Why a good contract may not be the right contract

Saturday, July 3rd, 2010

As objections to the standard property-management agreement demonstrate, fair is an eye-of-the-beholder conclusion

Suzanne Morphet

Recently I wrote about StrataWatch, a website that monitors companies which manage strata properties. The founder of StrataWatch, Bob Harper, automatically treats membership in the Strata Property Agents of B.C. as reason to lower his rating of a company.

He operates that way because two property-owner organizations think its members should not use the contract prepared by the Strata Property Agents of B.C. for its members.

The contract does not represent the best interests of property owners, the Vancouver Island Strata Owners Association and the Strata Home Owners Association of B.C. say.

Harvey Williams of the island association says the contract allows property-management companies to pool accounts for all properties they manage, making the monitoring of property-manager expenditures by strata corporations and councils difficult.

Kevin Thom, the executive director of the Strata Property Agents of B.C., says the Real Estate Council allows a brokerage to have a pooled trust account.

“This is often done to facilitate being more ‘green’ and only sending of one cheque to BC Hydro for, say, 200 clients,” he says.

Furthermore, Thom thinks the council’s annual audit of each brokerage, or their spot audits, would catch any money that goes “missing.”

Another objection Williams has to the SPABC contract is its “nickel and diming” content.

For example, the contract allows management companies to charge strata corporations and councils $95 per hour if a meeting lasts longer than two hours; to charge $300 for an annual review of the corporation’s trust accounts; and to charge $25 per month per box to store a corporation’s records.

Thom says management companies are required by the Real Estate Council to spell out every possible service fee, and says: “I believe it is in the clients’/consumers’ interest to know what they may be charged for.”

One more complaint Williams and others have with the SPABC contract is that it protects the management company from all “claims, damages, costs and liabilities” unless there’s gross negligence or deliberate misconduct on the part of the agent.

The Vancouver writer who blogs about strata living at Strata 101 doesn’t think that’s fair. She writes: “Property-management contracts essentially protect property management from everything….so much so, you have to wonder what service they do that a core group of owners couldn’t do just as easily themselves without the cost!!!”

On this point, both sides actually agree. Kevin Thom says it’s “absolutely true” owners can manage a common property themselves. There’s no law saying a corporation or council must hire a management company.

There’s also no law saying you have to agree to the SPABC contract if you do hire a manager.

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