Understanding Strata Fees

IS EVERY PAYMENT FROM AN OWNER A STRATA FEE?

Most people use the term “strata fees” to mean any money they pay to their Strata. Legally, strata fees are much more specific. Not every payment to the Strata is a strata fee, and the distinction is important because strata fees are subject to their own rules, including how they can be enforced.

WHAT ARE STRATA FEES?

Strata fees are the regular payments that owners make to fund the ongoing expenses of the Strata. They are paid into the operating fund and the contingency reserve fund and are typically paid on a monthly basis.

These fees keep the Strata running. They cover things like insurance, utilities for common areas, management fees, maintenance, and repair and contributions to the contingency reserve fund. We have an article on budgets and Categories of Expense for the Operating Fund that provides examples of expenses that are covered by Strata Fees.

Not every amount an owner pays to the Strata is a strata fee. Other types of payments include fines and user fees, which are legally distinct.

If the Strata’s bylaws allow the Strata to charge interest on unpaid strata fees, then that interest is added to the strata fees amount total and is counted as strata fees for enforcement purposes.

DOES IT MATTER IF THE STRATA REFERS TO ALL PAYMENTS FROM AN OWNER AS STRATA FEES?

The distinction between general payments to the Strata (as examples, user fees and fines) and Strata Fees is important because Strata Fees are treated differently under the law. Most importantly, a Strata can file a Certificate of Lien on a Strata Lot for unpaid Strata Fees but not for unpaid user fees or fines or similar debts to a Strata.

A Strata is built on the idea of shared responsibility. Certain things, like the repair and maintenance of common property are not left to individual owners; the responsibility is centralized and paid for collectively. Strata Fees create the Operating Fund and Contingency Reserve Fund that allow the Strata to carry out its basic functions. Because Strata Fees are necessary, Strata Fees are one of the types of debts that can be enforced by registering a Certificate of Lien against a Strata Lot. This is a legal claim against the property that must be cleared before the Owner can sell the Strata Lot or renew their mortgage. We have written articles about the procedure that a Strata must follow before a Certificate of Lien can be filed and an article describing the process of filing a Certificate of Lien (Form G) and an Acknowledgement of Payment (Form H).

CAN AN OWNER REFUSE TO PAY STRATA FEES IN PROTEST OF MISMANAGEMENT OF THE STRATA?

We have encountered situations where an owner has refused to pay their Strata Fees as a protest. Sometimes this is based on their idea that the Council is misspending money, that things are not being done properly, or that the budget is inappropriate or irresponsible.

There is no lawful ability for an owner to refuse to pay Strata Fees. They are set in the budget based on a resolution passed by the owners. There is no available legal defence to the failure to pay Strata Fees, including no ability to “set off” strata fees against a debt that an owner alleges the Strata owes to that owner.

If strata fees were treated as optional, the structure would not work. The Strata would either be unable to meet its obligations, or conscientious owners would need to over contribute to meet the shortfall caused by owners that did not meet their obligation.

CAN THE COUNCIL WAIVE OR DELAY THE TIME THAT AN OWNER MUST PAY THEIR STRATA FEES?

There is also no lawful ability for a Council to decide that an owner does not need to pay Strata Fees. There are situations where an Owner tells the Council that for some reason (usually related to an unexpected personal expense or employment issues) they cannot pay their Strata Fees and requests an amendment or a deferral on the time to pay Strata Fees. Unfortunately, regardless of how sympathetic the Council may be to an Owner’s personal situation, there is no discretion for the Council to vary an owner’s obligation to pay strata fees.

STRATA FEES ARE FUNDAMENTAL TO THE PROPER RUNNING OF THE STRATA

Strata Fees are the payments that fund the operation of the Strata. They do not include all money paid to the Strata, but a specific type of contribution with a defined role and based on a budget approved by the Owners at a general meeting.

Understanding the distinction between Strata Fees and other payments to the Strata helps both owners and the Strata understand their respective obligations and powers and why certain enforcement tools, such as Certificates of Lien, are available for some debts and not for others.