Effective November 1, 2023, the BC government will implement new regulations for strata corporations to ensure better funding for essential repair and upkeep, along with improving disclosure for buyers of strata lots. Although the changes may be viewed as “housekeeping”, the new regulations are meant to improve overall maintenance and mitigate the risk of strata insurance claims, as well as prevent developers from advertising unrealistically low strata fees.
The new regulations will require strata corporations and developers to contribute a minimum of 10% to the contingency reserve fund (CRF) annually, an increase from the previous 5% requirement. The increased CRF contribution is aimed at funding future financial needs of the strata, as well as reducing the risk of unexpected financial burdens.
In the short term, raising contributions payable to the CFR may cause upward pressure on strata corporations and tenants of strata lots, as the increase can be reflected in rental fees. This can also reveal “penny-pinching’ internal budgeting issues if contributions are set at the current minimum requirement. Hopefully strata corporations will have more resources to face emergencies and for items that are not funded in their annual budget.
In addition, effective April 1, 2023, changes to the Form B Information Certificate will require a summary of the strata corporation’s insurance coverage to be included. This will make it easier for prospective buyers and strata owners to determine if the property is adequately insured and what insurance they would need to purchase for their units. The inclusion of the insurance certificate with the Form B Information Certificate is considered essential for allowing buyers to make informed decisions.
Our real estate practice group will continue to monitor the developments as more details become available.
For more information, please contact Hugh Claxton of our real estate practice group.