Tagged: Management Companies
October 22, 2018 at 2:01 pm #2137
Two contractors have recently advised On-Site Maintenance that they are required to pay fees to our Property Management company in order to do work for us? Has anyone else ever experienced this? I look forward to feedback from other Boards, Contractors and Property Management companies.
Originally posted by Shelley E
October 22, 2018 at 2:01 pm #2138
Management Companies differ in the approach in this area and it is an individual business decision. I believe this should be declared to the Board by the manager rather than the information coming from service providers. Each Board then needs to make a decision regarding whether this is appropriate or not. You will want to know by how much this will affect the cost from the service provider to the Corporation. You may want to discuss this with your manager to determine the end affects for your Corporation and get the details of this process.
KDM Management Inc.
Trudy A on August 07 2018 at 02:51 PM
October 22, 2018 at 2:02 pm #2139
I agree with Trudy on this, however, I believe that if it is a licensed brokerage, this may be against RECA regulations for a brokerage as it is essentially a form of kickback to charge a fee to be on their contractor list. This is also just my opinion, but it seems to me to be unethical as well.
Carrie P on August 07 2018 at 03:02 PM
October 22, 2018 at 2:02 pm #2140
I’ve had some contractors mention that they do this with other companies who keep a “preferred contractor” type of list. However it seems this would place the management company in a certain conflict. I would question whether any contractor who doesn’t pay that type of fee would be at risk of losing work? I can see a lot of problems with this type of “finder’s fee” and can say that our management company does not subscribe to this approach.
Jen M on August 07 2018 at 03:04 PM
October 22, 2018 at 2:02 pm #2141
It is the practice of some management companies to charge a percentage of certain invoices to the condominium corporation as an “administration fee” for organizing and supervising the work. As long as that practice is disclosed in advance, I don’t see an issue with that type of arrangement although our company does not add administration fees to invoices.
However, it sounds unethical, if not illegal for a property manager to charge a fee to a service provider in order for them to be able to perform work on behalf of the condominium corporation.
Mark R on August 07 2018 at 03:27 PM
October 22, 2018 at 2:02 pm #2142
Sounds like your Management Company is using their preferred contractors. Review your agreement with them, if you feel something is not right or you are not familiar with contracts have your corporation lawyer for advice. may be much cheaper in the long run. Ask your self what is best for the Corporation, who authorized this contract. If they are Licensed. they could be breaking the law.
Rod P on August 07 2018 at 04:53 PM
October 22, 2018 at 2:02 pm #2143
Very unethical business practice as there is no way of truly knowing what amount of “kickback” so to speak is being received by the management company. Since the property management company works on behalf of the condo board it would be no different than a main contractor hired by their customer/client to find the right trades to do the scope of work required and adding 15-20% which is a fairly standard contractor( management company) mark up to supervise the work to be done. Therefore the condo association should be paying the mark up to the management company.
Mike B on August 07 2018 at 05:00 PM
October 22, 2018 at 2:02 pm #2144
I think this is a very poor practise on the part of any property manager to want kickbacks for awarding contracts. This puts the Board in a very bad position. The Board and the Property Manager should be requesting 3 quotes for jobs and there should be no kickbacks for either. I personally think you should be looking for a new property manager if this is there way of doing business. There are lots of contractors out there that will give you a quote and are happy to do the work your require. My personal thoughts are if you used an engineering firm to write the specifications for your work (on large projects) they would tender the contract and give you a list of the bids and you could choose. There are no kickbacks involved then.
Anne A on August 07 2018 at 10:20 PM
October 22, 2018 at 2:03 pm #2145
Yes, very unethical. MY property manager does this. First they have the contractor sign up for what they call their preferred vendors list.This costs about 300.00 per year then the contractor has to PAY my property management company 5% of whatever they bill us. They tell the contractor that they have to pay this if they want any more work at this complex. THIS IS EXTORTION AS DEFINED IN THE DICTIONARY.
I tell my contractors NOT TO SIGN UP and DO NOT PAY. We , the board hire our own contractors and my management company has approached long time contractors with this proposal. We have a clause in our Management Agreement that says the PM is not allowed to take or receive any monies etc so the PM has set up a different company within their organization to receive their kickbacks .
