Strata Management Services
(b) Common Licensing Scenarios - Strata
Joan Pennywise, wanting a bit of extra income in her retirement, has offered to provide accounting services for several small strata corporations.
Does Joan have to be licensed?
Joan can provide accounting services to strata corporations without licensing provided she neither ‘‘collects nor holds’’ money on their behalf.
As ‘‘collecting money’’ includes the receipt of cheques, albeit cheques made out to that strata corporation and deposited by Joan directly into its accounts, the strata council must take responsibility for receiving and depositing all cash and cheques. Joan may help the strata corporation set up pre-authorized, direct deposit payments for owners, but may not handle (i.e., receive, deposit or expend) money in any form.
There is nothing to prevent Joan from recommending payment of invoices and preparing cheques for signing by the strata council, as long they are issued from accounts over which she has no signing authority.
NW9999, a self managed strata, is facing a building envelope remediation project and wants either a project manager acting as agent for the strata corporation, or an accountant to receive and hold in trust the funds levied for the project, negotiate and enter into contracts on behalf of the strata corporation, and supervise and make payment to employees and contractors hired or engaged by the strata corporation to do the work.
Is a licence required?
All of the above services require licensing under RESA. Unless the project manager or accountant hired by the strata corporation is a real estate licensee, they will not be able to provide the services required by NW9999.
VR9999 is about to begin an expensive building envelope remediation project which its current management company feels unqualified to manage. The strata council of VR9999 is obtaining quotes from other strata management licensees for management of the remediation project, but intends to keep its current management company, from whom it feels it is getting good service.
Can two licensees be engaged by the same strata corporation?
There is nothing in RESA that would prevent VR9999 from engaging two strata management licensees, one to do the regular management of the complex, and one to manage the envelope remediation under separate service agreements. VR9999 should, however, review its current strata management service agreement to ensure it is not an exclusive service agreement in this respect.
Strata management services are provided to LMS0000 by its resident caretaker. While he is on holiday, the strata council of LMS0000 hires a temporary replacement for him.
Is licensing required?
Since the caretaker is managing the strata corporation under the exemption for employees, his or her replacement must be put on the payroll and satisfy the criteria for employees set by the Canada Revenue Agency.
BCS0000 wants to become self managed.
Are there any regulatory requirements for this?
There are no regulatory requirements to meet before BCS0000 begins management of its own affairs. The conduct of its council will be governed by the Strata Property Act, a self-administered statute with no enforcement provisions for the Real Estate Council or any other regulatory body.
The Strata Property Act, Regulation and helpful pamphlets designed for strata councils can be found on the website of the Superintendent of Real Estate at www.fic.gov.bc.ca.
VIS9999 pays strata agent, John J. John (JJJ), who is an owner in the complex, to provide strata management services. JJJ is a real estate licensee licensed only to provide trading services and rental property management.
Does JJJ require further licensing?
If he were not a licensee, JJJ could be paid for providing strata management services to VIS9999 under the exemption found in Section 2.17 of the Real Estate Services Regulation (see Exemption #1(a) above). Licensees, however, cannot rely on this exemption.
(2) … subject to the Rules, this Act [RESA] applies to every licensee who provides real estate services, even if the licensee
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(c) would other wise be exempted by this Act or the regulations from the requirement to be licensed in relation to the provision of those real estate services. (Section 2(2) of RESA)
With regard to strata management services, the only exemption from the licensing and other requirements of RESA made available to a licensee in the Rules is found in Section 9-3 (Exemption #1(b) above). Under that exemption, JJJ may not provide strata management services ‘‘for or in expectation of remuneration’’.
If he wishes to be paid, JJJ must acquire the appropriate licensing. Then he may provide remunerated strata management services in the name of and on behalf of his related brokerage (presuming the brokerage is licensed to provide strata management services).
Furthermore, until he is licensed properly, JJJ runs the risk of disciplinary action by the Real Estate Council and, in the event of a dispute with VIS9999, of losing his management fees since he is prohibited by RESA from bringing or continuing an action for remuneration in relation to his unlicensed real estate services.
The strata council of LMS9999 deals mostly with Percy, the unlicensed assistant of their strata agent Penelope.
Must Percy be licensed?
Percy may not act, or appear to act, as an agent of the strata corporation. This means he may not provide any services which require licensing by exercising
… delegated powers and duties of a strata corporation or strata council, including
(i) making payments to third parties on behalf of the strata corporation,
(ii) negotiating or entering into contracts on behalf of the strata corporation, or
(iii) supervising employees or contractors hired or engaged by the strata corporation, or
(iv) enforcing bylaws or rules of the strata corporation,
but does not include an activity excluded by regulation;
Operating within these restrictions still leaves Percy several ways to assist Penelope in managing LMS9999. He can, for example,
- answer calls from residents of the complex;
- take dictation;
- attend council meetings with Penelope;
- assist at general meetings of the strata corporation;
- prepare and edit or proofread minutes on Penelope’s behalf;
- draft letters and prepare information certificates for her to review and sign;
- perform bookkeeping services under her direction;
- ask tradespersons to send her quotes; and
- provide any other service that does not fall within the definition of ‘‘strata management services’’.
C. George, a licensee, is elected to sit on the strata council of a strata corporation where he is an owner. The strata has a management company and C. George is not a member of any other strata corporation’s council.
What is required of Mr. George?
The licensing and other requirements of RESA must be met by ‘‘every licensee who provides real estate services’’ (Section 2(2) of RESA). Since what strata council members do falls within the definition of real estate services (strata management services) any licensee who is a member of a strata council must meet the requirements of the licensee exemption above (Exemption #1(b) above).
Mr. George must therefore
- disclose in writing to the strata corporation, before sitting on the strata council that:
- even though licensed under the Real Estate Services Act, he is not acting as a licensee in this case,
- he is not regulated under the Real Estate Services Act in relation to his activities on the strata council, and
- the strata corporation is not entitled to the same protections applicable under the Real Estate Services Act to persons who deal with licensees who are not acting under this section of the Rules;
- provide a copy of the written disclosure to the managing broker of his related brokerage;
- not have sole signing authority for withdrawals of any funds of the strata corporation and not other wise have sole authority for expenditures of any funds of the strata corporation; and
- accept no remuneration for being on the strata council.
Grosspar Holdings owns six units in BCS9999 and offers to provide strata management services.
Can Grosspar Holdings manage BCS9999?
The exemption in Section 2.17 of the Real Estate Services Regulation that enables a strata lot owner to provide strata management services is limited to individuals who are owners. It does not apply to a sole proprietorship, a partnership or a corporation. Grosspar Holdings cannot provide strata management services without licensing and meeting the other requirements of RESA.