The strata management contract

The strata management contract is a legally binding agreement between the strata corporation (or section) and the strata management company. A strata contract should be in writing and reviewed by independent legal counsel. 

Learn more on this page:
Entering into a strata management contract 
Important contract elements
Paying for contracted services
Termination of strata management contracts

Entering into a strata management contract

A strata management contract can be entered into by the strata council on behalf of the strata corporation (or the executive on behalf of a separate section). 

• However, the strata council (or section executive) may be directed by the majority of owners at a general meeting with respect to entering into a contract and
• any strata council or executive member must promptly disclose any direct or indirect interest in a strata contract, and cannot participate or vote in relation to the contract

For new strata developments, a strata management contract can be entered into by the Owner Developer:

• before the first transfer of a strata lot title
• after the first transfer of a strata lot title, but before the first annual general meeting, if the strata manager is at arm's length to the Owner Developer and
• after the first transfer of a strata lot title, but before the first annual general meeting, with a unanimous resolution of the strata corporation, if the strata manager is the Owner Developer or is not at arm’s length to the Owner Developer

Strata management contracts entered into by the Owner Developer before the first annual general meeting will automatically terminate, on the earlier of either:

• four weeks after the date of the second annual general meeting (however, the strata management contract may continue if renewed by majority vote at the general meeting)
• the cancellation date contained in the contract or agreed to by the parties

Sections and Strata Management:  It is important to note that a strata corporation and a section are distinct bodies. A section’s interests may differ from other sections’ interests.

In April 2013, the Real Estate Council of BC (RECBC) issued information bulletins clarifying the responsibilities of strata management companies managing sections to acknowledge and protect these different interests. (Please note as of August 1, 2021, the BC Financial Services Authority has replaced RECBC).

A different brokerage may be employed by a section or a contract must be negotiated with the strata management company which recognizes the different interests of the section(s) and the strata corporation.

Important contract elements

There are some important contract elements to consider. A good contract should:

• be in writing
• clearly lay out the rights and obligations and/or delegated authority of the strata manager. The contract needs to comply with both the Strata Property Act and the Real Estate Services Act which governs licensed strata property managers and brokerages.
• specify a list of duties, powers and limitations of strata managers and the strata management company
• clearly specify how the strata management company is paid, including fees paid by third parties (e.g., for the preparation of an "Form B: Information Certificate" or a "Form F: Certificate of Payment") and whether these fees belong to the strata corporation or to the strata management company
• specify who will have signing authority for, and access to, strata corporation monies and what kind of account the monies will be held in and
• include clear termination procedures such as a date when the contract expires

The strata management company may assign different strata managers to provide services to the strata corporation or the contract can be assigned to another licensed strata property management company. Whether this is allowed or how it is handled can be negotiated in the contract between the strata corporation (or section) and the strata management company.

Unless otherwise specified in the contract, it is the responsibility of the strata council to give clear direction to the strata manager or strata management company. 

Advice on Contracts: The strata associations offer advice for strata corporations on what to consider when contracting for strata property management services.

Strata associations and the BC Financial Services Authority (BCFSA) also advise strata corporations to seek independent legal advice before signing a strata management contract.

The contract can be developed and/or amended with the consent of both parties (the strata corporation or the section and the strata management company) to suit respective needs. There is no official standard contract.

Paying for contracted services

Before agreeing to the strata management fee, the strata council, executive of the section, or Owner Developer must ensure that the fee is approved:

• in the annual operating budget or
• by special levy

Termination of strata management contracts

Strata management contracts can be terminated without penalty to either party in the contract:

• under the terms specified in the contract or
• by the strata corporation with two months' notice to the strata management company, if first approved by a 3/4 vote or
• by the strata management company giving two months' notice to the strata corporation

When a strata management contract ends, the brokerage must return all strata corporation records in its possession or control to the strata corporation within four weeks of the contract termination. As well, under the BCFSA Rules, strata management companies must keep some strata records, or copies of strata records, for at least 7 years after their creation.

The BCFSA plays an important oversight role in regulating strata property management companies and managers for compliance with the Real Estate Services Act (RESA) and its Rules.  

References:
Strata Property Act, sections: 4, 10, 24, 30, 32, 33, 34.1, 37-39, 135, 144, 179, 194
Strata Property Regulations: 7.2, 8.2, 18.1
Real Estate Services Act and Rules
Standard Bylaws (which can be amended): 20 and 21

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