The Power to Spend the Strata Corporation's Money

WHAT ARE THE STRATA'S TWO FUNDS FOR?

A Strata Corporation holds its money in two separate funds, and each fund exists for a different kind of expense. The Operating Fund pays for common expenses that come up at least once a year, or that are needed to obtain a depreciation report or an electrical planning report; the Contingency Reserve Fund pays for common expenses that usually come up less than once a year, or that do not usually come up at all.

It is important for Council to keep this distinction in mind before it approves any expenditure, because the Strata Property Act does not let the Strata treat its money as one pool to be spent on whatever Council decides is a good idea. Which fund an expense belongs in determines which approval process applies to it, and getting that wrong can mean the expenditure was never properly authorized at all.

WHEN CAN COUNCIL SPEND FROM THE OPERATING FUND?

Council can spend from the Operating Fund only if the expenditure is consistent with the fund's purpose, and only if it has also been approved by a ¾ vote, authorized in the budget, or authorized under one of the Act's own unapproved-expenditure exceptions (s.97). Both conditions must be met — an expenditure consistent with the fund's purpose but never approved is just as unauthorized as one that was approved but has nothing to do with the fund's purpose.

Our understanding is that no court has yet interpreted what "consistent with the fund's purpose" or "authorized in the budget" actually requires, despite how often the Operating Fund is the fund a Strata reaches for first. This is a case where the Act's own text has to do the work without a judgment to sharpen its edges, and Council should not assume that a category loosely connected to a budget line is automatically enough.

WHAT MUST THE BUDGET ACTUALLY AUTHORIZE?

The Strata Property Regulation requires the budget itself to show opening balances in both funds, estimated non-fee income, Operating Fund expenditures itemized by category, contribution totals, each Strata Lot's monthly contribution to each fund, and estimated closing balances (s.6.6). Council prepares the budget, and it must be passed by a majority vote at each annual general meeting and distributed to Owners with the meeting notice (s.103).

Approving a budget category is not the same question as approving a specific dollar amount. Several tribunal decisions have held that approving a category is enough: an Owner who votes for a landscaping line item authorizes spending anywhere within it, without a further vote on the specific invoice (Woytuik v. The Owners, Strata Plan VIS 5970, 2017 BCCRT 32; Hoover v. The Owners, Strata Plan KAS 1984, 2018 BCCRT 620; Haw v. The Owners, Strata Plan EPS 1869, 2019 BCCRT 509; Wong v. The Owners, Strata Plan LMS 2461, 2022 BCCRT 562). A "$6,000 TBD" landscaping reserve has even been accepted as adequate authorization for maintenance items not individually listed (Muller v. The Owners, Strata Plan EPS4420*], 2023 BCCRT 44).

1093870 B.C. Ltd. v. The Owners, Strata Plan NW213, 2022 BCCRT 328, points the other way: legal fees of $10,776.46 against a budgeted legal category of only $2,500 were held unapproved, because the specific amount, not just the category, must be put to the Owners. No court has yet resolved the conflict between these two lines of tribunal reasoning, so Council should not assume a category alone will protect an expenditure that runs well past what was budgeted for it.

WHEN CAN COUNCIL SPEND FROM THE CONTINGENCY RESERVE FUND?

Council can spend from the Contingency Reserve Fund only if the expenditure is consistent with the fund's purpose, and only if it has also been approved by the vote the type of expenditure requires (s.96). A majority vote authorizes a depreciation-report-recommended repair or replacement, EV charging infrastructure, or obtaining the depreciation report or electrical planning report itself; every other Contingency Reserve Fund expenditure requires a ¾ vote.

This is a higher bar than the Operating Fund's own approval route, and it is deliberately higher. The Contingency Reserve Fund exists for the Strata Community's larger, less frequent expenses, and the Act asks for broader Owner buy-in before that money is spent.

CAN COUNCIL AVOID THE CONTINGENCY RESERVE FUND VOTE BY SPENDING FROM THE OPERATING FUND INSTEAD?

Council cannot avoid a failed Contingency Reserve Fund vote by funding the same project through the Operating Fund instead. In Azura Management (Kelowna) Corp. v. Owners of the Strata Plan KAS2428, 2009 BCSC 506, the Strata's ¾ vote to fund a project from the Contingency Reserve Fund failed, and the court held that routing the same expenditure through the Operating Fund would "violate the intent of the Act" (para. 132).

