April 2023
British Columbia will require developers and strata (condominium) corporations to contribute at least ten percent of their operating expenses to the reserve fund. This doubles the minimum requirement from five percent and is consistent with Ontario requirements.
While there is no definition of adequate funding, or a single approach given the differences in building construction, equipment and resident needs, it is clear that ten percent of operating expenses to the reserve fund is insufficient.
Developers, seeking to keep condo fees low so they can more easily sell units, tend to establish reserve fund contributions at an unsustainably low level. Once management is handed over to an owner-elected condo board, the board may undertake actions that result in further underfunding, exhibit poor management or follow bad advice.
Reserve fund contributions should be sufficient to ensure funds are available for long-term repair and replacement of common elements. Over time this requires that condo fees be adequate for paying all operational costs PLUS an estimated 30 percent being directed to the reserve fund.
