New Disclosure Form for Strata Management Companies

Did you know that that your strata management company (brokerage) is required to disclose certain information about benefits they receive (if any)?

Since 2005, when the Real Estate Services Act became law, all real estate professionals have been required to comply with section 5-11 of the Real Estate Rules. This rule, which came into force on 2006, requires rental property and strata management companies to disclose any remuneration or benefits they receive from anyone other than their client in relation to rental property management services and strata management services.

In 2021, RECBC released new, simplified forms intended to be easier to understand and to ensure clients are getting the information they need. The new form for stratas is called Payments and Benefits Disclosure Information for Strata Corporations. It is available in six languages.

The form itself is not mandatory but the requirements to make these disclosures have been in place for 15 years. While your strata manager is not required to use this particular form, they may find that the new form is convenient and easy to use to clearly communicate with their clients.

When a strata management company or strata manager anticipates receiving remuneration (either directly or indirectly) from someone other than the strata corporation for providing strata management services to or on behalf of the strata corporation; they must promptly disclose in writing to the strata corporation:

  • the source of the remuneration (a payment including any commission, fee, gain or reward)
  • the amount of remuneration to be received
  • as well as all relevant facts relating to the payment

For example, your management company may recommend a service provider to their clients. If they receive, or anticipate receiving, a referral fee from the service provider in exchange for the recommendation, they must disclose this to the client before they can retain the referral fee. These relationships, as well as the nature and extent of the benefit, must be disclosed in advance so that the strata corporation can be fully informed of all material information prior to selecting the service provider, or making or authorizing the expenditure.

In many cases, the strata management company and the client have agreed, in their service agreement, that the strata management company will charge and retain specific fees for providing strata documents (such as Forms B and F, and copies of strata documents). If the fee amount that the strata management company charges for providing strata documents changes, the company must disclose the change to the client.

They must also disclose any direct or indirect benefit they receive or expect to receive from making an expenditure on behalf of a client. This information must be disclosed before the benefit is accepted. The form helps clients to see at a glance whether a benefit is: money, gifts, points or any other type of benefit. As a best practice strata management companies are encouraged to review their service agreements and related contracts annually for changes related to remuneration and benefits from third parties that will need to be disclosed to their clients.

Strata council and section executive members can change every year and may not have reviewed prior disclosures. Even if the expected remuneration is relatively stable year to year, and payments or benefits have been previously disclosed, RECBC recommends that strata management companies keep strata council and section executive members well informed by providing a completed disclosure form early in the new year that identifies the remuneration they expect to receive for the year ahead. They should also complete an “end of year” written disclosure identifying the total amount of remuneration/benefits actually received over the course of the year, including variable amounts such as Forms B and F, rush fees, etc.

While your manager is required to provide this information under the prescribed circumstances, your strata council may request this information at any time.

See the required disclosures on the website for more information including examples of situations that require prompt disclosure.

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