Budgeting and strata fees

Strata lot owners approve the annual budget, and their strata fees, by majority vote at the annual general meeting. Owners must pay for shared common expenses through their strata fees, the contingency reserve fund (CRF), and sometimes by special levies.

Learn more on this page:
The operating fund and contingency reserve fund
Strata fees
Preparing the annual budget
Preparing a financial statement and tax return
Changing the fiscal year
Approving the annual operating budget
Expenditures from the operating fund

The operating  fund and the contingency reserve fund

To meet its expenses the strata corporation must have – and owners must contribute to – an operating fund and a contingency reserve fund (CRF).

• The operating fund is for common shared expenses that usually occur either once a year or more often than once a year. Examples of operating fund expenses include such things as: monthly utilities; seasonal landscaping, weekly cleaning, minor maintenance, strata property management, and annual insurance costs for the strata corporation.
• The contingency reserve fund (CRF) is for common expenses that usually occur less often than once a year or that do not usually occur. Examples of CRF expenses include such things as: replacing the roof, upgrading the elevator or repaving a road. As of November 1, 2023, the strata corporation or section must annually contribute a minimum of 10% of the operating fund to the CRF when approving the budget at the annual general meeting.
• As of March 2014, changes to strata legislation allow the strata corporation to pay for a depreciation report from either the operating fund or the CRF by majority vote.

Strata fees 

Each strata lot owner must pay strata fees to cover budgeted common expenses for the strata corporation. Some strata owners will also pay additional strata fees for the section or type and the common expenses that only apply to strata lots within the section or type.

Strata fees will include contributions to the operating fund, for expenses that occur once a year or more often, and will also include contributions to the contingency reserve fund for expenses that occur less than once a year or do not usually occur. Strata fees are usually paid monthly.

Strata fees are set when the budget is approved by majority vote at the annual general meeting (AGM). Within two weeks of the budget passing, the strata corporation must inform owners of the new strata fees.

Calculating strata fees

Strata fees are normally calculated by dividing the expenditures in the approved budget among the strata lots on the basis of unit entitlement. In apartment style (condo) or townhouse strata developments, unit entitlement is often based on the habitable size of the strata lot. For example, a bigger two-bedroom condo would usually pay more in strata fees than a smaller one-bedroom condo. However, in bare land stratas, unit entitlement is usually equal for each strata lot. 

The schedule of unit entitlement is contained in the strata plan for the strata corporation and must be registered at the Land Title Office (LTO) or filed separately on a "Form V: Schedule of Unit Entitlement" at the LTO.

Strata fees can be changed to use another formula, by passing a a resolution approving the new formula by unanimous vote, and registering the resolution, and the approved formula, at the LTO.

Late or unpaid strata fees

Most strata corporations have a bylaw setting out when strata fees are to be paid. If a strata corporation doesn’t have its own bylaw for the payment of strata fees, then Standard Bylaw 1 applies which requires strata fees to be paid on, or before, the first day of each month. 

A strata council can fine a strata lot owner for failing to pay strata fees in accordance with a bylaw. Standard Bylaws 23 and 24 apply to any strata corporation that does not have its own bylaws about fines. Before charging fines, the strata corporation must follow the strata bylaw enforcement process set out in section 135 of the Strata Property Act and explained in enforcing strata bylaws and rules.

Additionally, a strata corporation may charge interest for late or unpaid strata fees if it passes a bylaw setting out the rate of interest that can be charged for late payments.

The interest on late or unpaid fees:

• cannot exceed 10% per annum compounded annually
• is not a fine and
• forms part of the strata fees

The strata corporation may also file a lien for unpaid strata fees against a strata lot. The lien may be registered at the Land Title Office (LTO) against the title of a strata lot by filing a “Form G: Certificate of Lien”. 

A lien allows the strata corporation to start the process to foreclose on a strata lot. A lien may not be filed for unpaid fines.

Any of these actions must consider the limitation period. On June 1, 2013, the basic limitation period under the BC Limitation Act for debt collection changed to two years.

For strata corporations this means that some debts - such as special levies and strata fees - that become due and owing are generally not collectable after a two-year period. (Please note, since the Limitation Act was changed in 2013, subsequent court cases and Civil Resolution Tribunal decisions have indicated that the two-year limitation period does not apply to the collection of strata fines).

Strata corporations can create a bylaw to prohibit a strata lot owner or tenant (if the strata corporation is entitled to register a lien against the strata lot, if the owner has unpaid strata fees or special levies) from sitting on the strata council or from voting on resolutions requiring a majority or 3/4 vote at general meetings.

Other contributions to fund common expenses

Strata corporations can receive revenue to fund common expenses from other sources as well. The annual budget could include revenue from user fees for parking, electric vehicle charging, or guest suite rentals; revenue from common laundry facilities; interest from the operating account, leasing space for a cell phone tower or sale of assets.

