What Is a Contingency Reserve Fund in a BC Strata and How Much Should It Hold?
This answer covers the law of British Columbia.
A contingency reserve fund (CRF) is the strata's savings account for expenses that happen less often than once a year or do not usually happen, such as major repairs. The annual contribution must be at least 10% of the total amount budgeted for the operating fund contribution. That is a floor, not a target, and new stratas have their own rule for what the owner developer must put in.
Owners cannot spend CRF money freely. Spending generally needs a 3/4 vote at an AGM or SGM, though some items such as a depreciation report need only a majority, and council can spend on limited emergencies without a vote. The money must be invested only in insured accounts or permitted investments, and your contributions are not refunded when you sell.
To judge whether a fund is healthy, a buyer can look at the CRF balance on the Form B and the attached depreciation report, which projects costs over 30 years. A thin balance against large projected costs may mean special levies later, so it is worth having a lawyer review the documents.
Key takeaways
- The annual contribution to the contingency reserve fund must be at least 10% of the total amount budgeted for the operating fund contribution.
- New stratas follow a different rule: the owner developer must contribute the lesser of 10% of estimated operating expenses multiplied by the years since the strata plan was deposited, or 50% of estimated operating expenses.
- Spending the fund generally needs a 3/4 vote at an AGM or SGM, with some majority-vote items and limited emergency spending as exceptions.
- To judge the fund, look at the CRF balance on the Form B and the attached depreciation report, which includes a 30-year cost projection.