Recipe for Running a Smooth Condo Ship¾Part 1

by  Brynice Agnew (extensive additions by Ian MacLeod)

Part one of a two-part article covering all aspects of condominium management, financial planning and communication. This article is only a general overview and its applicability will vary with each strata corporation.

1. Knowledgeable council members and strata lot owners

i. Who are the council?

a)     The council is elected by the eligible voters and consists of the number of members set by the bylaws. Strata Property Act (SPA) section 29(1);

b)     At each Annual General Meeting (AGM) of the strata corporation (SC) all the members of the council retire from office and a new council is elected. A retiring member of the council is eligible for re-election and subject to the SC’s bylaws. SPA Sections 25, 28.

ii. What must the council do?

a)     Exercise the powers and perform the duties of the SC. SPA Sections 26, 31, 32 and 33;

b)     Hold an AGM. SPA Section 40;

c)     Prepare a budget for the year and present it to the owners for their approval at each AGM. SPA Section 103;

d)     Determine each owner’s strata fees according to SPA Section 99;

e)     Collect strata fees and pay the SC’s bills;

f)       Recommend amendments to bylaws, as needed, and present them for the owners’ approval in the form of resolutions at the AGM;

g)     Write rules as needed for management of the common property;

h)     Effect compliance by the owners with the SPA, the bylaws and rules;

i)        Maintain architectural control over the building;

j)       Maintain and repair the common property, including the exterior of the building, as needed;

k)      Obtain and maintain proper insurance. SPA Section 149;

l)        Maintain a contingency reserve fund (CRF). SPA Section 93;

m)    Distribute (subject to the SC’s bylaws) minutes of all council meetings. SPA Section 35(1)(a);

n)     Obtain competitive bids (at least three, if practical) for all contracts for repairs, management, insurance, etc.;

o)     Retain essential records, bookkeeping, copies of contracts, etc. SPA Section 35;

p)     Respond to requests for Information Certificate, Form B. SPA Section 59;

q)     Appoint a Privacy Officer;

r)       Identify from whom personal information is collected and why;

s)      Adopt a privacy policy;

t)      Review current privacy practices;

u)     Collect written consent whenever possible from those who provide personal information to the SC;

v)     Obtain acknowledgement from third parties before you disclose personal information to them;

w)    Update and improve the SC’s privacy policy and practices as these mature.

iii. Attributes of a council member:

a)     Display a professional attitude, compare the strata corporation to a company and its board of directors;

b)     Have a working knowledge of the SPA, the SC’s bylaws and rules;

c)     Show leadership and set a good example by complying with all the SC’s bylaws and rules;

d)     Be able to participate in council meetings and general meetings professionally and efficiently, using a formal agenda and adhering to Robert’s Rules of Order as applicable;

e)     Be well informed by attending seminars, workshops and educational programs to continuously upgrade their knowledge of the condominium way of life, and encourage others to do the same.

iv. Attributes of a strata lot owner:

a)     Has a basic knowledge of the SPA and a working knowledge of the SC’s bylaws and rules;

b)     Sets a good example by complying with all the SC’s bylaws and rules;

c)     Participates in general meetings, professionally and efficiently, adhering to Robert’s Rules of Order as applicable;

d)     Is actively concerned with the proper operation of the SC;

e)     Observes council meetings, attends general meetings and carefully reads the minutes of these meetings.

2. Management

The council has the duty to manage the property and assets of the SC for the benefit of all owners. SPA Section 31.

Management options:

i. Self-management

Note: Works optimally for strata corporations with 50 units or fewer.

Advantage:

Since owners have a vested interest in the SC, they are often willing to dedicate greater effort to its management.

Disadvantages:

a)     Management effectiveness and continuity can be adversely affected by the annual turnover of council;

b)     Many council members lack the necessary time to spend in management;

c)     Management by owners may lack a certain degree of professionalism.

ii. Hire a property management firm

Note: the contract and the terms therein are of paramount importance.

Advantages:

a)     Relieves the owners of the day-to-day management concerns of the SC;

b)     Professional property manager (PM) should provide expert knowledge and advice achieved through experience.

Disadvantages:

a)     PM may adopt expedient methods rather than democratic procedures;

b)     Owners sometimes feel they do not have enough control in their own homes.

iii. A combination of self-management with some of the obligations contracted out.

Selecting a property management firm:

a)     The council (or a committee of council) should prepare a list of tasks that the PM is expected to do along with a proposed management agreement. This should be circulated to chosen property management companies for a price tendered and additional services that may be offered;

b)     The council/committee should interview each company and meet the person, who would be the PM for the SC;

c)     Ask for and check on each company’s references. Seek referrals from owners or councils from buildings already managed by the company;

d)     Make sure that the company has an adequate fidelity bond;

e)     Assess the range of technical expertise the company has at its disposal. Needed experts must be readily available for the PM if they are not on staff;

f)       The management contract should be clear and concise; it should state clearly the responsibilities of the property manager, the fee to be charged, the length of the contract, etc.;

g)     Negotiate before signing.

What to expect from your property manager:

a)     Management fees vary with service. If owners want superb service they must be prepared to pay for it;

b)     Monthly financial statements should be prepared for the council members, including income and expense statement for the month and year-to-date, with comparative figures to the budget, a list of units in arrears for common expense and an annual balance sheet;

c)     A general maintenance schedule and monthly report; preventative maintenance plans and a monthly repair report;

d)     Twenty-four hour telephone for emergencies;

e)     The firm should provide proof of adequate liability and fidelity insurance;

f)       The firm should be willing to sign a contract allowing the corporation to terminate the contract upon shorter notice than provided in SPA Section 39 (2 months).

To be continued in the next issue.