What this topic covers
Building operations, risk, documents and finances for the Practice of Condominium Management (PCM) exam: maintenance, contractors and quotes, the corporation's duties, records and the service agreement, fund accounting, the reserve fund, borrowing and chargebacks. These are original study notes for practice questions, not RECA material. Legal points are based on the Condominium Property Act (CPA) and Regulation (CPR) and the Real Estate Act Rules in force on 1 January 2027; thresholds, periods and amounts can change and should be checked in the current version of the text.
Maintenance and the corporation's duties
- Maintenance types: preventative = planned servicing before failure; reactive = repair after failure; corrective = work on a defect already found; cosmetic = appearance (PCM blueprint 3.1.2.3).
- Repair and orders: keep common property in good and serviceable repair (CPA s. 37(2)(a)) and comply with public authority orders requiring work on the parcel (s. 37(2)(b)).
- Taxes and insurance: the corporation is not liable for taxes levied on a unit and its share of common property (CPA s. 65); insuring units and common property is its obligation (s. 47(1)(a)).
Contractors, quotes and conflicts
- Selection: same scope for all firms; confirm insurance, licensing and references; the board decides (PCM blueprint 3.2.2.1).
- Board process: departing from the board's direction, such as three quotes, needs board approval (PCM blueprint 3.3.1.1).
- Third-party benefits: disclose in writing their nature, extent and influencing factors before accepting them (Rule 80.82(1)(e)) and obtain written acknowledgement (Rule 80.82(3)).
Documents and the service agreement
- Content: scope of authority, including electronic disbursements, signing cheques, contracts and investing (Rule 110.24(e)); trust account interest is paid to the corporation (Rule 110.24(h)).
- Records: kept separate at the brokerage's registered business office in Alberta (Rule 110.22).
Operating account and reserve fund
- Fund accounting: money recorded in separate funds by purpose, such as the operating account (CPA s. 38.1) and the reserve fund (s. 38) (PCM blueprint 3.5.2.4).
- Reserve fund: major repair and replacement that does not normally occur annually (CPA s. 38(1)), plus the reserve fund study and report and other expert reports on common property (s. 38(1.01)). Recurring annual costs go to the operating account.
- Example: roof $64,000 + study and report $7,500 + engineer's report $4,000 = $75,500 from the reserve fund; an $18,000 annual maintenance contract is an operating cost.
- Commingling: not allowed except to pay for repair or replacement of depreciating property (CPR s. 27(2)).
- Capital improvements: need a special resolution, unless required to meet legal standards with enough money left (CPA s. 38(2)).
- Study provider: directors and the manager are excluded (CPR s. 21.1(2)), but a corporation of not more than 12 units may act as provider by special resolution, not ordinary resolution (CPR s. 22).
Borrowing and chargebacks
- Borrowing: a resolution is needed when the new loan plus loans outstanding in the fiscal year exceed the greater of 15% of revenues in the latest financial statements (or a bylaw amount) and a previous resolution's maximum (CPR s. 31.7(2)). Largest new loan = greater limit - outstanding loans. Example: 15% of $560,000 = $84,000; prior resolution $120,000; outstanding $45,000; 120,000 - 45,000 = $75,000.
- Chargeback: capped by the insurance deductible, claim or not (CPA s. 39.01(3)(b)); after the owner's response or the deadline, whichever is earliest, the board levies or declines by resolution (CPR s. 73.91(4)), then serves a statement (s. 73.92). It is not a special levy (CPA s. 39.1).
Sample questions (5)
1. Which description best fits preventative maintenance of a condominium building?
- Repairs made after a component has failed, to put it back into working order.
- Work done to improve the look of common areas, such as repainting a lobby.
- Repairs to a defect found in an inspection, scheduled for a later date.
- Planned servicing and inspections done before failure to reduce breakdowns.
Preventative maintenance is planned, scheduled servicing and inspection carried out before a component fails so that breakdowns are reduced and equipment lasts longer. Repairs after a failure are reactive, work on a defect already found and scheduled for later is corrective, and work that improves appearance is cosmetic. The four types are distinguished in the PCM blueprint at 3.1.2.3.
2. A municipal fire inspector sends the corporation a written order to repair a damaged stairwell fire door on the common property. The board asks the manager who is responsible for complying. What should the manager say?
- The corporation must comply, so the board should authorize the repair as its own duty.
- The owners of the units nearest the door must arrange and pay for the repair themselves.
- The condominium manager is personally responsible for the repair under the service agreement.
- The corporation may wait for the next reserve fund study to list the door before acting.
(CPA current as of May 14, 2026) Section 37(2)(b) of the Condominium Property Act makes it a duty of the corporation to comply with notices or orders by a municipal or other public authority requiring work on the parcel, and section 37(2)(a) requires it to keep the common property in good and serviceable repair. The work is not assigned to nearby owners, and the manager acts for the board under the service agreement instead of taking on the corporation's duty. Waiting for a later study would leave the order unmet.
3. The board asks its manager to recommend a contractor for a parkade membrane repair, and three firms have submitted bids. Which step best supports an unbiased and qualified choice?
- Check each firm's insurance, licences and references, then report the findings to the board.
- Recommend the firm the manager has used before, since its work is already familiar to the manager.
- Let one bidder's sales representative write the scope of work used to compare the bids.
- Recommend the lowest bid, because price is the clearest basis for comparing the firms fairly.
Unbiased and qualified contractor selection means comparing firms on the same scope and confirming that each one is insured, properly licensed and able to give references, then giving the board the results so that the board decides. Choosing on price alone ignores qualifications, favouring a familiar firm introduces bias, and letting a bidder write the scope lets that bidder shape the comparison. This reflects PCM blueprint 3.2.2.1 on hiring practices.
4. Which charge does section 65 of the Condominium Property Act say the corporation is not liable for in relation to a unit?
- A utility account for the lighting that serves the common property of the parcel.
- The premium for the insurance the corporation must place on the units and common property.
- A tax levied on the unit and its share of the common property by a local authority.
- The cost of repairs to the common property that the corporation must keep in repair.
(CPA current as of May 14, 2026) Section 65 of the Condominium Property Act provides that the corporation is not liable, in relation to a unit and the share in the common property assigned to it, for any rate, charge or tax levied by the Crown, a local authority as defined in the Municipal Government Act or any other authority with power to levy on land, so a property tax levied on a unit falls on its owner, not on the corporation. Insurance on the units and common property is the corporation's own obligation under section 47(1)(a), and lighting and repairs of the common property are costs of controlling and maintaining it under section 37 that are paid by the corporation.
5. The board directs its manager to collect three written quotes for replacing a rooftop unit. Only two firms deliver quotes by the deadline. What should the manager do?
- Report the two quotes and the shortfall to the board and ask how it wants to proceed.
- Ask the higher bidder to lower its price to match the other firm's quote first.
- Choose the lower of the two quotes, since the board's direction cannot be met in full.
- Add a third quote prepared by the manager's own brokerage to reach the board's number.
The manager has a duty to consult the board when obtaining services and to follow the process the board directs, so a departure from the three-quote direction is for the board to approve. Quietly choosing the lower quote, pressing the higher bidder to match the other price or adding a quote from the manager's own brokerage would all bypass the board's process and could taint the transaction. This reflects PCM blueprint 3.3.1.1.