Strata Fees on a Fixed Income: What a BC Downsizer Should Check Before Buying

A strata fee is a new bill for an owner who has always lived in a house. If you live on a fixed income, which is a set amount each month such as a pension, you need to know whether you can pay that fee for the next 15 to 20 years. This guide explains who sets the fee in BC, which one-time bills an owner can get, and which documents to read before you buy.

What is a strata fee, and how is your share set?

Seven terms appear in a strata's documents.

• Strata. The owners' group that runs a condo or townhouse complex. The Province of BC says a strata corporation is made up of all the strata lot owners. Your home is a strata lot.
• Strata fee. The amount each owner pays the strata, usually every month.
• Operating fund. The strata's account for costs that come once a year or more often.
• Contingency reserve fund. The strata's savings account for large repairs.
• Depreciation report. A report that lists the large repairs ahead and what they will cost.
• Special levy. A one-time bill to every owner, in addition to the monthly fee.
• Unit entitlement. A number given to each home that sets the share it pays.

The Province says each strata fee has two parts. One part goes to the operating fund. The Province's examples include monthly utilities, landscaping, cleaning, strata property management and the strata's yearly insurance. The other part goes to the contingency reserve fund, for costs such as "replacing the roof, upgrading the elevator or repaving a road."

The strata divides the approved budget among the homes by unit entitlement. In a condo building or a townhouse complex, the Province says unit entitlement is often based on the habitable size of the home, which is the area you can live in. Its example is a condo of 105 square metres, which has a larger unit entitlement than a condo of 37 square metres. The larger home would usually pay more. The owners can change to another formula only by a unanimous vote. Our page on how strata fees work has more detail.

Who decides when the fee changes?

The owners do, once a year. They elect a strata council, the group that carries out the strata's duties. The Province says the council prepares a budget for the coming year and sends it to owners with the notice of the annual general meeting, at least two weeks before the meeting. The owners approve the budget by majority vote, and the fees are set when the budget passes.

How the vote is counted

The Province says generally all strata lots have one vote. An owner on a pension has one vote, the same as every other owner.

A majority vote means more than half of the votes cast. The Province counts the eligible voters who are at the meeting in person, by electronic means or by proxy, and who do not abstain. A proxy is a person you name in writing to vote for you. In the Province's own example, a strata has 90 votes, 34 are at the meeting, and 18 votes in favour pass the budget.

So a budget can pass while you vote against it, and every owner then pays the new fee. Our advice is to read the proposed budget when it arrives, and to attend the meeting or send a proxy.

Why a fee goes up

The fee is calculated from the budget, so it rises when the budget rises. The Province's pages name three things that can raise a budget. The cost of the strata's insurance, which is paid from the operating fund, can rise. A budget deficit, which means the strata spent more than the owners paid in, must be eliminated during the next fiscal year, and raising the fees is one way to do that. And the yearly contribution to the reserve fund must be set after considering the depreciation report, so a new report can raise it.

Each building has its own budget, so use the building's own record. The Province says a strata must keep its budgets and financial statements for at least six years. Ask for the budget of each of those years, and write down the monthly fee for the home you want.

How much must the building save for large repairs?

The 10% rule for the reserve fund

The Province says that, effective November 1, 2023, every strata must contribute a minimum of 10% of the annual operating fund to the contingency reserve fund each year. Section 6.1 of the Strata Property Regulation sets the base as the amount budgeted for the operating fund. For each $100 budgeted for the operating fund, at least $10 more goes to the reserve fund.

The Province adds that most strata corporations already contribute more than this legal minimum. The amount one building needs depends on its depreciation report. Our page on the contingency reserve fund explains how the money can be spent.

Who must have a depreciation report

The Province says every strata with five or more strata lots must get a depreciation report on a five-year cycle. A strata with four or fewer lots is exempt. Two dates matter:

• July 1, 2024. Owners can no longer hold a yearly 3/4 vote to delay the report.
• July 1, 2026. This was the deadline in Metro Vancouver and the Fraser Valley for a strata with no report, or with a report received before December 31, 2020.

That deadline has passed. If a complex with five or more homes shows you a report dated before December 31, 2020, ask the council when the new one will arrive. A strata created since July 1, 2024 must get its first report within two years of its first annual general meeting.

What to read in the report

The report projects costs over 30 years, which includes the 15 to 20 years you plan to live there. The Province says it must include:

• a list of the parts the strata must repair, such as the roof, the windows, the plumbing and the roadways, with the expected service life of each;
• the expected cost of maintenance, repair and replacement, projected over 30 years;
• the current balance of the reserve fund, and how the fund is paid into now;
• at least 3 funding models, which are plans for paying those costs.

The Province says a model could use the reserve fund, special levies, increased strata fees, borrowing, or a mix of these. The owners choose whether to follow any of the models.

Our suggestion: add up the cost of the repairs listed for the years you plan to live there. Compare that total with the reserve fund balance and the yearly contribution in the budget. Then ask the council which funding model the strata follows. A model that relies on special levies means one-time bills in those years. Our depreciation reports page and our post on reading a depreciation report have more.

