Limits on Authority in Alberta
Under the Real Estate Act and Rules, condominium managers must adhere to strict limits on their authority.
WHAT YOU'LL LEARN
Limits on Authority
Risks of Exceeding Authority
Drafting a Policy Document
Key Takeaways
Limits on Authority
Under the Real Estate Act and Rules, condominium managers must adhere to strict limits on their authority, especially regarding their capacity to:
Contract: Managers cannot bind a condominium corporation to contracts exceeding the scope of their authority as outlined in their service agreements or the board’s instructions.
Licensees must "act only within the scope of the authority granted by the client."
Delegate: While tasks may be delegated, managers must ensure that delegations are authorized and appropriate under the Real Estate Act Rules. Delegating duties beyond their capacity or competence could breach fiduciary obligations.
Incur Expenses: Managers must ensure that any expenditures are explicitly authorized within their representation agreement or by the board. Unauthorized expenses may lead to civil liability or disciplinary action.
The Real Estate Act Rules specifies that "licensees must not misuse, misappropriate, or mishandle funds held in trust or under their control."
Risks of Exceeding Authority
Exceeding these limits can lead to:
Breach of Fiduciary Duty: A condominium manager owes fiduciary obligations such as loyalty, confidentiality, and acting in the best interests of the condominium corporation. Exceeding authority can result in a breach of these duties.
The Real Estate Act Rules: "A licensee must act honestly and in good faith in their dealings with clients."
Civil Liability: Exceeding authority may result in the manager being held personally liable for unauthorized contracts or expenses.
The Real Estate Act defines conduct deserving of sanction, which includes acting outside the scope of authority.
Regulatory Sanctions: The Registrar has the power to investigate and impose penalties, suspend, or cancel a license for such breaches.
Example Analysis:
A condominium manager signs a maintenance contract exceeding the amount authorized by the board. This action:
Violates the fiduciary duty to act within the scope of authority.
May result in personal liability if the corporation refuses to honor the contract.
Risks disciplinary action from RECA for unauthorized contracting.
Drafting a Policy Document
A policy document for condominium managers can help ensure compliance with legislative requirements and establish clear boundaries.
Policy Template:
Title: Limits on Authority Policy for Condominium Managers
Purpose:To define the limits of authority for condominium managers in contracting, delegating, and incurring expenses, ensuring compliance with the Real Estate Act and protecting the interests of condominium corporations.
Scope: This policy applies to all licensed condominium managers and brokerages.
Policy Statement:
Contracting Authority:
Managers must obtain written authorization from the board of directors or representation agreements before signing contracts on behalf of the condominium corporation.
Contracts exceeding a predetermined limit ($X amount) require specific board approval.
Delegation of Authority:
Tasks may only be delegated to qualified individuals. The condominium manager remains responsible for ensuring that delegated duties are performed correctly and in compliance with the Real Estate Act Rules.
Incurred Expenses:
All expenditures must align with the condominium corporation's approved budget or receive explicit board approval.
Monitoring and Compliance:
Monthly reports must be submitted to the condominium board detailing contracts, delegated tasks, and expenditures.
Any breaches must be reported to the Registrar within the timelines outlined in the Real Estate Act Rules.
Approval: This policy is approved by [Name/Title] and is effective as of [Date].
Key Takeaways
Managers must act within the authority granted by the board or representation agreements.
Breaching authority can lead to civil liability, fiduciary duty breaches, and regulatory sanctions.
A clear policy helps mitigate risks and ensures compliance with the Real Estate Act and Rules.
