Responsibilities of Condominium Manager Brokerages
Brokerages are required to provide accurate and timely periodic and financial reports to condominium corporations to maintain transparency, accountability, and compliance under the Real Estate Act Rules.
WHAT YOU'LL LEARN
1. Brokerage Periodic and Financial Reporting Requirements
2. Compliance Checklist for Brokerages
3. Learning Activities
Periodic Reporting Obligations
Condominium management brokerages are responsible for providing regular reports on the financial and operational activities of the condominium corporation they manage.
These reports must include details about:
Income and expenditures for the reporting period.
Trust account reconciliations showing balances and transactions.
Details of reserve fund contributions and expenditures.
Financial Reporting Obligations
Annual Accounting Reports:
"A brokerage must prepare and deliver to each condominium corporation a financial report showing all money received or disbursed on behalf of the condominium corporation for each fiscal year."
The financial report must clearly outline:
All revenues received (e.g., condominium fees, special assessments).
All expenses disbursed (e.g., maintenance costs, insurance premiums).
The starting and ending balances in the trust account for the fiscal year.
Additional Reporting Requirements:
If requested by the condominium corporation, brokerages must provide interim reports or specific financial statements.
The reports must comply with the terms outlined in the condominium management service agreement.
Importance of Reporting
Reporting ensures that condominium corporations can:
Make informed decisions about their financial health.
Maintain compliance with the Condominium Property Act and Real Estate Act.
Compliance Checklist for Brokerages
Trust Account Record-Keeping
Below is a compliance checklist that can be used by brokerages to meet record-keeping and reporting obligations under the Real Estate Act and Real Estate Act Rules.
Maintain Accurate Trust Account Records:
Record all deposits and disbursements with detailed descriptions.
Ensure records include supporting documentation, such as invoices and receipts.
Perform Monthly Reconciliations:
Reconcile trust account balances with bank statements every month.
Investigate and resolve discrepancies promptly.
Ensure reconciliation is signed by the broker or authorized representative.
Retain Records for 3 Years:
Store all trust account records in an organized manner.
Ensure records are accessible for inspections or audits.
Follow Rules for Electronic Transfers:
Obtain written authorization for all electronic transfers.
Maintain documentation of each transfer, including purpose and recipient details.
Notify the Registrar of Trust Account Issues:
Immediately report any negative balances or shortages to the Registrar.
Provide an action plan to address the issue if requested by the Registrar.
Periodic and Financial Reporting
Prepare Annual Financial Reports:
Include all revenues, expenses, and trust account balances for the fiscal year.
Deliver the report to the condominium corporation within the required timeframe.
Provide Interim or Additional Reports:
Respond promptly to requests for specific financial reports from the condominium corporation.
Ensure reports align with the terms of the condominium management service agreement.
Ensure Accuracy and Transparency:
Verify that all financial reports are accurate, complete, and transparent.
Use clear language and provide detailed breakdowns of transactions.
Compliance Monitoring:
Conduct Internal Audits:
Schedule regular internal audits of trust account and financial records.
Review compliance with monthly reconciliation and reporting requirements
Review Service Agreements:
Ensure all reporting obligations are clearly outlined in the service agreement.
Communicate regularly with the condominium corporation to confirm satisfaction with reporting practices.
Train Staff on Compliance:
Provide training to brokerage staff on trust account management and reporting requirements.
Emphasize the importance of adhering to Real Estate Act Rules.
Activities
Knowledge Check:
List the trust account records that brokerages are required to maintain under the Real Estate Act Rules.
Scenario-Based Exercise:
Given a case where a brokerage must prepare an annual financial report, outline the key components of the report and how to deliver it in compliance with the legislation.
Practical Task:
Using the compliance checklist, complete a mock audit of a sample trust account and identify areas where the brokerage needs improvement.
Trust Account Record-Keeping Requirements:
Brokerages must maintain detailed and accurate records of trust account activities. These requirements are strictly governed by the Real Estate Act Rules to ensure transparency and prevent misuse of funds.
Trust Account Documentation: "A brokerage must keep books, records, and accounts for all money received or disbursed in relation to the business of the brokerage."
These records must include:
Deposits: Record of all funds deposited into the trust account, including condominium fees, special assessments, and reserve fund contributions.
Disbursements: Detailed records of all payments made from the trust account, including invoices and receipts.
Reconciliation Requirements: "A brokerage must reconcile each trust account monthly, ensuring the balances recorded in the brokerage’s trust ledger match the bank statement balances."
Monthly reconciliations must:
Identify and resolve any discrepancies between the ledger and the bank statement.
Be signed off by the broker or a designated representative.
Retention of Records: "All trust account records must be retained for a minimum of 3 years from the date the record was created."
These records must be readily available for inspection by the Registrar or other regulatory authorities.
Electronic Transfers:
Electronic transfers of trust funds are permitted but must:
Be authorized in writing by the condominium corporation.
Include detailed documentation of the transaction.
Registrar Notifications: "A brokerage must notify the Registrar immediately if a trust account experiences a negative balance or a shortfall."