The money itself did not change character in that case — the problem was that the section 96 vote requirement cannot be evaded by choosing a different pocket to pay from. Surplus Operating Fund contributions can still lawfully end up in the Contingency Reserve Fund, but only through the Act's own default-allocation route, which the Owners can displace by a ¾ vote of their own (s.105(1)(a); Azura, para. 133). The issue in Azura was avoiding the vote, not moving money between funds as such.

WHEN CAN COUNCIL SPEND MONEY WITHOUT OWNERS' AUTHORIZATION AT ALL?

Council can spend money without Owners' authorization in only two situations, both exceptions to the general rule that spending must be put to the Owners (s.98). The first is a de-minimis exception: an unbudgeted Operating Fund expenditure is authorized without a vote if it, together with every other unapproved Operating Fund expenditure made that fiscal year, stays under the bylaw-set limit or, if the Bylaws are silent, under the lesser of $2,000 and 5% of that year's Operating Fund contributions.

The second is the emergency exception, and it reaches further. Council can spend from the Operating Fund or the Contingency Reserve Fund, without a vote, if it has reasonable grounds to believe an immediate expenditure is necessary to ensure safety or to prevent significant loss or damage, including obtaining or maintaining required insurance (s.98(3)-(3.1)). The expenditure must not exceed the minimum amount needed (s.98(5)), and Council must inform the Owners about it as soon as feasible (s.98(6)).

This is not a new idea in strata law. An unbudgeted repair or maintenance expenditure over $500 required special-resolution approval under the *Strata Property Act*'s 1974 predecessor unless it had already been budgeted for, and the modern de-minimis and emergency routes are what carved these exceptions out of that older baseline rule (Blunt (Re), 1977 CanLII 311 (BC SC), para. 9).

"As soon as feasible" is judged on the circumstances rather than against a fixed number of days, but it is not satisfied by disclosure that waits until the underlying matter is finished and the final account is rendered. In The Owners, Strata Plan VR 2213 (Re), 2021 BCSC 905, the Strata paid legal fees from the Contingency Reserve Fund under the emergency exception and did not disclose the expenditure to the Owners until the litigation concluded; the court held this did not satisfy section 98(6) (paras. 241-247). Our understanding is that the court did not go on to decide whether the legal fees themselves actually met the emergency exception's necessity test — the respondents raised that argument, but the case turned entirely on the disclosure timing instead (para. 233). It is worth noting separately that the Act does not authorize paying litigation expenses from the Operating Fund at all, which is why the Strata in that case had already moved the same fees out of the Operating Fund before relying on the emergency exception (Dockside Brewing Co. Ltd. v. Strata Plan LMS 3837, 2005 BCSC 1209, aff'd 2007 BCCA 183, considered inThe Owners, Strata Plan VR 2213 (Re), 2021 BCSC 905 at para. 230).

WHAT HAPPENS IF COUNCIL SPENDS MONEY IT WAS NOT AUTHORIZED TO SPEND?

An expenditure made without the approval section 98 or the budget requires is not converted into an authorized one just because Council believed, in good faith, that it was necessary. A claim for reimbursement of an unapproved expenditure fails if no evidence is put forward that the emergency exception's own preconditions — a reasonable belief in immediate necessity for safety or loss prevention — actually applied (0899148 B.C. Ltd. v. Ching, 2025 BCSC 1694, para. 81).

However, an unbudgeted or unauthorized expenditure does not, on its own, expose an individual member of Council to personal liability. An Owner's right to sue a member of Council personally is confined to the remedy created by section 33 for a conflict of interest under section 32; the good-faith standard in section 31 does not create a freestanding cause of action against a member of Council, and the court's inherent jurisdiction does not expand that route (Rochette v. Bradburn, 2021 BCSC 1752, paras. 82-83). This means an unauthorized expenditure is the Strata Corporation's own problem to resolve, through Council reversing course, seeking ratification, or facing a challenge from an Owner, rather than a basis, by itself, for going after the individual members who approved it.

A STRATA CORPORATION MAY ONLY SPEND MONEY THE ACT AUTHORIZES IT TO SPEND

The Strata Property Act does not give Council a general discretion to spend the Strata's money on what it judges to be a good idea. Every expenditure must be authorized — a budget line, a Contingency Reserve Fund vote at the level the expenditure requires, or one of the narrow unapproved-expenditure exceptions — an expenditure that does not fit one of those routes is not authorized, however sensible it may have seemed to Council at the time.

The law is about line drawing here as much as anywhere else in the Act: the line between the Operating Fund and the Contingency Reserve Fund, between a category and an amount, and between an emergency and an inconvenience. Getting that line right protects both the Owners who are paying for it and the Strata Community's ability to trust that its own money is being spent the way the Act, and the Owners themselves, actually authorized.