Contingency Reserve Funds and Special Levies
1. What is the Contingency Reserve Fund?
Strata corporations must have a contingency reserve fund (“CRF”) to pay for common expenses that
The contributions from strata owners to the CRF should be included in every budget approved at an annual general meeting.
Usually, CRF contributions will appear as a single line item in the budget, and the budget will not detail any specific use of the CRF.
Separate sections within a strata corporation have a duty to establish their own operating fund and CRF for common expenses that relate exclusively to the section. However, common expenses shared by different sections cannot be included in separate section budgets, and must be included in the strata corporation budget as a common strata corporation expense.
Strata lots that are differentiated as different types of strata lots in a bylaw do not have the power to establish their own operating fund and CRF.
2. Contributions to the CRF
Usually, CRF contributions are based on the unit entitlement of each strata lot in the strata corporation. Contributions to the CRF are approved in the annual budget and collected through strata fees.
If the strata corporation has separate section budgets, CRF contributions for that section are usually based on the unit entitlement of each strata lot in the section.
Contributions to the separate section CRF are approved in the separate section annual budget and collected through separate section strata fees.
The following may also be added to the CRF:
3. Minimum/Maximum Contributions
The amount that a strata corporation must contribute to the CRF is based on the total annual budgeted contributions to the operating fund for the fiscal year that
If the amount in the CRF is:
4. Depreciation Reports
A depreciation report may be used to assist a strata corporation in determining the amount that it should be contributing to the CRF. However, a depreciation report is only a guide for the strata corporation. CRF contributions ear marked for a
certain purpose in a depreciation report can actually be spent for any purpose for which the fund may be used.
A depreciation report may never be used to lower the CRF contribution below the minimum contribution required by the Act.
The depreciation report should estimate the repair or replacement cost and the expected life of each major item of the common property (e.g. the roof) or the common assets (e.g. playground equipment).
At this time there is no standard prescribed form which must be used for a depreciation report.
Strata corporations may want to consider including the following items when
preparing a depreciation report:
This list is not exhaustive and a strata corporation may prepare a depreciation report for any common property or assets belonging to the strata corporation.
5. Expenditures from the CRF
Expenditures from the CRF must be:
6. Unapproved Expenditures from the CRF
An unapproved expenditure will only be permitted:
If an unapproved expenditure occurs a strata council must inform owners as soon as possible about the expenditure unless the expenditure was to pay for an insurance deductible.
7. Investing and Managing the CRF
The CRF can be invested or held:
must be accounted for separately from other monies held by the strata
corporation or separate section;
8. Claim to Monies in the CRF
When the sale of a strata lot occurs, the seller is not entitled to a return of contributions to the CRF.
9. What is a Special Levy?
A special levy is monies collected for a specific purpose:
10. Preparing a Resolution for a Special Levy
A resolution approving a special levy must:
11. Approving and Contributing to a Special Levy
A strata lot owner will contribute to a special levy:
A special levy must be approved at a general meeting. The vote necessary to
approve a special levy will be:
12. Expenditures and Uses of a Special Levy
Monies collected for a special levy must only be spent for the purpose of thespecial levy.
The strata council must inform owners on how monies raised from a special levy have been spent.
The special levy can be used to secure a strata corporation loan by approval of a ¾ vote.
13. Excess Special Levy Funds
The strata corporation must return excess funds from a special levy to the owners in the same proportion that the levy was collected, if there is at least one owner entitled to more than $100.
If no owner is entitled to more than $100, the strata corporation may deposit the excess funds in the CRF.
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