Barbara P on August 08 2018 at 07:47 AM
October 22, 2018 at 2:03 pm #2146
Will be glad when RECA requires all Property Managers have to be licensed so we can report these kind of issues and hopefully the Property Manager will be chastised for such unethical business practices.
Anne A on August 08 2018 at 09:17 AM
October 22, 2018 at 2:03 pm #2147
Bottom line is, the condo corporation pays for all the “considerations”
Gerrit R on August 08 2018 at 09:21 AM
October 22, 2018 at 2:03 pm #2148
The practice of preferred vendors is something that is common in the Insurance Industry. However, there are NO kickbacks to the insurer to be on that list. The insurers do that so that they can ensure that the vendors they recommend are competent, competitive and have solid business practices. Personally, I would not be in favor of any kickbacks to the property manager.
Selecting the right property manager is a difficult job at the best of times. I own several condo units and have served on boards as well. Having read many property management contracts, I find that you really need to check not only the monthly fee but what other fees are for additional services. The property manager we uses does NOT accept kickbacks. The do have a number of contractors they recommend but only because those contractors have proven themselves to be worthy!
Heather C on August 08 2018 at 10:46 AM
October 22, 2018 at 2:03 pm #2149
Sorry to say this is becoming more and more common and the owners are paying for this. There are a group of condo boards in Calgary filing a class action against the management company for doing this. Read your contracts, many disclose this but board don’t read their contracts or get legal assistance in understanding these contracts. At Condo Check we provide a service to assist boards in selecting their management company and find that boards who understand this is in the contract are not selecting those companies. Read the fine print and that includes the additional charges sections of the contracts before you engage a management company. Those contracts are binding. Cheers! Bernie
Bernice W on August 08 2018 at 03:59 PM
October 22, 2018 at 2:03 pm #2150
If a contractor is quoting work to be done in your complex and having to pay a fee to your Property Manager (who you are already paying a monthly fee to as well as any other charges they tack on to their monthly bill) you can bet your sweet life that the fee is going to be included in the price your are quoted. So any way you look at it, it is the Condo Association that in a round about way ends up paying this “preferred contractor” fee to the Property Manager. It is a corrupt practice and should be against the law.
Ruth G on August 08 2018 at 07:50 PM
October 22, 2018 at 2:04 pm #2151
Disgraceful practice by any professional.
Brett B on August 08 2018 at 08:11 PM
October 22, 2018 at 2:04 pm #2152
Unfortunately it’s a shady industry with little regulation. It seems out of character for an NDP government to take such a long time to move forward with protecting the little guys–condo owners.
Donna S on August 09 2018 at 07:08 AM
October 22, 2018 at 2:04 pm #2153
I think it is a very reprehesive practise and if I found out our Property Manager was doing this, I would do my best to end their contract with our complex.
Anne A on September 08 2018 at 04:39 PM
October 22, 2018 at 2:04 pm #2154
This practice is becoming somewhat of an industry norm, which I feel needs to be stopped immediately! Condominium Management companies are paid to facilitate and coordinate projects. Taking advantage of the situation is not ethical nor is it right! What’s next, an extra payment bonus is if someone gets a specific job? Anyone that defends this type of activity is criminal and should be treated as such. This is like adding administration fees to special assessments, lets tax the ones already going through hardships. If a Condominium Management company is not willing to do AB and C then they should move onto another industry. Stealing from the average Condominium Owner increases prices for work. At the end of the day the client is paying. There should not be any costs to bring contractors to the table. The contractors that are paying these fees should be questioned as well…………………..
Curtis S on September 10 2018 at 08:59 AM
October 22, 2018 at 2:04 pm #2155
We vote the Directors to do their job on our behalf. If they do not properly vet the candidates for a position as property managers they should be fired or asked to remove themselves from their position, at a Special
General Meeting requested by the owners, as per Section 30.1 of the Condominium Property Act. It is understandable that some my not know what they are doing, but that should not stop them from taking measures to learn and recognize that they should keep the residents as their first priority, rather than the property manager.
Ron K on September 10 2018 at 12:02 PM
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