Should you use the strata management company of your building to manage your rental property?.

If you own an investment property in a strata corporation and are looking for a rental management company there are many things you should consider.  

One of the most overlooked aspects of hiring a rental property manager is, are they fully invested in managing your property. A rental property manager will help a landlord with multiple aspects including finding a tenant, managing tenant relations during the tenancy and completing the move out process. 

BC has regulations in place identifying who can manage your property. If you are the owner of the property you are able to manage it yourself. When you hire a third party they must be licensed by the governing body which in BC is the BCFSA. Why do third parties need to be licensed, to protect landlords from being misrepresented in the rental property management process. Licensed individuals have training on the laws, regulations and processes governing rental properties in BC. 

There are three licensing groups in BCFSA for Real Estate Professionals, Trading, Strata Management and Rental Management. A person with a trading licence assists you in selling your property, they can also help tenants find a rental property. Strata Managers are licensed to manage Strata Corporations, which is the entire building, and can be residential or commercial properties. 

Rental Managers are licensed to manage rental properties, which can include residential, or commercial. Residential properties include Apartment buildings, individual houses and strata lots inside Strata Corporations. Strata lots include commercial properties, condos, townhouses and can include single family homes in a Strata Corporation. What is often misunderstood is rental managers are not licensed to assist tenants find a property to rent as they represent the landlords not tenants. 

An individual and a brokerage may obtain all three licence categories if they choose and provide Trading, Strata and Renal Management to their clients.  

BCFSA describes various types of conflicts of interest when dealing with multiple types of licence categories if interacting with one client. In recent years BCFSA removed the ability of Trading agents to represent the buyer and the seller in a sales transaction, this is called dual agency. This was implemented to ensure each party's interests are being fairly represented.  

In property management there are no limitations at this time for a strata property management company and rental unit in that strata be managed by different parties. 

BCFSA identifies areas of potential conflicts of interest for all licensees when they are licensed in another category. 

Here is BCFSA explanation on a licensee's responsibility regarding conflicts of interest.

“As a licensee, you have an overriding duty to avoid conflict of interest, which can be achieved in many cases through proactive planning. However, where a conflict cannot be avoided despite your best efforts to do so, you must promptly and fully disclose the conflict to your client so that they can make an informed decision on how to proceed.”  

The first conflict we will identify is between Rental Managers and Trading (Sales) agents. 

“Providing additional categories of real estate services (e.g. trading services), such as where you may have an interest in receiving a commission from the sale of a rental property that you manage;    

In the above scenario a Trading agent may be encouraging a client to sell a property at a time that may not be the most appropriate for you.

The other conflict is between Strata Management and Rental management as outlined below.  

“Providing rental property management services to a strata unit owner in a strata building that you or your brokerage manages;”

-Represent Offering a discounted rental property management rate to owners in a strata corporation that the brokerage manages (is the strata corporation actually subsidizing the individual owners? 

The larger issue is how BCFSA recommends how to manage a conflict of interest between managing a rental in a Strata Corporation you manage is as follows:

 “This potential conflict could be addressed by modifying your duties in advance by designating a primary and secondary client. The secondary client must understand and agree that the primary client the duties owed to them may be limited in certain situations”

The above statement recommends that when the Strata management company also manages a rental in the same building they have one of the parties sign a document stating one party will be the primary and the other will be the secondary client. In all cases the rental client will be identified as the secondary client because the strata earns more revenue for the property management company.

What does this mean for the rental client? Section 30 of the real Estate Council rules outlines the duties of a licensee and includes acting in the best interest of the client, taking lawful instruction, maintain confidentiality, and take steps to avoid conflict of interest. 

When one party agrees to have the services they receive modified by their agent they are being under-represented in the times they need them most, which is when a conflict arises. As a landlord when you hire a property manager you should be able to expect they will always be able to represent your interests. 

The issues they may not be able to assist you with are bylaw infractions, CRT claims filed against you and when insurance claims are not being handled properly. These are the most important situations that you should be receiving professional advice and guidance on.      

Link to real estate council rules 

https://www.bcfsa.ca/about-us/legislation/real-estate-services-rules#section30

There have been a significant number of cases filed in the CRT when bylaw infractions have been applied incorrectly to tenants and the fines overturned due to strata management companies not following proper process to apply the fines in accordance with the Strata Property Act. In these cases your rental property manager should be advising that the process has been applied incorrectly before it reaches the CRT to resolve the issue with the Strata. 

We recommend you don’t hire the strata management company who is managing your building to also manage the rental property in the same building. This protects you and your tenant. We also recommend you ensure the manager you hire is licensed by BCFSA to protect your rights as a landlord. 

Cartref Properties has worked in both rental and strata management but only provides rental property management specializing in properties located within Strata Corporations.

Renting your property can be confusing. Cartref Properties can assist you, call today to discuss your needs or find more information about us at: www.cartrefproperties.com