Increases to Strata Fees

WHY WOULD STRATA FEES INCREASE?

Strata Fees fund the ongoing operation of the Strata. As a Strata’s anticipated expenses increase, Strata Fees increase accordingly. Owners should understand how and why increases occur so that they can assess whether a proposed budget is reasonable and what to expect if fees change. We have an article explaining categories of expenditure in a budget.

HOW ARE STRATA FEES DETERMINED?

Strata Fees are set through the approval of the annual budget.

The budget is based on the Strata’s projected expenses for the coming fiscal year, including contributions to both the operating fund and the contingency reserve fund.

Strata Fees are not arbitrary. They reflect what the Strata believes it will need to spend to meet its purposes and obligations.

The Strata Property Act does not limit the amount that Strata Fees can increase from year to year. However, the budget must be approved by a majority vote of the Owners, and if a majority of the Owners consider the proposed budget unreasonable, the resolution will be defeated.

CAN STRATA FEES BE INCREASED RETROACTIVELY?

Sometimes a budget isn’t adopted before the start of the new fiscal year. This occurs if the Annual General Meeting is delayed or if the proposed budget is not approved on the first attempt.

Strata Fees remain the same as the previous year until the next budget has been approved, but by the time a new budget has been approved, the Strata may be months into a new fiscal year.

If the approved budget creates an increase in Strata Fees, then each owner has underpaid their Strata Fees for the portion of the budget that has already occurred. For example, if monthly Strata Fees were originally $400 and were then increased to $500, there would be an under-payment of $100 for each month that had passed. In that situation, the Strata can either increase the monthly fees for the remaining months in the fiscal year or can require that the under-payment be corrected in a single lump sum adjustment.

STRATA FEE INCREASES REQUIRE OWNER APPROVAL

Strata Fee increases are driven by the Strata’s anticipated expenses and approved through the budget. While increases are not capped, they are subject to owner approval. Where a budget is approved late, owners may be required to make up the difference so that contributions align with the approved budget for the year.