Understanding a Licensee’s Duty Within the Scope of Authority Granted by a Condominium Corporation
The Real Estate Act Rules requires licensees to act within the scope of authority provided by a representation relationship. A licensee must act in the best interests of the client and follow the terms of the representation agreement.
WHAT YOU'LL LEARN
Understanding a Licensee’s Duty Within the Scope of Authority Granted by a Condominium Corporation
Evaluating a Condominium Manager’s Actions Against Their Granted Authority
Drafting a Delegation Agreement That Meets Real Estate Act Rules Requirements
Key Legislative Guidance:
The Real Estate Act Rules requires licensees to act within the scope of authority provided by a representation relationship. A licensee must act in the best interests of the client and follow the terms of the representation agreement.
"A licensee must only provide services they are authorized to perform and that they are competent to provide.”
Licensees are required to ensure their actions comply with the obligations defined in their representation agreement and the scope of authority granted by the condominium corporation.
Key Points:
Licensees are agents of the condominium corporation and must operate within the legal and contractual authority granted by the representation relationship.
Actions outside the scope of the agreement or contrary to the condominium corporation’s instructions are considered a breach of duty.
Licensees must document all client instructions and approvals, ensuring clarity on tasks delegated and services provided.
Evaluating a Condominium Manager’s Actions Against Their Granted Authority
Case Study: Unauthorized Repairs
Scenario: A condominium manager undertakes significant repairs to common property without prior approval from the condominium corporation board, as required under the representation agreement.
Legislative Reference:
A licensee must “act honestly and with reasonable care and skill.”
A licensee is required to comply with the terms of the representation agreement and not act beyond their authority.
Analysis:
The manager’s actions violated the representation agreement because they did not obtain proper authorization for repairs, even though the repairs were necessary.
This could result in financial disputes, loss of trust, and liability for the manager and the brokerage.
Assessment Framework:
Was the action authorized? Check the terms of the representation agreement.
Was the decision communicated to the client? Determine if the condominium corporation was notified of the manager’s intent to act.
Was compliance documented? Verify that documentation exists to support the manager’s decision.
Drafting a Delegation Agreement That Meets Real Estate Act Rules Requirements
Key Requirements for a Delegation Agreement:
To comply with the Real Estate Act Rules, the delegation agreement must include:
Clear Scope of Authority:
The agreement must define the tasks and authority delegated to the condominium manager by the condominium corporation.
Example: “The licensee is authorized to collect monthly fees, prepare budgets, and coordinate routine maintenance under the supervision of the board of directors.”
Documentation of Responsibilities:
“All agreements related to services provided must be in writing.”
Specify key obligations such as trust account management, compliance with the Condominium Property Act, and reporting timelines.
Compliance and Limitations:
Include a clause requiring the manager to act in compliance with the Real Estate Act Rules and not exceed the delegated authority.
Example: “The licensee must not authorize expenditures exceeding $5,000 without prior written approval from the board of directors.”
Conflict Resolution:
Outline the process for resolving disputes between the manager and the condominium corporation.
Example: “Any disagreement regarding authority or responsibilities shall be resolved through written consultation with the condominium board.”
Template for a Delegation Agreement:
Delegation Agreement
This Delegation Agreement is entered into by [Condominium Corporation Name] and [Licensee Name] on [Date].
1. Scope of Authority: The licensee is authorized to:
Collect condominium fees on behalf of the condominium corporation.
Maintain financial records in compliance with the Condominium Property Act and Real Estate Act Rules.
Coordinate routine property maintenance up to a limit of [$5,000] without additional approval.
2. Responsibilities: The licensee agrees to:
Act in the best interests of the condominium corporation.
Provide financial reports monthly to the condominium board.
Document all transactions and maintain transparency.
3. Compliance: The licensee will comply with the Real Estate Act Rules, the Condominium Property Act, and all relevant bylaws.
4. Limitation of Authority: The licensee may not:
Authorize major expenditures exceeding $5,000 without board approval.
Sign contracts exceeding one year in duration without prior consultation.
5. Dispute Resolution: In the event of a conflict, the parties agree to resolve disputes through written consultation or arbitration as required.
Signed:
[Condominium Corporation Representative]
[Licensee]
Date:
By following this framework, licensees can ensure they comply with legislative requirements, maintain professional accountability, and provide clarity on delegated responsibilities.
This module emphasizes the importance of understanding and complying with the authority granted by representation relationships, assessing actions for compliance, and drafting proper delegation agreements. The Real Estate Act and Rules provide a clear framework to ensure condominium managers act within their authority and maintain transparency and professionalism.
