In our last piece, we reviewed the threshold for being granted a license as a condo manager or management services provider. Let’s now explore whether skirting those requirements is possible.
Can someone manage condominiums without a license?
Not legally. Section 34 of the CMSA prohibits unlicensed practice as a condo manager, as follows:
Prohibition, condominium management services
34. (1) No person shall provide condominium management services unless licensed as a condominium management provider or as a condominium manager.
(2) A person who is not licensed as a condominium management provider or condominium manager shall not,
(a) directly or indirectly hold himself, herself or itself out as being a condominium management provider or condominium manager, respectively; or
(b) perform any of the functions of a condominium management provider or condominium manager.
This language is similar to legislation governing other regulated professions and is backed by provisions making unlicensed practice an offence that can be halted and prosecuted by the regulator, resulting in restraining orders, fines and incarceration. This prohibition is also mirrored in section 36:
Notification of licence required
36. Subject to section 42, no condominium management provider or condominium manager shall provide condominium management services until notified in writing by the registrar that the provider or the manager, as the case may be, is licensed.
While it may be “belt and suspenders,” this section effectively blows away the argument that “I thought I was licensed because no one told me that I wasn’t!”
Section 51(1) goes further and makes management firms responsible to ensure that their employees are duly licensed.
Restrictions on employees
51. (1) No licensed condominium management provider shall employ an unlicensed person to perform a function for which licensing is required.
Strangely, however, s. 51(1) does not seem to prohibit contracting work to unlicensed persons. This needs to be fixed to close an obvious loophole for workers that aren’t employees. [Update: The Ministry folks kindly point out that s.1(1) of the CMSA defines “employ” as “to employ, appoint, authorize or otherwise arrange to have another person act on one’s behalf, including as an independent contractor.” Problem solved.]
Additionally, unlicensed managers will have no standing to pursue their clients in court for management fees they earned while unlicensed, thanks to section 34(3):
Licence a requirement to bring action
34 (3) Except as otherwise prescribed, no action shall be brought for remuneration for services in connection with providing condominium management services unless, at the time of providing the services, the person bringing the action was licensed or exempt from licensing under this Act and the court may stay any such action upon motion.
These provisions will make it difficult for amateurs, dabblers or anyone else to manage condominiums without a license (and to get paid for it).
But as with all things, the possibility of exemptions exists. Section 35 says:
35. Despite section 34, a licence shall not be required in respect of the provision of condominium management services by the persons or in the circumstances that are prescribed.
The people and circumstances that are not required to obtain a license will be set out in a regulation. Those exempted will likely include members of self-regulated professions carrying out their professional practises and will also likely include a carve-out for self-managed condo boards and for court-appointed administrators whose powers and protections are spelled out in a court order. As technology, business practices and the marketplace changes, different scenarios may arise that may need to be regulated (or not). Roughing in room for flexibility is therefore prudent.
While it’s clear that only a licensed person can provide condo managements services, is it possible for a condo corporation to engage an unlicensed manager to run their condo?
In a word, no. Schedule 1 of Bill 106 contains proposed new section 17.0.1 of the Condominium Act, 1998, which reads:
A corporation shall not enter into an agreement with a condominium management provider or a condominium manager to receive condominium management services unless the provider or manager, as the case may be, is licensed under the Condominium Management Services Act, 2015.
This requires condo boards to, in addition to their other diligence, ensure that the proposed manager or management service provider holds a license. Fulfilling this step could be as simple as checking a website or asking to see a copy of the license.
Prohibiting condo corporations from engaging unlicensed managers helps round out a closed system that will ultimately protect unit owners from directors who may be tempted to gamble their condominium’s assets and affairs by entrusting them to an unqualified manager to save a few bucks. Many condominiums that went down that garden path have paid dearly for it.