from past years, we were told the prior strata
councils had authorized this and we were not entitled to any of the
We hear about finder fees and payoffs and kick-backs
We hear about finder fees and payoffs and kick-backs from contractors,
but have never experienced it first-hand. Is this a normal industry
practice? If it is, how do we know what we are signing if it is just an
authorization for a contractor to receive fees as a result of doing our
business, but never telling us what the amounts are?
Kevin J., Surrey
The relationships around third-party fees and commissions may vary
depending on the type of contractor.
The strata management company, for example, is your agent and has a
fiduciary duty to act in your best interest as their client, whereas a
contractor is not your agent and may be subcontracting for other types
of services and charging a premium or fee on those services or may be
receiving product rebates from suppliers.
The terms and definitions of services and any financial relationships
and services that are compensatory are best addressed in the contract
or service agreement.
Under a strata management agreement the Rules of the Real Estate
Council require: if a licensee receives or anticipates receiving,
directly or indirectly, remuneration, other than remuneration paid
directly by a client, as a result of the licensee, the licensee must
promptly disclose to the client all remuneration paid or payable to the
licensee’s related brokerage in relation to the real estate services
provided, and the disclosure must include all of the following: (a) the
source of the remuneration, (b) the amount of the remuneration or, if
the amount of the remuneration is unknown, the likely amount of the
remuneration or the method of calculation of the remuneration, and (c)
all other relevant facts relating to the remuneration.
A general disclosure form that simply authorizes commissions or fees is
not complete unless the amounts and source of commission have been
The actual amounts being received may have a material impact on your
decision. For example, if a supplier is providing season tickets to a
local sports team, but the actual value has no impact on the terms of
the contract and the price is still competitive, both parties benefit.
However, if the fees are increasing your cost as the consumer as a
result of the financial incentive, then yes, you would assess the
After all, the money is coming out of the pockets of your fellow strata
owners. It all requires your consent.
demand full disclosure of any
amounts being received, any business relationships
Protect your strata corporation and demand full disclosure of any
amounts being received, any business relationships where the
contractor, service provider or strata management brokerage owns or
operates other companies that are providing services, and any
incentives that are being provided to individual licensees.
whose interest are they really working on
If a contractor is receiving benefits from a third party, then whose
interest are they really working on behalf of?
Tony Gioventu is executive director of the Condominium Home Owners’
Any property management company who
asks the board to sign a release allowing them to make undeclared
commissions on contracts that they bring to the board for approval, has
got to be looked at with suspicion. Time for the board to hire
Be clear on roles with strata management companies
07 September 2016
Our strata council is in the process of interviewing for a new
Our previous company constantly changed our manager and council did all
the work we had contracted for. In the last three months, no one has
come to our council meetings or provided us with any assistance, so we
convened a special general meeting and terminated the contract.
Are there basic pitfalls we should watch out for when negotiating a new
Martin K., Coquitlam
When you engage strata management, the company you retain
and their staff are your agents. Meaning, they do what you instruct,
what you contract for and act as you whenever they are doing your
Your strata must be clear on roles and responsibilities within the
scope of the contract and the services being provided, if you are
expecting a successful relationship. Confirm that everything a company
claims it will do for you is detailed in the written service contract.
Clearly define the performance description of the manager, when the
duties are performed, and how they are reported to the strata
council. My contract mantra: “If it isn’t in writing, it likely
isn’t true or going to happen.”
A number of strata-management companies
demand compensation or user
fees from the contractors/service providers, which are often not
A number of strata-management companies demand compensation or
user fees from the contractors/service providers, which are often not
disclosed to a strata, and many councils are unaware that they have
signed a consent of some sort permitting other fees or compensation
from third parties. The complication with this relationship is
establishing who your manager is acting for — you, the
contractor/service provider or their own interests.
Under an agency agreement, they have a duty to act in your best
interest. That’s why you hire them.
There are two options to solve this problem
There are two options to solve this problem. Insert a clause in the
contract that a) prohibits any fees, compensation or commissions from
any third party, or b) as required by the Real Estate Services Act, any
fees, compensation or commissions are disclosed to the strata
corporation, and your consent to retain the fee is required.
A legal review of strata management contracts before you sign is always
advised. The company holds your trust funds, acts as your agent and
business manager, advisor, record keeper, and represents your strata
through most business transactions.
have a legal review of your contract and save yourself many heartaches
Negotiate a fair contract that holds both the company and the strata to
a mutual level of accountability. Usually, for under $2,000, you
can have a legal review of your contract and save yourself many
heartaches. Put this into perspective: what is it worth to protect your
150-unit highrise with an asset value of $45 million and a $1 million
When things go wrong, make sure you can end the agreement fairly.
While the act defaults to a three-quarters vote, you can negotiate
termination by majority vote, or unanimous vote of council.
If your strata can hire a company by majority vote, then why can’t you
terminate them by majority vote? It is a reasonable expectation
that the owners at a general meeting would be competent to make this
type of decision. This is a contract and may be negotiated. There is no
such thing as a standard form of contract or contract that cannot be
Finally, review the schedule of fees closely and ask questions. Are
there additional costs for extra services? How are they authorized? Do
you pay additional fees to manage major projects or collect special
levies? Have you authorized the company to transfer your assets
and services to another company in the event they sell? How are
decisions made that affect investments and trust funds? Many strata
corporations have successful management relationships that span over 20
years. A fair contractual relationship is essential.
Conﬂict of interest for property manager to take insurance
19 June 2017
We are a self-managed board but I frequently meet with board members
from other Associations that are managed. I recently learned that in
addition to the management fees they pay, this particular management
company has a licensed insurance agent and that they get 15% commission
on a $60,000 policy. That's an additional $9,000 a year. This does not
seem right to me. It is standard? Couldn't the board insist it be lower
or the rates net of commissions totally?
Bob L Michigan
Insurance rates net of commissions totally? How is the agent going to
make a living? BUT, this sounds more like a kick back than a
commission. Basic rule: never buy insurance through your management
You can’t negotiate insurance rates with a single company: you need
quotes from at least three companies. Select the company that best
meets your criteria. It may not be the lowest quote. For example, we
recently chose a company because their deductible was based on the
complex as a whole rather than each building within the complex. It
could be a huge difference in payout if storm damage occurred to
Anytime property Management gets commissions on outside things such as
Insurance, vendors etc. it's called a kick back and the Association
won't get the best deals just the paid off deals
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