The Contingency Reserve Fund and Special Levies, Explained

Two funds, one future

A strata corporation runs on two accounts. The operating fund handles everything that recurs, landscaping, utilities, insurance premiums, minor repairs. The contingency reserve fund exists for everything else: the roof that gets replaced once a generation, the elevator modernization, the parkade membrane. Per the province's CRF rules, it's meant for expenses that occur less often than once a year, or that don't usually occur at all.

As a buyer you never see this fund directly, but you buy its consequences. A building that has saved for its future charges you for that future gradually, through fees. A building that hasn't will eventually charge someone all at once, through a special levy, and if you own the unit that day, that someone is you.

The 10% floor, and why it's a floor

Since November 1, 2023, every strata corporation and section must contribute at least 10% of the amount budgeted for the annual operating fund to the CRF each year, approved with the budget at the AGM. Before that, minimum contributions could taper off once the fund hit a threshold, and plenty of stratas parked there.

Treat the 10% as what it is: a legal minimum, not an adequacy standard. The honest adequacy standard is the building's own depreciation report, which models what the CRF needs to cover the next 30 years of projected work. A strata contributing exactly 10% while its report recommends more is compliant and underfunded at the same time. Both facts belong in your read of the building.

How CRF money gets spent

The Strata Property Act sets different approval bars depending on the purpose:

• Majority vote: spending needed to obtain a depreciation report, and repair, maintenance, or replacement work recommended by the depreciation report. The province lowered this bar deliberately, so that following the report's plan is easy.
• 3/4 vote: almost everything else.
• No vote: emergency spending necessary to ensure safety or prevent significant loss or damage.

For buyers, the pattern to notice in the AGM minutes is a council that uses the majority-vote path to steadily execute its depreciation report. That's what a well-governed building looks like in paperwork form.

Special levies: how they pass

When a cost outruns both funds, the strata raises a special levy, a one-time charge to owners on top of fees. The approval rules:

• A 3/4 vote when the levy is divided among owners the same way strata fees are, usually by unit entitlement. This is the standard case.
• A unanimous vote when the levy is divided some other way, by a "fair division" of the particular expense.
• Since December 12, 2013, a safety valve: if a levy is needed to ensure safety or prevent significant loss, wins a majority, but misses 3/4, the strata can ask the BC Supreme Court to approve it anyway.

The levy resolution sets the payment schedule, one lump sum or instalments, and late payments can attract interest within regulated limits.

Who pays the levy when the home sells

This is the question that actually reaches buyers, and the rule is cleaner than the folklore around it. Responsibility follows the payment due dates, split at conveyance: the seller owes the portion of an approved levy payable before the date the strata lot transfers, and the buyer owes the portion payable on or after that date.

Three practical consequences:

• An approved levy shows on the Form B, and your lawyer accounts for it in the closing adjustments. No approved levy sneaks through a properly reviewed purchase.
• A levy payable in future instalments can legitimately become your bill even though the sellers voted for it. That's not a trap, it's the rule, and it should be priced into your offer.
• A levy that gets approved after you complete is entirely yours. The only warning you get is the minutes, where levies live as "discussions" for months before they become votes. This is why we read two years of minutes on every strata purchase.

Reading a building's levy risk before you offer

No one can promise you a levy-free decade, but the risk is unusually legible for anyone willing to read three documents together: the depreciation report (what's coming), the Form B's CRF balance (what's saved), and the minutes (what the council is actually doing about the difference). Where the gap between the first two is wide and the third shows drift, assume the gap becomes a levy or a fee jump on someone's watch, possibly yours.

If the numbers matter to your financing, loop in your mortgage broker before subject removal, and put anything ambiguous in front of your real estate lawyer. And if you'd like a second read of a specific building's package, start a conversation with the FRIVE team, comparing reserve funds across two shortlisted buildings is one of the most useful things we do with buyers.