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Apples to Apples: Selecting a Strata Property Management Company

July 9th, 2013

Disclaimer:  This is not a legal opinion and should not be relied upon as such.  Although we are experts in strata property management in British Columbia, members of the public are encouraged to seek legal opinions on their specific circumstances before acting.

There are three scenarios in which a strata will be in the position of seeking new strata management.

  1. As the developer prior to the first conveyance
  2. As a Self-Managed Strata looking for more guidance or assistance
  3. As a Strata Council and Ownership unsatisfied with the current Strata Management brokerage

So in each case you are left with a decision as to who to contact as there are usually several options.

You are probably going to send out your request for management proposals to at least three management brokerages.  Assuming they all respond, you now have at least three different proposals to sift through and decide who to award the contract to.

The next step should be a “promo” meeting with each of the short listed candidates, because nothing can replace the face to face meeting.  At this meeting it is an opportunity for the council/committee to ask questions, and the manager to give you a feel for their style and approach.

Still, how do you compare.  Each manager has taken the same course to become licensed, read the same books, is regulated by the same authority, and follows the same rules.  So they are the same, right?  Comparing management companies is like shopping in a grocery store for apples.  Our local grocery store carries a minimum of three types of apples, but there are dozens of varieties.  The apples all have a different flavour, use, season, size, shape, & colour.  So although they are all still apples the nuances will make a big difference.

So how do you sort through the “apples” or management companies?  Before you even start figure out what you want, and be very clear when requesting your quote.  This is probably the most important thing.

However, there are a few other things to consider once the proposals have been received:

Watch for hidden or incidental costs:  Many management firms will quote low on monthly management fees and charge more for incidental “administration fees.” These administration fees can accumulate quickly.  A 100 unit building can expect to see admin fees around $150.00 per average month with a $0.15 per page charge.  When holding a general meeting those costs are expected to triple in that month.  Obsidian would rather charge for our service than gouge you on incidentals.  Our printing costs are 1/3 of the average competitor.  We have the option of colour printing too, to increase the impact of minutes, notices, and correspondence from council.

Portfolio Size:  Each strata manager will be managing a portfolio of multiple stratas.  Think about what it means when they managed 10, 15, 20+ strata.  How can they focus on you when every other day they are at a strata meeting gathering more and more action items?  Communicating with 10, 15, 20+ councils and ownerships?  How much admin support does each manager have?  Obsidian has no more than 8 strata or 1000 units per manager (with the exception of Basic and Accounting Management clients).  We back that up with bookkeeping staff and an assistant shared between every two managers.

On-Line Access:  Many firms offer this service, some still don’t.  It is critical in this age of communication that: owners, residents, managers, and suppliers have access to information and communication.  This allows for a much smoother operation of the strata.  Obsidian offers a unique community portal as part of our fee.

Termination Clause:  Ask about the termination clause in the contract.  No one wants to go into a relationship thinking about it failing.  However, sometimes the business relationship does fail.  The Strata Property Act and most management contracts require a ¾ vote at an Annual or Special General Meeting to terminate a strata management contract.  This process is awkward, confrontational, and consumes time and money.  Obsidian’s contract is client friendly, a majority vote by council at a properly convened and recorded council meeting, plus two clear-months notice, and we part ways professionally.

Updated Training:  The strata legislation and other factors that impact strata operation are changing quite rapidly.  Current continuing education requirements are very limited and frankly insufficient.  Ask how many seminars you manager has attended recently.  On what topics or areas of operation.  Ask if they are they part of CHOA, PAMA or CCI, any of these association hold regular seminars.  There is usually a seminar every other month.  At Obsidian we insist that our staff take as many training seminars as possible; we make it a priority to be up to date with our knowledge.

Meet the Manager:  Many brokerages will send their Managing Broker, Sales Manager, or General Manager to the meeting.  It is unlikely that any of these individuals will be your representative.  Ask them to bring your manager to the meeting so you can get a feel for them specifically.  The brokerage is only half the equation in management.  The relationship you have will be dictated by the weakest link of the two halves.  A strong manager in a week brokerage is equally handicapped as a weak manager in a strong brokerage.  Make sure both meet your requirements.  At Obsidian we understand this relationship, and by contract cannot reassign management without council approval.  Obviously if the manager leaves our team a new manager will have to fill the hole.  However, we hope that by creating redundancy within our management teams service levels will not be impacted.

Green Initiatives:  Business communities are now recognizing the savings that can be realized by reducing their impact on the environment and implementing sustainable operating solutions.  Ask the manager for some projects they initiated to save their clients’ money and how they could assist you.  Our team has experience and connections to implement green solutions that allow money to be diverted from expenses to the Contingency Fund.

These questions should assist you in understanding how to pick a management company.

Any questions on this article or other strata matters are welcome.  Please contact us though our contact us page.


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