Starting November 1, 2023 strata corporations must contribute a minimum amount to their contingency reserve fund (CRF) annually. The amount of the annual contribution must be at least 10% of the total amount budgeted for operating expenses (the operating fund). This change will only come into effect after voted on at next AGM.
This is not big news read or hear in the news but, it has significant change that might affect your condo fees and something to look for when buying a condo for investment or principal residence. This is a positive change in my view in light of increasing cost of building maintenance and it's for owners protection not having to vote on a levy to cover building operation costs, read more
For purchaser is an assurance that the building and strata/council is fiscally responsible with it's funds and wasteful.
Similar to depreciation reports council and owners could vote against it but, most buildings already have more then sufficient funds to cover yearly expenses. Every building has a life cycle and after 15 years of age when begin to see deficiencies that require immediate attention if not already addresses. One of the determining factors if a building is considered safe investment is how many times deprecation report has been waived off and how much money spent or not on physical items of the building. This is an indication that either council/strata 'knows what's best' or demographics of the building are reluctant to spend on new elevator or changing windows for example therefore a major expense will come one or two years time.
Another positive of this new government initiative has to do with new developments where developers who are required to start a CRF fund only put aside minimum of 5% which leaves new owners to increase fees drastically in first two to three years to make up for shortfall of required operating income. The owner developer must contribute the lesser of (a) 10% of the estimated operating expenses multiplied by the number of years since the strata plan was deposited, or, (b) 50% of the estimated operating expenses. These amounts are being increased from 5% and 25% respectively. Do you think this will affect the cost of new condo's ?
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