Strata Management Companies, Part 2
Last time, we talked about just what a strata management company does and how to go about choosing the right one. Now let’s take a look at how to enter into a contract with a management company and what to expect during the contract.
Strata Management Company Contracts
Once you have decided on what company your strata is going to go with, it is time to negotiate the contract with that company. Some things to remember:
- While the strata council is doing the negotiation, the entire corporation is bound by the contract.
- Contracts can include as many or as few services as the strata corporation wants. There is no set number of services that must be provided (or not provided) by the management company.
- There are legally some responsibilities of a strata corporation that cannot be delegated. Make sure that the strata continues to fulfill those duties.
- Owners must approve the fees, company and services provided by the management company.
- It is up to the council to ensure that duties assigned to the management company are being performed. If they are not, the council must address the situation, as the duties are ultimately their responsibility.
Management Company Interactions with the Strata and the Owners
The management company has very different relationships it must maintain with the strata corporation and the property owners. This is due to the nature of the contract.
Many owners incorrectly assume that the management company can work directly on their behalf and at their request. This is due to the fact that owners generally have the most contact with the management company, not the strata council. This is not the case. Management companies must work on the behest of the strata corporation and its council. They cannot take direction from owners. This should be made clear to owners.
Management companies also have duties that they must comply with in regards to the strata corporation. These duties include:
- Maintaining loyalty to the strata corporation
- Executing the instructions of the strata corporation
- Keeping confidence with the strata corporation
- Performing assigned duties with skill and care
- Accounting for all money and property that the strata corporation puts under its management
Fees for Service
All of this comes at a cost. Management companies will all charge a fee associated with the contract. Often that fee is set, regardless of the amount of duties that the strata corporation assigns to them. This fee may be non-negotiable.
Other companies may be willing to tailor charges based on the wording of the contract and the amount of assigned duties. In cases like this, it is important for the contract to reflect what services are covered and what charges, if any, will be associated with duties outside of the contract.
A depreciation report will help strata corporations decide just what services they will require from a management company. Reserve Advisors can provide deprecation reports and other services associated with them. Contact us today.