A reminder to property and strata managers

September 2020

It is an important aspect of risk management for both strata and property managers to recognize their role as agents.

When negotiating or arranging contracts on behalf of your client, you must keep in mind that you should not be exposing yourself to legal liability for that contract. For example, a property manager who’s named as the landlord in a lease may be found responsible for breaching the lease, even in circumstances where the property manager has done no wrong. For example, your client, the homeowner, asks you to give the tenant notice to vacate so that the homeowner can renovate. If the homeowner later breaches the Residential Tenancy Act and sells the property instead, the brokerage, as landlord in the lease, may be on the hook for all the damages to the tenant.

The brokerage’s only recourse is to try to seek indemnity from the homeowner. If that isn’t successful, the brokerage is left holding the bag.

This type of risk could be minimized if your client’s contracts (such as leases or service agreements) are in your client’s name (not the name of your brokerage) and authorized, reviewed and are signed by the client. If your client is not able to sign the contract themselves, then you could obtain the written authorization from the client to sign on their behalf.

If the contract is in your client’s name but you are signing on their behalf, you must ensure compliance with Real Estate Rule 5-3. Keep in mind that you must never sign in the name of the client, but rather should sign your own name, indicating beside or below your signature that you are signing as agent for the client.

Licensees who make themselves parties to a contract (for example, by naming the brokerage as the landlord) should be aware that they may not have insurance coverage should claims be filed against them for breach of that contract.