Why you should not hire the strata management company to manage your rental in a building they manage!.
When hiring a rental management company to manage your investment property there are many factors you should consider. One factor that is often misunderstood is what happens if you hire the strata management company who manages the building your investment property is located in.
BCFSA has rules regarding conflicts of interest. One of the conflicts of interest is when a strata management company also manages rental units in buildings they provide strata management services to. In these situations BCFSA requires the management company to obtain permission from their clients to modify their duties when a conflict arises. This is obtained by having one client, always the rental client, sign an agreement that indicates they are the secondary client and their duties will be modified during conflicts of interest. Why would you hire a property manager who needs to modify their duties and is unable to provide proper representation while managing your investment property.
When is there a conflict between strata corporations and rental owners?. There are two major issues that create conflicts between rental owners and strata corporations. One is when there is a bylaw infraction, and the second is when there is an insurance claim or damage caused to your unit by the strata or another unit.
When you rent your strata lot tenants sign a Form K which means they agree to adhere to the strata bylaws for the property. If the strata management company issues a bylaw infraction to your tenant, and the council directs the management company to apply a fine, is your rental manager ensuring their own management company is properly applying the strata bylaws and following proper procedure for enforcing bylaws. Or are they asking you to follow the directions of the strata due to the management company managing the building.
This is when the conflict arises and if the rental manager speaks up to provide the rental owner with advice the management company would then possibly be violating their obligations to the strata corporation by not following their directions. That is why in these cases the rental clients, who are the smaller portion of the business, will be the client who has the modified duties applied to the services they are receiving.
Recently we had an experience with a bylaw requesting the tenant pay a move out fee. The bylaw clearly states the move fee is not charged to move outs only move ins or moves from one unit to another in the building.
The bylaw wording is:
"the moving fee applies only to occupiers moving into the building or from one suite to another"
We are stil awaiting a response from the strata manager to confirm our tenant is not required to pay a move out fee. Why should the rental manager be asking the strata manager to clarify and ensure the fee is not required here. If the tenant fails to pay the fee, the strata will apply this fee to the owner’s account and maybe apply a fine to the owners account expecting the owner to pay the fine, due to the tenants actions even when the bylaws are being applied inaccurately. When the management company is also managing the rental unit they may miss an issue of this nature and just request the owner pay a fee or fine that is not required.
The above situation could also apply when an insurance claim occurs. In an insunrace claim this could lead to an owner being charged a fine, deductible and or repair costs without having proper advice on who is responsible for the costs related to the issue.
Avoid conflicts of interest in management of your investment rental property, by not hiring the management company who provides the strata management services.
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