Operating Fund

The Operating Fund is established under the Strata Property Act (SBC 1998, c. 43), which requires every strata corporation to prepare an annual budget that includes estimated operating expenses and to collect contributions through monthly strata fees. Section 92 of the Strata Property Act specifically requires the strata corporation to establish and maintain an Operating Fund for expenses that occur at least once a year. The budget must be approved by the owners at the Annual General Meeting (AGM).

Under the Strata Property Act (SBC 1998, c. 43), the Operating Fund covers recurring expenses expected to occur at least once a year, such as building insurance premiums, utility costs for common areas, strata management fees, landscaping, cleaning, and routine maintenance of common property. These are distinguished from capital or major repair expenses, which are the responsibility of the Contingency Reserve Fund. Strata bylaws may specify additional categories of operating expenditure applicable to a particular strata corporation.

Monthly strata fee contributions to the Operating Fund are calculated based on each strata lot's unit entitlement as a proportion of the total unit entitlement for the strata corporation, in accordance with the Strata Property Act (SBC 1998, c. 43) and its Regulation. The strata corporation prepares an annual budget estimating total operating expenses, which owners approve or reject at the AGM; the approved budget determines the total amount to be collected. Each owner's share is then proportionate to their unit entitlement unless a different formula is permitted under the strata's bylaws.

If the Operating Fund is insufficient to cover actual expenses during the year, the strata corporation may need to call a special levy under the Strata Property Act (SBC 1998, c. 43), which generally requires a three-quarters vote of the owners at a general meeting. Alternatively, the strata corporation may transfer funds from the Contingency Reserve Fund with proper authorization, subject to the Strata Property Act's requirements. Persistent deficits may signal that the annual budget needs to be increased at the next AGM.

Yes. When a strata lot is sold in BC, the buyer is entitled to request a Form B Information Certificate under the Strata Property Act (SBC 1998, c. 43), which the strata corporation must provide within a prescribed timeframe. The Form B discloses, among other things, the current balance of the Operating Fund, any outstanding amounts owed by the strata lot owner, and whether there are any anticipated special levies. This information helps prospective buyers assess the financial health of the strata corporation.

Under the Strata Property Act (SBC 1998, c. 43), the strata council may make expenditures from the Operating Fund for items included in the approved annual budget without further owner approval. However, unbudgeted expenditures from the Operating Fund must not exceed the monetary limit set out in the Strata Property Act Regulation or the strata corporation's bylaws without calling a special levy or obtaining proper authorization at a general meeting. Owners should review their strata's bylaws and the Regulation for the specific spending limits applicable to their strata corporation.

Under the Strata Property Act (SBC 1998, c. 43), the Operating Fund covers day-to-day and recurring expenses that occur at least once a year, while the Contingency Reserve Fund (CRF) is intended for expenses that occur less often than once a year or that are not expected to occur but may. The CRF is typically used for major repairs and replacements of common property and common assets, informed by a depreciation report. Strata fees collected each month contribute to both funds in proportions set by the approved annual budget.

Yes. The Strata Property Act (SBC 1998, c. 43) and its Regulation require the strata corporation to maintain the Operating Fund and the Contingency Reserve Fund in separate accounts at a savings institution. This separation ensures that operating money is not commingled with reserve funds and allows for transparent financial reporting to owners. Financial statements presented at the AGM must account for each fund separately.

A real estate licensee licensed under the Real Estate Services Act (RSBC 2004, c. 42) and regulated by the British Columbia Financial Services Authority (BCFSA) has a duty to act in the best interests of their client and to disclose material information, which includes the financial state of a strata corporation's Operating Fund. The licensee should assist the buyer in obtaining and reviewing the Form B Information Certificate, the strata's most recent financial statements, and the approved budget so the buyer can assess the adequacy of the Operating Fund. Licensees must not misrepresent the financial health of the strata corporation.

When a strata lot is sold in BC, the outgoing owner does not receive a refund of their past contributions to the Operating Fund, as those contributions belong to the strata corporation as a whole and not to individual owners. The buyer assumes responsibility for future monthly strata fee contributions to the Operating Fund from the completion date of the sale. Any outstanding strata fee arrears owed to the Operating Fund at the time of sale are typically disclosed on the Form F Certificate of Payment under the Strata Property Act (SBC 1998, c. 43) and must be cleared before the strata corporation issues the certificate.