Termination language is a critical component of agreements between corporations and property-management contractors

Suzanne Morphet
Sun

A concern I too often hear about from owners of strata properties is about the contracts their strata corporations sign with the managers of strata properties.

Under the law, the manager of a strata property must have what’s called a “service agreement” in writing unless waived by the customer, the strata corporation. The absence of an agreement can generate sanctions. Last November, for example, the provincial government’s Real Estate Council of B.C. reprimanded a Vancouver property manager for “professional misconduct” for providing strata services without an agreement.

The regulator fined the company $1,000.

So, if the intention of the law is to protect the owners of strata properties — and they are the ones who get to waive the requirement for a contract, not strata managers — why do the contracts generate so many concerns?

The contract provided by the Strata Property Agents of B.C., to which about one-third of the property-management companies in the province belong, is one source.

Owners who have spoken with me have a number of issues with it, including the absence of a termination date.

According to the Real Estate Council of B.C., “a service agreement for strata management services must include the duration of the agreement.” The SPABC contract governs relations between contractor and council “indefinitely” or until it’s terminated by either contractor or council.

The contractor can terminate on two months’ notice. But for a strata corporation to terminate requires a resolution passed by a three-quarters of the owners, which means either calling a special general meeting or waiting until the next AGM.

“Either way, it’s a long, uncomfortable and often unworkable time with a property agent who knows the owners are going to be asked for permission to fire them,” says Oscar George, a strata property-owner on Vancouver Island who created a website dedicated to property-manager affairs and the SPABC contract.

When I asked the real estate council if a contract that continues “indefinitely” violates the council’s “duration of the agreement” requirement, representative Tyler Davis replied: “A service agreement that is for an indefinite period of time satisfies this requirement.”

So, if the contract is right, by law, is it good, by owners? There seems to be a lot of confusion around the contract in general.

Davis acknowledges that some strata corporations believe either the SPABC agreement is mandatory or that it can’t be changed.

I asked Kevin Thom, the executive-director of the Strata Property Agents of B.C., about the contract, its “indefinite” expiry date and the apprehension that strata corporations must sign it, as is.

“The body of the contract is copyrighted, yes. You can make any change you want to that in the schedule,” he says.

“You could make it a two-year term with an expiry date, you could make it subject to the whim of the council, the council could meet at any point in time. You can do what you wish and every one of our members has been advised of this.”

But no matter how well intentioned the Strata Property Agents of B.C. are, it’s impossible for the association to ensure that each of its members explains these options to strata councils.

It’s one more reason for the owners of strata properties to ensure either they or their strata corporations belong to an owners’ association with contract expertise.

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This entry was posted on Saturday, June 19th, 2010 at 9:08 am and is filed under Strata Information. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.