Mandatory Content Requirements
Why Are Mandatory Requirements Important?
Contracts that lack key legal provisions can result in:
Legal disputes between the condominium board and management brokerage.
Financial loss due to unclear payment structures or termination clauses.
Non-compliance penalties if the agreement fails to meet Real Estate Act Rules.
To protect the interests of all parties, every service agreement must include specific elements mandated by the Real Estate Act Rules.
Key Mandatory Elements of a Service Agreement
Every condominium management service agreement must:
Be Signed by All Parties
Why? Signatures confirm that both parties understand and agree to the terms of the contract.
Example: The condominium board president and the management brokerage’s authorized representative must both sign the agreement before services begin.
Clearly State All Terms and Conditions
A complete service agreement must include:
Names of the Parties – The full legal names of the condominium corporation and the management brokerage.
Property Description – The address or legal description of the property under management.
Effective Date – The start date of the agreement.
Duration – The length of time the agreement will remain in effect (e.g., one year, with an option to renew).
Scope of Services – A detailed description of the services the management brokerage will provide, such as:
Financial management (e.g., budgeting, reserve fund administration).
Maintenance coordination.
Compliance with condominium laws and bylaws.
Responsibilities of Each Party – Clearly defining the obligations of both the condominium corporation and the management brokerage prevents disputes.
Use and Distribution of Information – Policies regarding confidentiality and handling of personal information.
Remuneration Details – The fees for services, including:
Flat fees or percentage-based payments.
Payment schedule (monthly, quarterly, annually).
Additional fees for extra services beyond the standard contract.
Termination Provisions – The conditions under which either party can terminate the agreement (e.g., notice periods, breach of contract procedures).
Example: The contract may allow either party to terminate the agreement with 60 days’ written notice.
Indicate Trust Fund Handling
If the brokerage will hold funds on behalf of the condominium corporation, the agreement must specify which funds are held in trust.
Trust Fund Categories:
Operating Funds – Used for day-to-day expenses, such as maintenance and repairs.
Reserve Funds – Dedicated to long-term capital repairs and replacements.
Special Levy Funds – Collected for specific major projects.
Other Amounts – Any additional funds the brokerage manages.
Example: If the management brokerage will collect monthly condo fees, the contract must state how these funds will be held and managed.
Ensuring Compliance with Legislative Standards
To ensure contracts meet Alberta’s legal requirements, condominium managers should implement the following best practices:
1. Develop Comprehensive Checklists
A contract checklist should include all mandatory elements to ensure nothing is missing.
Each service agreement should be reviewed before signing.
Example: Before approving a new condominium management contract, the board reviews a checklist to ensure it includes:
Termination clauses.
Payment schedules.
Scope of services.
2. Conduct Regular Audits
Annual contract audits ensure that agreements remain legally compliant and beneficial to the condominium corporation.
Adjustments may be necessary if laws change.
Example: If new regulations affect condominium reserve fund reporting, contracts should be updated to reflect these changes.
3. Engage in Continuous Education
Stay up to date on legislative changes to ensure contracts remain compliant.
Provide training for board members to help them understand contract obligations.
Example: A condominium manager attends yearly legal seminars to stay informed about changes to Alberta’s Real Estate Act Rules.
Analyzing Service Agreements for Completeness
Once a contract is drafted, it must be evaluated to ensure it is legally sound and beneficial to the condominium corporation.
Step 1: Cross-Reference with Legislative Requirements
Verify that all elements required by the Real Estate Act Rules are included.
Ensure the agreement clearly states the responsibilities of both parties.
Example: A contract missing trust fund handling provisions is non-compliant and must be revised.
Step 2: Assess Clarity and Specificity
Ensure terms are written in clear, precise language.
Avoid vague wording that could lead to misinterpretation.
Example: A clause stating, “The manager will oversee maintenance,” is too vague. Instead, it should state:
“The manager will coordinate and oversee all maintenance contracts, including weekly inspections and emergency repairs.”
Step 3: Evaluate Risk Management Provisions
Confirm that the contract includes:
Dispute resolution mechanisms (e.g., mediation, arbitration).
Indemnification clauses (protecting the condominium from liability).
Termination rights to avoid unfavorable long-term contracts.
Example: If a contract lacks a clear dispute resolution process, the corporation may be forced into expensive legal battles if a disagreement arises.
