I’m on a condominium board, and we have decided to hire a professional management company. Do they need to be licensed?

This is one of the most common questions we get. The answer depends on what they are going to do on behalf of the Board of Directors, and how they will handle the condominium corporation’s money.

Condominium managers are responsible for collecting condominium fees, arranging property maintenance (according to instructions from the condominium’s Board of Directors), assisting the Board of Directors with enforcing the Bylaws, and other duties set out in the Bylaws.

The Real Estate Act does not specifically refer to condominium management, but it does say that individuals need a licence if they collect contributions, or money, for the control, management, or administration of real estate.

So, if a condominium manager is collecting condominium fees, or other such fees such as special assessments, do they need a licence?

If a condominium manager collects the money payable to the condominium corporation, deposits it directly into the condominium corporation’s account, and they are not carrying out any other activities that fall under the definition of trading in real estate, they do not require a licence.

If a condominium manager deposits the money payable to the condominium corporation into the management company’s account for any period of time, no matter how short, they do require a licence.

As a member of a condominium Board of Directors, you and your Board will have to think about how you want your management company to collect and hold fees. If the company will hold them in its own account, they require a licence.

Licensing requirements provide some protection for consumers when a third party, for example a management company, holds consumer funds. All licensees are required to have Errors and Omissions insurance, and there is a consumer compensation fund that compensates consumers who suffer a financial loss as a result of fraud, breach of trust, or a failure to disburse or account for money held in trust. The compensation fund is only available to consumers who are working with licensed professionals on trades in real estate or deals in mortgages.

In December 2014, the Government of Alberta passed legislation that will require licensing for all condominium managers; however, the government has not announced the date on which those legislative changes will come into effect. In the meantime, the licensing requirements detailed in this article continue.

“Ask Charles” is a question and answer column by Charles Stevenson, Director of Professional Standards with the Real Estate Council of Alberta (RECA), www.reca.ca. RECA is the independent, non-government agency responsible for the regulation of Alberta’s real estate industry. We license, govern, and set the standards of practice for all real estate, mortgage brokerage, and real estate appraisal professionals in Alberta. To submit a question, email askcharles@reca.ca.