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On Tuesday, the province announced new rules for developers and strata corporations to help protect owners from higher insurance costs due to neglected maintenance.
The province has increased the minimum amount that developers and strata corporations must contribute to contingency reserve funds (CRF) .
Currently, the minimum contribution is 5% of the strata’s annual operating expenses.
As of Nov. 1, 2023, the minimum contribution will increase to 10% of the operating costs.
Every strata corporation in BC must have CRFs to pay for infrequent expenses such as emergencies and maintenance work.
The province says strata corporations, usually made up of owners of strata lots and a strata council, are responsible for managing and maintaining the common property, however, a small number of strata corporations are underfunding their contingency reserves.
Ravi Kahlon, minister of housing, says this puts homeowners at risk of surprise fee hikes and higher insurance costs.
Kahlon explains that most of the 34,000 strata corporations across the province exceed the minimum amount required for the CRFs and won’t be affected by the changes.
A report published in December 2020 by the BC Financial Services Authority says improved maintenance and risk-mitigation practices will reduce pressure on premiums and deductibles.
“The value of adequate contributions to the contingency fund and a well-implemented depreciation report for planning is critical in protecting a strata corporation’s assets and reducing the risk of future special levies,” Tony Gioventu, executive director, Condominium Home Owners Association of BC.
The province is also making changes to the Form B Information Certificate, which is a summary of the strata corporation’s insurance coverage. This will come into effect April 1, 2023.