In this ever-changing financial environment, it seems that service charges are forever on the rise – which leads to the age-old question, “How do I inform the owners?”.

In truth, it’s a little more involved than simply informing the owners. While the question might best be answered by a solicitor, the position of the Office of Fair Trading (OFT) is that the best practice for advising owners about updated fees calls for the most direct approach.

That means personal notification—rather than having the news buried in a general issue newsletter—where it might easily go unnoticed.

How you can notify and renegotiate

Owners would be required to respond one way or the other (either negatively or positively), a non-response cannot be taken as acceptance. There must be a clear provision for the owner’s signature and a date, so that a manager has proof that the appropriate person was notified and accepted the updated fees for the new owner agreement.

One possibility is to make an announcement on the monthly statement sent to the owner, advising him or her about the inclusion of a new addendum on the statement, which calls for their immediate attention.

It should be remembered that under the Property Occupations Act, any units which still operate under the old PAMDA 20a Form, must move to the latest version of Form 6 in cases where changes are made to owner agreements—including increases to owner agreement fees.

The Office of Fair Trading and its Judiciary

As you read through the Property Occupations Act (POA) and its regulations, you will occasionally see the term ‘Maximum Penalty’, which may apply to non-compliance or breaches of the Act. Terminology used by the Office of Fair Trading implies that a wide range of actions can potentially be taken when dealing with breaches of the POA, and that the maximum penalty will not necessarily be sought.

OFT Compliance officers identify three separate categories of offenses: those of carelessness, those of recklessness, and those of dishonesty.

  • ‘Careless’ offenses include administrative oversights which have little or no financial impact, and which have already been rectified.
  • ‘Reckless’ offenses are considered to be more serious, because these do carry a financial impact, and must therefore be corrected at the very earliest opportunity.
  • ‘Dishonest’ offenses are self-explanatory, and must be reported immediately to the OFT, as they require immediate rectification.

Where to learn more about updating owner agreement fees?

As part of the continuing education of licensees, the OFT will be conducting informative seminars in locations all along the east coast. These seminars will provide excellent educational opportunities for managers new to the industry, and will also serve as great refresher courses for veterans.

The OFT provides education on an ongoing basis through its Web-site and YouTube channel.