Which one-time bills can an owner get?

A special levy

The Province describes a special levy as money collected from owners for a specific purpose, in addition to the monthly fee. Owners approve one for a cost that the budget and the reserve fund do not pay for. A levy that is shared the same way as strata fees needs a 3/4 vote. The resolution must state the purpose, the total amount, the amount for each home, and the date or dates for payment. Section 108 of the Strata Property Act allows a levy that is "payable in instalments", with each date written in the resolution.

Who pays when a home sells? The due dates decide. The Province says that when a levy is approved before the home is conveyed, which means transferred, to the buyer, the seller owes "the portion of the levy that is payable before the date the strata lot is conveyed". The buyer owes the portion payable on or after that date. Ask your lawyer or notary how your contract handles a levy.

A buyer can find a levy in two places. The Form B, a certificate the strata issues for one home, must disclose any approved levy the owner still has to pay, with its due date. It must also disclose any notice of a resolution that needs a 3/4 vote and has not been voted on yet. The minutes of meetings show the repairs the owners have discussed. Our post on special levies for Fraser Valley condo buyers has more.

The strata's insurance deductible

A deductible is the amount the insured party pays toward a loss before the insurance company pays. The Province says deductibles for a strata's policy "can range from $100,000 to $750,000 and higher". A strata can pay its deductible from the reserve fund or by special levy, and the Province says neither needs the usual 3/4 vote.

The deductible can also become one owner's bill. The Province says that when a claim originates in an owner's unit, "the strata corporation may recover the cost of the insurance deductible from the owner if the owner is deemed responsible for the loss." It adds that an owner can be held responsible without being at fault or negligent.

This is why your own policy matters: the Province says strata owners are "strongly advised to purchase" their own insurance, and that it can cover some or all of the strata's deductible. Our suggestion: give your insurance broker the strata's insurance summary, ask for coverage that matches each deductible in it, and add the premium to your monthly cost. Our strata insurance page explains the two policies.

What can you do if you cannot pay a fee or a levy?

Owners aged 55 or older can apply to the Province's property tax deferment program. It pays one kind of bill. The Province says the program "allows you to defer your current year property taxes", and that only taxes classed as residential, or as residential and farm, can be deferred. A strata fee and a special levy are bills from the strata, and you pay them yourself. Our post on property tax deferment and the seniors grant explains who qualifies.

We read the Province's strata pages on fees, special levies and the reserve fund, and found no program there for an owner who cannot pay. The Act has two rules that can help. A levy can be payable in instalments, as explained above. And section 116 stops a strata from registering a lien when "arrangements satisfactory to the strata corporation have been made to pay the money owing". So an owner can ask the council for a payment arrangement, and the council decides. Our advice is to ask in writing before a payment is late.

The Province says the council can fine an owner for late fees under a bylaw, and can charge interest if a bylaw sets a rate. That interest "cannot exceed 10% per annum compounded annually". The strata can register a lien, which is a legal claim on your home until the debt is paid. Section 112 of the Act requires at least 2 weeks' written notice first. A lien lets the strata start the process to foreclose, which means to force a sale to collect the debt. Section 117 lets the strata ask the Supreme Court to order the sale of the home.

Which documents should you read before you buy?

Ask for six documents. The Province says a strata must provide a Form B within 7 days of a request from an owner or a purchaser, and can charge at most $35 plus up to 25 cents a page for copying. For minutes and financial statements, the Province says an owner, or a person the owner authorizes in writing, may request the records. Your real estate agent can ask the seller for them.

Source: document contents from the Province of BC's pages on budgets, the Form B, depreciation reports and strata insurance. The second and third columns are the FRIVE team's opinion.

Our strata documents page lists the full set. For a complex with an age rule, see our post on 55 and over buildings in BC.

How does the monthly cost compare with your house?

A strata fee is a new bill, and it replaces some bills you pay now. Divide each yearly bill by 12, and write an amount beside each line.

Source: FRIVE team method. Every amount comes from your own bills and from the strata's documents.

We suggest one test. Take the largest yearly change in the building's fee record, apply it to the fee again, and check that your monthly income is still enough to pay the total. Decide as well how much of your sale money you will keep for a future levy. Our post on condo, townhouse or rancher compares the three types of home.

Townhouses and bare land stratas

In a townhouse complex, ask which parts the strata repairs and which parts each owner repairs. The depreciation report must identify the parts that owners are responsible for. A bare land strata is a strata where each owner owns a lot and the house on it. The Province says unit entitlement there is usually equal for each lot, and that the owner is responsible for the insurance, repair and maintenance of the buildings on the lot. Our post on bare land and conventional strata fees compares the two.

This guide is general information about published rules. It cannot replace advice on your own purchase. Confirm legal questions with your own lawyer or notary, and tax questions with your own accountant, before you sign.

Next step

Your budget for a condo or a townhouse starts with what your house would sell for today. Ask us for a free home value, and a BC-licensed REALTOR® will email you a price range based on recent sales of homes like yours. Then enter that price in the downsizing calculator, along with the price of the home you want. You do not have to sell with us. Our downsizing guide covers the other steps.