Contingency Reserve Fund
When an owner sells a strata lot, does the seller get a return of any funds from the contingency reserve fund?
No. On the sale of a strata lot, the seller is not entitled to any return of contributions to the contingency reserve fund.
The strata corporation has a significant amount in the contingency reserve fund. An owner who is selling their strata lots has requested a return of the owner's proportionate share of the contingency reserve fund. Is the strata corporation required to do this?
No. On the sale of a strata lot, the seller is not entitled to a return of contributions to the contingency reserve fund.
May the council approve an expenditure from the contingency reserve fund without asking the owners?
No, an expenditure from the contingency reserve fund first must be approved by resolution passed by a 3/4 vote at an annual or special general meeting, with the exception of an emergency. An emergency entails the need to ensure safety or prevent significant loss or damage.
Our council wants to pass a resolution by 3/4 vote at a general meeting to allow strata council to spend small amounts up to a total of $5,000.00 from the contingency reserve fund without obtaining the owners' approval for each expenditure. Can the council do this?
There is no provision in the Strata Property Act to authorize future expenditures from the contingency reserve fund up to a maximum amount. Each expenditure from the contingency reserve fund must:
- be first approved by a resolution passed by a 3/4 vote at an annual or special general meeting; or
- be for an emergency to ensure saftey or prevent significant loss or damage; and
- be a type of expenditure consistent with the definition of the contingency reserve fund i.e. an expenditure that occurs less often than once or year or usually does not occur.
Our operating fund is overspent. May the strata council use money from the contingency reserve fund to cover the shortfall?
A strata corporation may lend money that is in the contingency reserve fund to the operating fund if:
- the loan is repaid by the end of the fiscal year of the strata corporation; AND
- the loan is for the purpose of covering temporary shortages in the operating fund resulting from expenses becoming payable before the budgeted monthly contributions to the operating fund to cover those expenses have been collected.
The strata corporation must inform the owners as soon as feasible of the amount and the purpose of any loan from the contingency reserve fund. An example of the type of operating fund expense for which a strata corporation may borrow from the contingency reserve fund is to pay a insurance premium that comes due prior to the fiscal year end of the strata corporation.
