After Hours Services: A Strata Management Case Study
This article presents a case study — a short, realistic situation followed by questions that give you the opportunity to assess your knowledge. Case studies are intended to help bring the Rules and professionals standards to life. Look for more case studies on diverse real estate topics in upcoming issues of the Report from Council.
Please take a moment to test your knowledge by submitting your answers to the questions based on the following scenario.
A strata management brokerage, ABC Strata Services, has an agreement with the 24/7 Restoration Company to provide after hours emergency services to strata corporation clients. When a strata lot owner calls the emergency number at 1:00 a.m. to report that water is pouring through their kitchen ceiling, 24/7 Restoration sends a crew to deal with the emergency. The crew evaluates the situation, stops the water, starts mopping up, and sets up some dehumidifiers. The following morning, 24/7 Restoration contacts the strata manager to let them know that they are on-site and dealing with a water leak in one of his strata complexes.
Test your knowledge with the following questions, and see how you compare with other professionals. When you hit submit, you’ll see how other readers have answered these questions.
You can find the correct answers by scrolling down to the ‘Answers’ section below.
Many strata management brokerages offer their strata clients “24-hour emergency services,” to ensure that any emergencies (such as a water leak) are attended to quickly. Depending on the nature of the emergency, the strata corporation client may need a restoration company or other contractor to repair and remediate the damage, and prevent further damage to the property.
To avoid the problems that ABC Strata Services may be facing, here are steps you can take to help ensure the emergency services your brokerage provides are compliant with your service agreement and the Rules.
The answer to each question is C.
Before 24/7 Restoration took any action on the night of the leak, they should have contacted a licensee from ABC Strata Services to obtain the necessary authorization to send their team out. Because they did not do this, ABC Strata Services may be in contravention of section 6-1(1) of the Rules, which states that a licensee must not pay an unlicensed person for the provision of real estate services that require licensing.
Make sure you have the delegated authority to enter into contracts
Brokerages that provide 24-hour emergency services to their clients must ensure that in the service agreement, the strata council has delegated the authority to enter into a contract by calling in contractors to attend at the strata corporation. A typical service agreement allows the brokerage to expend strata corporation funds in the case of an emergency, which may be subject to certain conditions including acquiring the approval of the strata corporation before any contractors are contacted.
Make sure only licensed individuals enter into contracts
Many brokerages provide 24-hour emergency services by ensuring that a licensee is “on-call” for either their own strata corporation portfolio, or for all of the brokerage’s strata corporation clients. When the licensee receives a call, they can take immediate steps to deal with the issue by contacting the appropriate contractor or restoration company as necessary.
Other brokerages delegate their authority to act in an emergency to an unlicensed third party. However, negotiating or entering into contracts for a strata corporation client is a defined strata management service for which a license is required, and thus the person arranging mitigation work must be licensed with the brokerage. Section 6-1(1) of the Rules requires that a licensee must not pay, offer to pay, or agree or allow remuneration to be paid to an unlicensed person who provides real estate services.
Practice Tip: Review how your brokerage provides 24 hour emergency call-outs to your clients. Revisit and amend any agreements with third parties to ensure that only licensees are providing real estate services on behalf of the brokerage.