Operating Fund or Contingency Reserve: Which One Pays for This?

Every self-managed council eventually hits the same question mid-meeting: do we pay for this out of the operating fund, or out of the contingency reserve fund? The Strata Property Act answers it with a test that has nothing to do with how big the bill is — and getting it wrong is one of the more common ways a well-intentioned council spends money it wasn't authorized to spend.

The dividing line is frequency, not size

Section 92 requires a strata corporation to establish both funds, and defines them by how often the expense occurs:

• The operating fund is for common expenses that usually occur once a year or more often than once a year, plus expenses necessary to obtain a depreciation report under s.94 or an electrical planning report under s.94.1.
• The contingency reserve fund (CRF) is for common expenses that usually occur less often than once a year, or that do not usually occur at all.

See Strata Property Act s.92. So a $40,000 annual landscaping and snow-removal contract is an operating expense, while a $6,000 one-time repair to a retaining wall is a plausible CRF expense. Frequency, not dollars.

Where an item falls can genuinely be arguable — an exterior wash done every third year, or a boiler service that some stratas budget annually and others treat as episodic. If your council is unsure, the safer route is to budget it in the operating fund where it recurs on a predictable cycle, and document the reasoning in the minutes. For how contributions are calculated and collected, see How Strata Fees Work in BC.

CRF spending rules in BC: which vote do you need?

Section 96 says CRF money can only be spent if the expenditure is consistent with the purposes of the fund and is approved as the section requires. A majority vote at an annual or special general meeting is enough in five cases:

1. obtaining a depreciation report under s.94;
2. repair, maintenance or replacement recommended in the most current depreciation report of common property, common assets, or portions of a strata lot the strata has taken responsibility for under s.72(3);
3. installing EV charging infrastructure, or managing the electricity it uses;
4. obtaining an electrical planning report under s.94.1;
5. obtaining other reports about EV charging infrastructure or the electricity it uses.

Every other CRF expenditure needs a 3/4 vote (s.96). Note what that means practically: a roof replacement your depreciation report recommends can go ahead on a majority vote, while the identical project with no depreciation report backing it needs a 3/4 vote. That is a strong argument for having a current report and keeping it on the shelf — required for stratas of 5 or more lots by July 1, 2026 in Metro Vancouver, the Fraser Valley and the Capital Regional District, and July 1, 2027 elsewhere in BC.

A "3/4 vote" is defined in s.1 as at least 3/4 of the votes cast by eligible voters present in person or by proxy when the vote is taken, excluding abstentions — not 3/4 of all owners.

Quick answers

Q: Can the council spend from either fund without an owners' vote?
Yes, but only in the narrow circumstances in s.98. Unapproved spending from the operating fund is capped at the amount in your bylaws, or — if the bylaws are silent — the lesser of $2,000 and 5% of the total operating-fund contribution for the year, counting all unapproved expenditures in that fiscal year together. Separately, money may come out of either fund where there are reasonable grounds to believe an immediate expenditure is necessary to ensure safety or prevent significant loss or damage. That spending must not exceed the minimum needed, and owners must be informed as soon as feasible. Check your registered bylaws for your own limit and any added conditions.

Q: Is a strata fund transfer from the CRF to the operating fund allowed?
Only as a loan, and only on strict terms. Section 95(4) permits the CRF to lend to the operating fund as the regulations allow, and Regulation s.6.3 allows it only if the loan is repaid by the end of that fiscal year and is to cover a temporary operating shortage caused by expenses becoming payable before the budgeted monthly contributions to cover them have been collected. Owners must be told the amount and purpose as soon as feasible. It is not a way to fund an operating deficit.

Q: Where does CRF interest go?
Into the fund. Under s.95 the CRF must be accounted for separately from other strata money, invested in permitted investments or insured accounts with BC savings institutions, and any interest or income earned becomes part of the fund. Regulation s.6.11 lists the additional permitted investments, including CDIC- or CUDIC-eligible term deposits and GICs with predetermined interest rates and federal treasury bills.

Funding the CRF each year

Since the 2023 changes, the annual CRF contribution must be at least 10% of the total budgeted contribution to the operating fund, and for years after the first AGM it must be determined after considering the most recent depreciation report, if any (Regulation ss.3.4 and 6.1; the amount itself is set by the strata under s.93). The old idea that no contribution is needed once the CRF reaches 25% of the operating budget no longer reflects the law. Ten percent is a floor, not a target — a depreciation report showing major work in five years is a reason to budget well above it. There is more on this in our Strata Contingency Reserve Fund guide and in How to Prepare a Strata Annual Budget in BC.

Getting it right on paper

Three habits keep councils out of trouble: code each expense to a fund when you build the budget, not when the invoice arrives; quote the s.96 branch you are relying on in the resolution text; and record emergency spending under s.98(3) in the minutes with the reason. ManageStrata keeps fund balances, resolutions and expenditure records separate so the audit trail is already there when an owner asks. If you are trying to work out what a past resolution or depreciation report actually authorized, SearchStrata can run AI analysis across your strata documents to surface the relevant passages quickly.

This article is general information about BC strata law, not legal advice; verify against the current Strata Property Act and Regulation or consult a BC strata lawyer.