Common expenses in strata corporations

The Strata Property Act specifies that there are two types of common expenses. Common expenses which either:

• occur once  a year or more often and are paid from the operating fund or
• occur less than once a year, or do not usually occur, and are paid from the contingency reserve fund

Strata lot owners must pay for common expenses. Common expenses can be paid from strata fees, the contingency reserve fund (CRF) or special levies.

Learn more on this page:
Common expenses paid from the operating fund
Common expenses paid from the contingency reserve fund
Common expenses may only apply to some strata lots
Table: allocation of common expenses

Common expenses paid from the operating  fund

The operating fund pays for common expenses which occur once a year or more often. 

Examples of operating fund expenses include things like: monthly utilities; seasonal landscaping, weekly cleaning, minor maintenance, professional services cuh as strata property management and annual insurance costs for the strata corporation. Operating fund expenses can vary widely, depending on the kind of strata corporation.

Operating fund expenses are usually paid from the operating fund through owners’ strata fees. Sometimes operating fund expenses are also paid by special levy. 

Common expenses paid from the contingency reserve  fund (CRF)

Expenses paid from the contingency reserve fund (CRF) are common expenses which occur less often than once a year. Examples of CRF expenses include such things as: replacing the roof, upgrading the elevator or repaving a road. 

Contingency reserve fund expenditures are usually known in advance and identified by a depreciation report. Expenditures must be approved by owners. 

• a majority vote is required if the CRF expenditure is necessary to obtain a depreciation report or is related to the repair, maintenance or replacement, as recommended by a depreciation report, of common property, common assets or portions of a strata lot for which the strata corporation has taken responsibility by bylaw
• otherwise a 3/4 vote is required

The CRF can also be used to pay for emergency repairs and for insurance deductibles that are a common expense at the direction of strata council without owners voting to approve.

Expenses paid from the contingency reserve fund (CRF) are from current and previous owners’ contributions to the CRF through strata fees. Sometimes expenses which occur less often than once a year are also paid by special levy.

Common expenses may only apply to some  strata lots

It is important to note that in some strata corporations, contributions for common expenses may only apply to some strata lots. 

This can happen to strata lots in sections (sections is a legal designation under the Strata Property Act), types of strata lots, strata lots using limited common property or where the strata corporation, by bylaw, has taken responsibility for the maintenance and repair of parts of the strata lot.

Sections within a strata corporation must have both separate section budgets and section contingency reserve funds (CRFs) for those section expenses which relate exclusively to that section. Contributions for the section budget are usually based on the unit entitlement of each strata lot in the section.

Contributions to the separate section operating fund and the section CRF are approved in the section’s annual budget and collected through separate section strata fees. 

Strata lots in a section will also contribute to a strata corporation budget and strata corporation CRF for expenses common to strata lots in all sections, or expenses which are shared by more than section.

After meeting section requirements, costs paid from the strata corporation's operating fund must be allocated and apportioned to strata lots in the operating budget as follows:

• costs paid from the operating fund that relate to the use of limited common property are apportioned by unit entitlement (or some other method approved by unanimous resolution), to those strata lots which are entitled to use the limited common property
• costs paid from the operating fund that relate to a type of strata lot identified in the bylaws as a type, are apportioned by unit entitlement (or some other method approved by unanimous resolution) to those strata lots of that type
  For example, if only some strata lots have a gas fireplace then those strata lots (if they are identified as a type in the bylaw) can be charged the gas supply costs and annual maintenance costs.
  Note: types of strata lots are different from sections. “Section” is a legal definition under the Strata Property Act with specific legal requirements. Strata lots that are differentiated as different types of strata lots in a strata corporation's (or section's) bylaws do not have the power to establish their own operating fund, CRF or bylaws.  Find out more about sections and types.
• costs paid from the operating fund that relate to the maintenance of specified portions of some strata lots where the strata corporation has taken responsibility by bylaw to maintain those portions of the strata lot, are apportioned by unit entitlement (or some other method approved by unanimous resolution) to those strata lots to which the maintenance relate and
• the balance of all maintenance costs paid from the operating fund are apportioned to all strata lots by unit entitlement (or some other method approved by unanimous resolution)

After meeting any section requirements, if the strata corporation undertakes repair and maintenance which occurs less often than once per year or does not usually occur (i.e. a contingency reserve fund expense) then those costs must be allocated and apportioned to all strata lots by unit entitlement or an alternative method for apportioning costs approved by unanimous resolution. 

Special levy exception: however, there is an exception to the contingency reserve fund expense, if the cost to repair relates to parts of the strata lot where the strata corporation has taken responsibility by bylaw to maintain a specified portion of the strata lot - and is paid from a special levy - then those costs are apportioned by unit entitlement or some other method approved by unanimous resolution, to those strata lots to which the repair relates.

The following table "How to Apportion Strata Corporation Expenses by Source of Funds" also explains how expenses are apportioned.

Table: how to apportion strata corporation expenses by source of funds

(This table also applies to strata lots in sections where the section has expenses that only apply to the section).

 

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References:
Strata Property Act Sections: 72, 91, 92, 96-100, 108, 127, 190-198
Strata Property Regulation: 6.4, 11.1-11.3

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