Managing Concerns with a Strata Manager

HOW SHOULD A STRATA MANAGE CONCERNS WITH A STRATA MANAGER?

We have written about strata management services, the responsibility for strata management, delegating duties and tasks to a strata manager and what to expect from a strata manager. Sometimes, there are concerns with the conduct of a strata manager. In that situation the Strata should start with a discussion with the strata management company and, if necessary, making a complaint to the BC Financial Services Authority.

SHOULD A STRATA TRY TO RESOLVE CONCERNS WITH A STRATA MANAGER OR STRATA MANAGEMENT COMPANY?

Concerns should be addressed in an escalating manner and always with a focus on shared expectations, accountability and strengthening the relationship.

If an Owner, who is not a member of Council, has a concern, that concern should be first raised with Council. This can be done by correspondence, attendance at a Council Meeting or by requesting a hearing. Sometimes, Owners may find it awkward to communicate their concerns because the strata manager may have a direct role in communications with the Council. However, it is important that an owner raise concerns because they may have a perspective or experience that is different from the current members of the Council.

If the concern is raised by a member of Council or the Council agrees that a concern raised by an Owner should be addressed, it should be brought to the attention of the strata manager or the strata management company.

It is important to understand that there is a structure for strata management companies that corresponds with licensing levels.

The top level is a “Brokerage”. The Brokerage holds the license under which all individuals are license to provide strata management services. Although it is not necessary a corporation or a company, it is distinct from any individual person.

The next level is the “Managing Broker.” There is at least one Managing Broker at each Brokerage. The Managing Broker controls the business and is responsible for the supervision of Associate Brokers and Representatives. The Managing Broker is a specific person with a license issued in their name that dictates what services they can provide. No member of the Brokerage can provide services that are not included in the Managing Broker’s license.

The next level is an “Associate Broker.” This is a person that is licensed as a Managing Broker but has chosen not to act as a Managing Broker. There are several reasons for this, including semi-retirement, not wanting to be responsible for the actions of Representatives and not being interested in the business aspects of the Brokerage. Even though an Associate Broker may be licensed to provide services that are not included in the Managing Broker’s license, an Associate Broker cannot provide those services.

The final level is a “Representative”. This is an individual that has a license to provide real estate services. The majority of Strata Managers are licensed as a Representative. They have an obligation to keep the Managing Broker informed of the services they are providing.

There are also “unlicensed employees” but they will not be acting a strata managers. These employees are usually administrative support staff, book keepers, client relationship managers and other roles directly related to the business of the Brokerage.

If there is a concern with the actions of a strata manager, it should be first discussed with the strata manager and if that is unsuccessful elevated to the Managing Broker. The Managing Broker is obligated by their license to take reasonable steps to deal with anything that may be improper, negligent or professional misconduct. They are also accountable for maintaining the trust accounts and records of the Brokerage.

It is important to understand that the Managing Broker does not need to report any professional misconduct or other concerns to the BC Financial Services Authority.

SHOULD A STRATA RAISE CONCERNS WITH STRATA MANAGEMENT WITH THE BC FINANCIAL SERVICES AUTHORITY?

The BC Financial Services Authority has the authority to investigate complaints about a strata manager.

These investigations can address complaints that:

• A Strata Manager did not act on instructions.

• A Strata Manager acted beyond their authority.

• A Strata Manager acted in a conflict of interest.

• A Strata Manager acted in a way that undermined public confidence.

• Somebody provided strata management services without a valid license.

For a detailed description of the nature of these complaints, please see our article on what to expect from a strata manager.

DOES A STRATA HAVE TO PARTICIPATE IN A BC FINANCIAL SERVICES INVESTIGATION ABOUT A STRATA MANAGER?

If a Council provides the BC Financial Services Authority with a complaint, an investigator should contact the Council to get more details. After reviewing those details the BC Financial Services Authority will determine whether it has the authority to investigate the complaint.

If the BC Financial Services Authority investigates there are several possible outcomes:

• Determining that there is not enough evidence to find a contravention.

• Making an order with the consent of the Strata Manager that is subject to the complaint.

• Conducting a formal public hearing.

• Imposing penalties.

• Publishing a formal decision.

WHAT ORDERS CAN THE BC FINANCIAL SERVICES AUTHORITY MAKE ABOUT A STRATA MANAGER?

The BC Financial Services Authority can make several different orders, either with the consent of the Strata Manager or after a hearing:

• Reprimand the Strata Manager.

• Suspend the Strata Manager’s licence.

• Cancel the Strata Manager’s licence.

• Impose restrictions or conditions on the Strata Manager’s licence.

• Require the Strata Manager to cease or to carry out any specific activity related to the real estate business.

• Require the Strata Manager to enroll in and complete courses, studies, or training specified in the order.

• Prohibit the Strata Manager from applying for a licence for a specified period of time.

• Require the Strata Manager to pay amounts in order to recover the enforcement expenses.

• Require the Strata Manager to pay a discipline penalty in the amount of not more than:

  • $500,000 in the case of a brokerage, and

  • $250,000 in any other case.

• Require the Strata Manager to pay an additional penalty up to the amount of remuneration accepted by the licensee.

It is important to understand that the BC Financial Services Authority cannot make an order that any money be paid to the Strata. For example, if the complaint against a Strata Manager was that they spent the Strata’s money without authority the BC Financial Services Authority cannot order the Strata Manager to repay that money. That would require a claim brought in a court. We have written articles about the ability of a Strata to commence a Strata Lawsuit on behalf of the Owners.

CONCERNS WITH A STRATA MANAGER SHOULD BE ADDRESSED WITH THE MANAGING BROKER BEFORE BEING REFERRED TO THE BC FINANCIAL SERVICES AUTHORITY

One of the benefits of hiring a licensed Strata Manager is that there are opportunities to address any concerns with the quality of the services they provide. If there are concerns, they should be first addressed with the Managing Broker of the Brokerage and if that is not successful a complaint can be made to the BC Financial Services Authority.