Any interest or income on the contingency reserve fund (CRF) bank accounts and investments becomes part of the CRF.

Surpluses from the previous year's budget may also be used as contributions to either the operating fund or the CRF.

With a resolution approved by a 3/4 vote, a strata corporation can borrow money and assign future strata fee revenue as security for a loan. A strata council should seek legal advice on the writing of the 3/4 resolution, and the loan negotiations.

Preparing  the annual budget

Strata fees and the annual budget are approved by a majority vote each year at the annual general meeting (AGM). 

Before each AGM, the strata council must prepare an annual budget for the strata corporation's upcoming year, and distribute it with the notice of the AGM at least two weeks before the AGM.

Section budgets: strata corporations with sections will have more than one budget. There will be:

• a strata corporation budget for expenses relating to the whole strata corporation, which meets the requirements set out below and
• a budget for each section for expenses relating only to the section, which also meets the requirements set out below

The strata corporation budget is voted on at the strata corporation AGM and the section budget is voted on at the section AGM.

The budget, for both strata corporations and sections, must contain:

• the opening balance in the operating fund
• the opening balance in the contingency reserve fund
• the estimated income from all sources other than strata fees, itemized by source (for example: interest, fines, parking, leasing space for cell-phone towers)
• a list of the estimated expenditures from the operating fund, itemized by category of expenditure (for example: electricity, landscaping, janitorial, strata property management, professional services, etc)
• the total of all estimated expenditures from the operating fund
• the total of all contributions to the operating fund 
• the total of all contributions to the contingency reserve fund (CRF), with consideration to the depreciation report. (The minimum contribution to the CRF must be equivalent to at least 10% of the total amount budgeted for the contribution to the operating fund.)
• each strata lot’s monthly contribution to the operating fund and each strata lot’s monthly contribution to the contingency reserve fund; this sum is called a strata fee
• the estimated balance in the operating fund and contingency reserve fund at the end of the fiscal year
• any contributions allocated to a portion of strata lot owners as a result of limited common property repair and maintenance, costs allocated by type or arising as a result of the repair and maintenance of portions of strata lots

The budget usually contains a single line item indicating the contribution to the contingency reserve fund (CRF).

• New 10% minimum annual contribution to the CRF: effective November 1, 2023, when approving the budget at the annual general meeting, strata corporations and sections are legally required to contribute a minimum of 10% of the total amount budgeted to the annual operating fund to the contingency reserve fund (CRF). (Most strata corporations usually contribute more than this 10% minimum to the CRF).
• Consider the depreciation report: contributions to the CRF must be made with consideration to the depreciation report. The depreciation report provides detailed estimates for maintenance, repair and renewal costs, over a 30-year time period.

Budget surpluses and deficits from the previous fiscal year

A budget surplus occurs when the contributions to the operating fund for the previous fiscal year exceed the actual expenditures.

A budget surplus can be dealt with in a new budget in one or more of the following ways:

• transferred to the contingency reserve fund (CRF)
• carried forward as part of the operating fund as a surplus, which will not reduce the strata fees
• used to reduce the total contribution to the next year's operating fund, which in effect reduces strata fees or
• any other way determined by a resolution approved by a 3/4 vote at an annual or special general meeting.

A budget deficit occurs when the actual expenditures exceed the contributions to the operating fund for the previous fiscal year. Under the Strata Property Act, a budget deficit must be eliminated during the next fiscal year. This can happen by raising strata fees and/or approving a special levy or by spending CRF funds with a 3/4 vote to eliminate the deficit.

Funds from the contingency reserve fund (CRF) can be lent to the operating fund to cover temporary shortages during the current operating year. If a temporary loan is made:

• it must be repaid to the CRF by the end of that fiscal year and
• the strata council must inform owners as soon as feasible of the amount and purpose of the loan

Preparing a financial statement and tax  return

Before every annual general meeting (AGM), the strata council, and section executive, must also prepare a financial statement for the fiscal year that is just ending, and distribute it with the notice of the AGM. The purpose of the financial statement is to report on the strata corporation's actual income and expenses for the year that is just ending. 

The financial statement must start from the beginning of the fiscal year and cover a period not less than up to two months before the AGM. Within eight weeks after the strata corporation's fiscal year end, the strata corporation must prepare a financial statement updated to the end of the fiscal year. 

