As of November 2023, the Canadian government mandated stratas to deposit an amount equal to at least 10% of their annual budget into the Contingency Reserve Fund (CRF). The CRF is a savings account for strata corporations, and of which a portion of every strata lot owners’ monthly maintenance fees goes into it. For a full overview of strata corporations and how they work, click here to see our blog post on that subject.

Why was this amendment made?

This change was implemented to address the prevalent issue of underfunded CRFs in many stratas, which often led to substantial, unplanned financial burdens on owners. The new rule aims to foster a culture of proactive financial planning, ensuring that stratas are better equipped to handle future maintenance and repair needs without imposing sudden financial demands on owners, safeguarding the property's value, and residents' investments.

How will it affect strata lot owners?

For current and potential strata lot owners, the amendment allows for a more gradual and manageable approach to funding significant repairs. A well-funded CRF diminishes the need for unexpected special levies, thus providing a more stable, financial environment. It also plays a crucial role in maintaining, and potentially enhancing, the value of properties through these assured funds. A prudent buyer’s realtor will always ask about the amount in the CRF and will want to see a certain amount in it, relevant to the amount of strata lots in the complex.

The downside includes the potential increases in annual strata fees and a possible impact on funding for immediate, smaller-scale projects.

How will it affect strata corporations?

Strata corporations will need to adapt to this change, primarily in their budget management strategies. Allocating 10% of the annual budget to the CRF will necessitate more judicious financial planning and may lead to higher strata fees to balance the budget. Despite this, the long-term benefits, including better maintenance and enhanced property values, are significant.