The Contingency Reserve Fund: How to Tell If a Strata Is Underfunded
Every few months a buyer calls me after a special levy notice arrives on a unit they bought the year before. The number is usually five figures.
The repair was almost never a surprise to the building.
What the fund is for
Your strata fee does two jobs.
Part of it pays this month's bills: insurance, management, landscaping, water, cleaning, elevator servicing.
The rest goes into the contingency reserve fund, the savings account for items that come due once every 20 to 30 years. A roof. A boiler. An elevator modernization. A building envelope.
When the reserve is large enough, the strata pays for the work out of savings and your fee stays where it is. When it is not, owners vote on a special levy and each unit pays its share directly.
How a levy actually lands
A special levy needs a 3/4 vote at a general meeting. Your share is set by unit entitlement, a fixed figure recorded in the strata plan, usually tracking the size of your unit.
The owner at the time of the vote is the one responsible. That is why timing matters so much to a buyer. A levy approved two weeks before your completion is a different conversation from one approved two weeks after, and the contract needs to say which side carries it.
The three documents that tell you the odds
You can get all three during your subject period.
The Form B Information Certificate. This is the snapshot. It states the monthly fee for your unit, anything owing on it, the current contingency reserve fund balance, any special levy already approved, and whether the strata is in litigation.
The depreciation report. This is the forecast. A qualified professional lists the major components, their condition, their remaining life, and what each will cost to replace. Then it models 30 years of funding, showing what contributions would keep the reserve ahead of the work.
BC stratas of five or more units must obtain one. The previous ability to waive it by an annual 3/4 vote was removed under changes announced in 2023, with a phased schedule for first reports and a five-year renewal cycle. Our walkthrough of how to read a depreciation report covers what to look for inside it.
The minutes, three years back. This is the behaviour. Annual general meetings, special general meetings, and council minutes tell you what owners voted to do about everything the report predicted.
What to look for in the minutes
Read for these five things specifically.
A repair discussed and then deferred. Once is a budget decision. Twice is a pattern, and the cost of the work has usually grown in between.
An engineering report commissioned. A strata does not pay for a building envelope investigation out of curiosity. Find out what it found.
Insurance renewal discussion. Large premium increases and rising deductibles show up here first. Our piece on the strata insurance deductible gap explains why the deductible figure matters to you personally.
Litigation. Against a developer, a contractor, or an owner. Any of them can consume the reserve.
Fee increases and the vote around them. A council recommending a 12% increase and owners voting it down to 3% tells you exactly how the building handles its reserve.
The low-fee trap
Buyers compare two similar units and pick the one with the lower monthly fee. In a newer building with few amenities, that can be a real saving.
In an older building it is a question rather than a feature.
A 1978 building with a $290 monthly fee, a thin reserve, and a roof at the end of its life is not cheaper to own than a comparable building charging $460 with a healthy fund. The money comes out of your account either way. One building takes it monthly, and the other takes it in one cheque after a vote you may lose.
Run the comparison on fee plus expected levy exposure, using the depreciation report's funding models as the source. Our strata fees explained piece breaks down what sits inside the monthly number itself.
Where the risk concentrates in Metro Vancouver
Three building profiles carry more of it.
Wood-frame buildings from the late 1980s and 1990s. This is the leaky condo era. Many have been remediated, and a remediated building with documentation is often a safer buy than an unremediated one at a lower price. Find out which you are looking at, and when the work was done.
Concrete towers approaching 40 years. The structure lasts. The systems do not. Elevators, boilers, plumbing risers, parkade membranes, and window walls all come due in a cluster.
Small stratas, under about 12 units. The same roof costs the same amount, divided among fewer owners. A four-unit strata replacing a roof produces a levy per unit that would be manageable in a 60-unit building.
What this comes down to
- The reserve is the savings account for work that comes due every 20 to 30 years.
- A special levy needs a 3/4 vote, and the owner at the time of the vote pays.
- Get the Form B, the depreciation report, and three years of minutes during your subject period.
- A repair deferred twice is the clearest warning in the documents.
- Compare buildings on fee plus levy exposure, never on fee alone.
- Settle in writing who pays any levy approved near your completion date.
- Contact our team to review a specific building's documents, or browse listings.
Plan your next step
Work through strata review before your subject removal date, and use comparing homes to weigh two buildings against each other on total cost rather than on the monthly fee.
Frequently asked questions
What is the contingency reserve fund?
It is the savings account a strata corporation holds for major repairs and replacements that do not happen every year, such as a roof, elevator, boiler, or building envelope. Part of every monthly strata fee is deposited into it. The Strata Property Act requires stratas to maintain one and sets minimum annual contribution rules.
How much should a strata have in its reserve?
There is no single correct figure, because it depends on the building's age, construction, and what is coming due. The useful test is the depreciation report: it lists the major components, their remaining life and replacement cost, then models what the fund needs to hold. A building with a large roof replacement due in three years needs far more on hand than a newer building with nothing major due for fifteen.
What is a special levy?
It is a one-time charge owners vote to impose on themselves to pay for something the reserve cannot cover. It requires a 3/4 vote at a general meeting. Each owner's share is calculated by unit entitlement, which is a fixed figure in the strata plan, so a larger unit usually pays more than a smaller one.
Who pays a special levy, the buyer or the seller?
The owner at the time the levy is approved is responsible for it. Where a levy is approved before completion but payable in instalments afterwards, the contract of purchase and sale and the statement of adjustments decide how it is handled between the parties. This is a point to settle in writing before you remove subjects rather than after.
What is a depreciation report?
It is a study by a qualified professional listing the strata's major components, their condition and remaining life, the estimated cost to repair or replace each one, and several funding models showing what contributions would be needed over 30 years. BC stratas of five or more units must obtain one, and the renewal interval is now every five years under rules phased in from 2024.
Can a strata vote to skip the depreciation report?
Stratas were previously able to waive the requirement by an annual 3/4 vote. That exemption was removed for most stratas of five or more units under changes announced in 2023, with a phased schedule for obtaining the first report. A strata that has no report and cannot explain why is a building to look at more closely, not less.
Are low strata fees a good sign?
In an older building, low fees usually mean one of two things: the building genuinely has few shared amenities and low operating cost, or the reserve is being underfunded. Compare the fee against the reserve balance and the depreciation report before drawing a conclusion. A low fee paired with a thin reserve and a roof due for replacement is a bill waiting to be issued.
What is the Form B Information Certificate?
It is a standard form a strata must provide on request that sets out the monthly fee for the unit, any amount owing, the current contingency reserve fund balance, any special levy already approved, any agreements the strata has entered, and whether there is litigation. It is one of the core documents to obtain during your subject period.
How far back should I read the minutes?
Three years at minimum, including annual general meetings and any special general meetings. You are looking for repairs that were discussed and then deferred, engineering reports that were commissioned, insurance renewals with large premium increases, and any mention of litigation or a building envelope investigation. A repair postponed twice is the clearest warning a document set can give you.
Does a new building mean no reserve risk?
A new building has fewer components at end of life, so the near-term risk is lower. Two other risks apply instead: the developer's first-year budget can understate operating costs, so fees often rise after the first annual general meeting, and construction defects can surface within the warranty period. The warranty covers some of that, and the strata's handling of a claim is worth reading about in the minutes.