The financial statement must contain the following information:

• the opening and current balance in the operating fund
• the opening and current balance in the contingency reserve fund
• the details of the strata corporation’s income from all sources, except special levies. It is important to include income from such things as interest, fines, user fees for things like parking, electric vehicle charging, guest suite rentals, and revenue from different activities such as leasing space for cell phone towers.
• the details of expenditures from the operating fund, including any unapproved expenditures
• the details of expenditures from the contingency reserve fund, including any unapproved expenditures
• income and expenditures by special levy, if any

The strata corporation must file a tax return for each fiscal year with the Canada Revenue Agency, and must provide a copy of their annual financial statements with their tax returns. Most residential strata corporations are essentially non-taxable corporations. For more information, please check with the Canada Revenue Agency.  The Condominium Home Owners Association (CHOA) also offers some information on this topic, please see bulletin: 600-06 Tax Guide (2 page pdf).

Changing the fiscal  year 

The strata corporation may, by a resolution passed by a 3/4 vote at an annual or special general meeting, change the date of its fiscal year by up to six months. Stratas may want to do this, for example, if many owners are away at a certain time of year. As a result, a budget may cover a period longer than twelve months but not exceeding eighteen months; or cover a period less than twelve months but for at at least six months.

If a change is made to the fiscal year that results in a period not covered by a budget, the owners must continue to pay the same monthly strata fees required to be paid under the previous budget until the new budget is approved.
 
Until a new budget is approved, the strata corporation may only spend money out of the operating fund if the expenditure:

• is the type of expense that is set out in the previous budget and usually occurs once a year or more often than once a year and
• does not exceed the maximum amount in the previous budget for that particular category of expense or
• meets the requirements necessary to make an unapproved expenditure.

The strata corporation should seek approval from the Canada Revenue Agency prior to changing its fiscal year.

Approving  the annual budget

The annual budget for the next fiscal year must be approved by a majority vote at the annual general meeting (AGM). The proposed budget can be amended by a majority vote, during the meeting, before the final vote to approve the budget. Within two weeks of the budget being approved, the owners must be informed of the new strata fees.

If a budget is not approved at the AGM:

• the strata corporation must prepare a new proposed budget. This new budget must be approved by a majority vote at a special general meeting (SGM) to be held within thirty days of the AGM. The special general meeting can be held later than thirty days if the later period is approved by a 3/4 vote at the AGM and
• the owners must continue to pay the same monthly strata fees required to be paid under the previous budget until the new budget is approved.

Until a new budget is approved, the strata corporation may only spend money out of the operating fund if the expenditure:

• is the type of expense that is set out in the previous budget and usually occurs once a year or more often than once a year and
• does not exceed the maximum amount in the previous budget for that particular category of expense, or
• meets the requirements necessary to make an unapproved expenditure.

Expenditures from the operating fund

After the budget is approved by the owners, the strata council is authorized to make expenditures from the operating fund for expenditures which usually occur either once a year or more often than once a year.

If an operating fund expenditure has not been approved as part of the annual budget :

• the expenditure can be made by the strata council if approved by a resolution passed by a 3/4 vote at a general meeting.
• the expenditure can be made by the strata council, provided that the unapproved expenditure (plus all previous unapproved expenditures made in the same fiscal year) do not exceed:
  - the limit for unapproved expenditures set out in a bylaw
  - or if no bylaw exists, the lesser of $2,000 or 5% of the total contributions to the operating fund for the current fiscal year.
• the expenditure is the minimum amount that the strata council needs to expend in order to ensure safety and prevent significant loss or damage; and the strata council informs owners as soon as possible about the expenditure.

Expenditures from the contingency reserve fund (CRF)

Generally, expenditures from the CRF must be approved by a 3/4 vote at an annual general meeting (AGM) or special general meeting (SGM).

However approval is not required for an expense:

• for emergency repairs, (the expenditure must not exceed the minimum amount needed to ensure safety or prevent significant loss or damage); or
• to pay for an insurance deductible required to be paid by the strata corporation to repair or replace damaged property

As well, as of March 2014, expenditures can be made by majority vote from the CRF if:
-  the expenditure is to obtain a depreciation report or
- the depreciation report recommends an expenditure and it is related to the repair, maintenance, or replacement of common property, common assets portions of a strata lot for which the strata corporation has taken responsibility by bylaw.

References:
Strata Property Act Sections: 14, 45, 53, 72, 91-92, 96-100, 102-108, 111, 115-117, 120, 190-198
Strata Property Regulation: 3.4, 6.1-6.8, 6.11, 17.9
Standard Bylaws (which can be amended) 1, 23, 24

Find it fast: a convenient site map listing all the webpages on the Province's strata housing website.

Subscribe for occasional emailed updates to strata legislation and the Province's strata housing website.

Disclaimer: the information on this website about strata housing is provided for the user’s convenience as a basic starting point; it is not a substitute for getting legal advice. Learn more about the site’s purpose and limits. The content on this website is periodically reviewed and updated by the Province of British Columbia as per the date noted at the top of each page.