Fee increase before council approval like putting cart before horse;
Tony Gioventu
Province
Dear Condo Smarts: We have an awkward situation in our strata with our manager. We really like our manager and have been very satisfied with our contract, but for this year’s AGM, the manager drafted the new budget, and then sent it out without the council’s review. It included an 11-per-cent fee increase.
Council was embarrassed to admit it had not reviewed the proposed budget, and in the end the amount was amended to a five-per-cent increase in management fees. Our fiscal year-end was Jan. 31, we had our meeting in June, and the next day after the budget was approved, our manager charged and paid the increase back to Feb. 1, without a council meeting or the consent of the council.
We don’t want to lose our manager, but we also want to be responsible in our decision-making. What should have been the proper procedures to follow?
— Hilary W., Abbotsford
Dear Hilary: It is important to understand the relationship between the strata council and the strata manager. The strata council members are the legally elected representatives of the strata corporation and are ultimately responsible for the decisions of the corporation, administration of the operations, financial operations, maintenance and repair of the common property, insurance, and the enforcement of bylaws and rules.
Basically, the strata corporation may contract out as many or as few of the operational services that it wishes to negotiate in the contract. The fees that a strata manager charges for their monthly services, and any disbursements or additional costs, or funds or benefits received on behalf of performing work for the strata corporation, must also be included in the contract or an additional signed addendum by the strata corporation.
Even if the fees are approved in the budget, the additional increase or service costs cannot be received by the management company unless they have either been specifically agreed in the contract schedule or until the strata council agrees to sign the new service agreement.
The approved budget simply authorizes the strata council to expend the funds. It is not a general practice for the manager to send out the budget and notice package without the approval of council; however, some strata corporations only meet once a year and rely on the manager to coordinate their notices and agendas for the meetings. Council members need to clearly understand the roles and duties of both the manager and the strata council.
Hilary’s strata corporation also needs to be mindful that it far exceeded the requirements for holding its AGM. The AGM must be held no later than 60 days after the fiscal year-end. Once an increase is approved at an AGM, the council needs to place that item on the agenda of the next council meeting, to discuss and ratify the fees and amendments to the contract.
Tony Gioventu is executive director of the Condominium Home Owners’ Association. E-mail [email protected].
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