Strata Management (22:VII)
|This information applies to British Columbia, Canada. Last reviewed for legal accuracy by the Law Students' Legal Advice Program on July 24, 2023.|
A. Introduction to Strata Management
The most common type of management of a strata corporation in British Columbia, and the primary focus of this section, is a professional, third-party strata manager who is licensed by BF Financial Services Authority (“BCFSA”) and bound by the provisions of the Real Estate Services Act, SBC 2004, c 42 (“RESA”) and the Real Estate Services Rules, BC Reg 209/2021 (“RES Rules”). This manager is contractually engaged by a strata corporation to provide “strata management services” as defined in s. 1 of RESA.
Less commonly, in other cases, strata corporations can choose to be self-managed with no licensing requirements. S. 2.17 of the Real Estate Services Regulation, B.C. Reg. 506/2004 (“RES Regulation”) permits an unlicensed individual to provide strata management services to a maximum of two strata corporations to which the person is an owner.
1. Definition of Strata Management
Neither the SPA nor the SPR provide definitions for the term “strata management”, but there are references to the term in each. For example, s. 37 of the SPA and s. 4.3 of the SPR both refer to the strata management as “providing the strata management services”.
B. The Contractual Relationship
1. Power and Capacity of a Strata Corporation to Contract
S. 2(2) of the SPA states that a strata corporation has the power and capacity of a natural person of full capacity. This includes the ability to enter into contracts in respect of its powers and duties under the SPA, the SPR, and the bylaws. Therefore, the strata corporation is permitted to enter into contracts for the provision of strata management services.
2. Contract Decisions
The SPA and the courts (Enefer v The Owners, Strata Plan LMS 1564, 2005 BCSC 1866 (Chambers)) give the strata council permission to make decisions regarding contracting parties, including with which parties the strata corporation will contract.
If funds being spent by a strata corporation occur more frequently than once a year, the SPA requires that the expenditure is approved in a budget before funds are spent. Only after the expenditure is approved and the budget that includes the expenditure is approved by the strata low owners, can the strata council enter into a contract with a strata manager of its choice.
3. Termination of Strata Management Contract
S. 39.1 of the SPA permits a strata management contract to be terminated by a strata corporation on two months’ notice if the cancellation passes a ¾ vote at an annual or special general meeting, regardless of any termination provisions in the strata management contract. The other party can terminate on two months’ notice without prior approval.
S. 39.2 clarifies that the only time a ¾ vote is not needed by the strata corporation to cancel a contract is when the contract could be terminated according to its terms if they are not onerous.
Within four weeks of the termination of a contract, s. 37 confirms that the person(s) providing strata management must return the strata corporation’s records, subject to a $1,000 penalty if they do fail to do so per s. 4.3 of the SPR.
C. Role of the Strata Manager
1. Exercise of Delegated Power and Duties
A strata manager exercises delegated powers and duties of a strata corporation and can often act as chair of general meetings and facilitate part of the strata council’s business, although the strata manager is under the instruction of the strata council.
2. Principal/Agency Relationship
Unless specifically stated otherwise, a strata manager acts as an agent of the strata corporation, authorized to act on the strata corporation’s behalf when dealing with other parties, issuing forms and records, and entering into contracts.
The common law has developed duties that an agent (strata manager) owes to its principal (strata corporation), referred to as fiduciary duties. S. 56 and s. 58 of the RES Rules give examples of those fiduciary duties in the disclosure of renumeration and disclosure of the nature and extent of benefits in relation to rental property management services and strata management services.
Further, s. 30 of the RES Rules set our requirements for a “brokerage” and its “related licensees”, in this case the strata manager, when providing services to a client. S. 33 and s. 34 add additional requirements to act honestly and with reasonable care and skill when providing real estate services, respectively.
3. Strata Management Correspondence
The strata manager will receive and send correspondence on behalf of the strata corporation or strata council. Such correspondence will form part of the records of the strata corporation, unlike communication amongst strata council members, as held by the CRT in Hamilton v The Owners, Strata Plan NWS 1018, 2017 BCCRT 141.
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