Dear Tony: Our strata in Burnaby hired a new management company two years ago after several interviews with guarantees of monthly financials and accounting. We had a historic problem of significant receivables, and in a 144 unit complex, unpaid fees by 15 strata lots have a significant impact. When they were hired, we had almost $150,000 in unpaid fees. Since 2023, our financial statements have become less reliable to the point we have not received financials for the past five months. We have no way of knowing if our bills are paid, the condition of unpaid fees, or the accuracy of financials. They have stopped responding to our requests for financial statements. Even if we terminate the company, how do we get our financial statements?
Sarah M.
Under the Rules of the Real Estate Services Act, a strata brokerage must provide the reconciled financial statements for accounts managed by the brokerage on behalf of the strata corporation within six weeks of the month ending. For example, for Dec. 31 month ending, the statements are due by the Feb. 11.
The financial statements include operating and special levy accounts, investments, bank reconciliations, and receivables. Your council should be able to review these and compare to your approved budget for the current fiscal period. As a best practice, strata corporations with unpaid strata fees, special levies, fines, damages or insurance deductibles, should have these itemized to enable the council to make decisions on collection actions. These include demand notices for strata fees and levies to enable liens and further collection actions, the application of interest if permitted in the bylaws or resolutions, fines and penalties, notice of action in the Civil Resolution Tribunal, application to the courts for judgements and collections or court ordered proceedings to force the sale of a strata lot.
Without your financial statements, your council or lawyers are unable to act on behalf of the strata corporation. This may also be a breach of your strata management service agreement.
First solution, make an appointment with the broker for your management company and determine a time line for the reports and how to improve the delivery, and confirm the agreement in writing. Many companies are currently experiencing staffing issues in accounting; however, it doesn’t alter the obligations. Five months is an unreasonable delay.
Provided you have an agreed solution to move forward, it’s a viable solution if approved by your strata council. If the brokerage does not respond or meet the agreed upon delivery, contact BC Financial Services and file a complaint. Chronic failure to provide financial statements may result from a variety of issues, but the protection of public funds is a priority for the regulators. BC Financial Services Authority (BCFSA)
Tony Gioventu is executive director of the Condominium Home Owners Association
