Service Providers Impact on Strata Governance – Have Committees' Decisions Become a Rubber Stamp?

The all too cosy relationships between some strata lawyers and strata managers can have an effect on the quality of strata decision making by owners corporations in two ways. First, the choice of strata lawyers (and other service providers for that matter) is not always a rigorous process. Secondly, the repeated use of the same firms can lead to internally reinforced thinking lacking fresh ideas and concepts that can be introduced by those outside ‘the club’. I’m not the only one with these concerns.  

Strata decision makers risk surrendering self determination to ‘the experts’

Canadian academics, Treffers and Lippert (2020) challenge the notion that condominiums, (the term for strata in the USA and Quebec) are self-governing entities and argue instead that condo decision making has become appropriated by specialised condo service providers such as condo lawyers, property management companies, engineering consultants and insurance companies. In the end ,they say being a condo board member has been reduced to procuring these services and depending on condo-specific service providers does not necessarily amount to better governance. 

International research shows the danger of a closed shop of service providers 

In coming to these conclusions, the authors undertook 150 in-depth interviews of condo owners, board directors and industry representatives in Ontario and New York, and studied the results of an extensive survey of Ontario owners (n = 3222) which preceded law reforms in that province. Interestingly, in search of issues that come from owners rather than being imposed by industry experts, the authors also reviewed extensive amounts of press, law reform submissions, cases and documents recording condo decision making. 

The findings explored the impact of condo service providers on five key governance problems -  

• exploitation of the lack of knowledge and experience among board members, 
• conflicts of interest and fraud (e.g., engineering firms doing studies to keep levies low, so they get more lucrative ongoing repair and maintenance work), 
• compromised democratic processes and information flow to board members and owners,
• fragmented and non-inclusive communities, and
• poor enforcement of condo laws. 

Having examined these issues, the authors find ‘self-governance’ an illusion rather than a reality. 

The call for governments to think differently about strata corporations 

The authors also express doubt that continuing condo law reforms are enough to tackle these intensifying governance issues. In doing so, Treffers and Lippert add their weight to calls by others including, for example, Doug Harris (2019), to move beyond thinking about condominium / strata as autonomous private realms and more like hybrid private / public entities that have an important role in shaping our cities. 

The research demonstrates that in modern cities, strata corporations have an enormous impact, not only on their owners and residents, but also on the other dimensions of city life.  Strata corporation decision making processes are complex due to the nature of collective ownership of common property. The scope for strata service providers to take advantage of these dynamics is an inherent risk and requires attention.