How a BC Strata Budget Is Built (and Why the Budget Meeting Matters More Than the AGM)

By the time owners see the proposed budget in their AGM package, the important decisions have already been made. The AGM is where a budget is approved or rejected; the council meeting six to ten weeks earlier is where it is actually built. Owners who want influence over their strata fees are showing up to the wrong meeting.

This is how a BC strata budget gets assembled, in the order it really happens, and what a council should be arguing about at each step.

This article is general information about the Strata Property Act and Regulation, not legal or accounting advice. Your bylaws, your fiscal year and your building's circumstances all matter — confirm specifics with your strata manager, your accountant or a strata lawyer.

The statutory frame, briefly

Three rules set the shape of everything else:

• The strata corporation must prepare a budget for the coming fiscal year for approval by a majority vote at each annual general meeting.
• The AGM must be held no later than two months after the fiscal year end.
• The proposed budget goes out with the notice of the AGM, which must be at least two weeks before the meeting.

Work backwards from those and the real calendar appears. If your fiscal year ends December 31, your AGM must happen by the end of February, notice must be out by mid-February, and the budget must therefore be finished by early February at the latest. Which means the council's budget work starts in November or December — before the year it is budgeting for has even ended.

What the budget must contain

The regulation prescribes the contents, and a budget missing these is not a compliant budget:

• The opening balances in the operating fund and the contingency reserve fund
• Estimated income from sources other than strata fees, itemised
• Estimated operating expenditures, itemised by category
• The total contribution to the operating fund
• The total contribution to the contingency reserve fund
• Each strata lot's monthly contribution to each fund
• The estimated balance in each fund at the end of the fiscal year

That last line is the one owners should read first. A budget that ends the year with a thinner operating fund than it started with is telling you something, and it is rarely telling you good news.

Step one: close out the current year honestly

You cannot budget forward from a number you do not trust. Before anyone opens a spreadsheet for next year, the council needs the current year's actuals to date and a realistic projection to year end.

The questions that matter here:

• Which lines are running over, and is it structural or one-off? A single burst pipe is one-off. Three years of rising landscaping invoices is structural, and budgeting last year's number again is a decision to overspend again. Our guide to what happens when a strata goes over budget covers the mechanics.
• What is sitting in accounts receivable? Budgeted income assumes owners pay. If arrears are climbing, the budget is quietly optimistic. See collecting unpaid strata fees in BC.
• Are there invoices for work already done that have not landed yet? They belong in this year, not next.
• Is there a surplus or a deficit forming? Under the Act, an operating surplus may be carried forward, moved to the contingency reserve fund, or used to reduce the coming year's fees, unless owners direct otherwise by a 3/4 vote. A deficit must be eliminated during the next fiscal year — which means it is not a problem you can defer, it is a line item in the budget you are about to write.

Step two: rebuild the operating budget line by line

The lazy method is last year's budget plus a percentage. It is lazy because it hides the two things owners most need to see: which costs are actually accelerating, and which are the strata's own choices.

Build it in three tiers.

Contractual and fixed

Insurance, utilities, elevator maintenance, landscaping, janitorial, fire safety inspections, management fees, banking, audit or review engagement. Most of these are on contracts with known renewal dates and known escalators. Pull the actual contracts. Insurance in particular should never be a placeholder — get an indication from your broker before you finalise, because it moves more than anything else on the page. Our article on why strata insurance is so expensive in BC explains what is driving that.

Recurring and predictable

Common area repairs, plumbing call-outs, lighting, pest control, garbage overages, small parkade repairs. These are not fixed, but they are not surprises either. Use a three-year average, not last year's number, and not the most optimistic year.

Discretionary and deferrable

Painting the corridors. Replacing the lobby furniture. A landscaping upgrade. This is where a council genuinely decides what kind of building it wants to be, and it is the only tier where "we could skip it" is an honest answer. Label it clearly so owners can see what is choice and what is obligation.

Step three: set the contingency reserve fund contribution deliberately

This is the number that separates a competent budget from a negligent one.

The regulation sets a minimum annual contribution to the contingency reserve fund of at least 10% of the total budgeted operating fund contribution in the year following the first AGM. Minimums are not targets. A building with a thirty-year depreciation report showing an envelope replacement in year eight and an elevator modernisation in year eleven needs a CRF contribution driven by that, not by a percentage.

The honest sequence is:

1. 1.Read the funding models in your depreciation report. There will be at least three.
2. 2.Decide which model the strata is actually following, and say so in the budget notes.
3. 3.Set the CRF contribution to match that model.
4. 4.If the number is uncomfortable, say that out loud too — the alternative is a special levy later, and owners deserve to be told which one they are choosing.

If your report says you are underfunded, we have written separately about what to actually do next.

Step four: convert the total into strata fees

Once the operating and CRF contributions are set, the arithmetic is fixed. The total is divided among strata lots in proportion to unit entitlement, and each owner's monthly fee is their share divided by twelve. If you are unclear on why your neighbour pays more for a similar-looking unit, that is unit entitlement, and it is not negotiable at a budget meeting.

There are exceptions worth knowing. Where an expense relates to limited common property benefiting only some lots, or where your bylaws define different types of strata lots, the regulation permits contributions to be calculated across only the benefiting lots. Sectioned buildings run separate section budgets on top of the strata-wide one.

Step five: write the notes, not just the numbers

The most useful page in a budget package is the one that is not a spreadsheet. A short covering memo that says, in plain sentences:

• What changed from last year and why, in dollars
• What the fee increase is, in dollars per month, for a typical unit
• What the council chose not to do, and what that defers
• What the CRF contribution is funding, and against which depreciation report model
• What the strata would have to spend if a known deferred item fails

Councils that write this memo get quieter AGMs and higher meeting attendance, because owners stop suspecting that something is being hidden from them.

What happens if the budget is voted down

It happens, and it is survivable. Under the Act, if the proposed budget is not approved, the strata corporation must put a new budget to owners at a special general meeting within a short prescribed window. In the meantime:

• Owners keep paying the previous year's strata fees.
• The strata may only spend from the operating fund on recurring expenses of the same nature and not exceeding the amounts in the previous budget — plus genuine emergency expenditures.

That is a workable holding pattern for a few weeks and a bad way to run a building for a few months. The practical lesson is that a budget defeated at the AGM is almost always a budget that was not explained before the AGM.

Once the budget passes, the Act requires owners to be told their new monthly contribution promptly — within two weeks of approval — so fees and pre-authorised payments can be updated cleanly.

A council budget timeline that works

• Fiscal year end minus 3 months — pull actuals, project to year end, request insurance indication, list contract renewals
• Minus 10 weeks — first council budget meeting: rebuild operating lines, agree the discretionary list
• Minus 8 weeks — second budget meeting: set the CRF contribution against the depreciation report
• Minus 6 weeks — finalise, calculate per-lot fees, draft the covering memo
• Minus 4 weeks — council approves the proposed budget for circulation
• At least 2 weeks before the AGM — notice and full package out to owners
• AGM — majority vote
• Within 2 weeks of approval — notify owners of new fees, update payment arrangements

Frequently asked questions

Who approves a BC strata budget? Owners do, by majority vote at the annual general meeting. The council prepares the proposed budget; it has no force until owners approve it.

When does a BC strata have to hold its AGM? No later than two months after the strata corporation's fiscal year end, with at least two weeks' notice. The proposed budget and financial statements go out with that notice.

What happens if owners reject the proposed budget? The strata must put a revised budget to owners at a special general meeting within a short prescribed period. Until a budget is approved, owners continue paying the previous year's fees and the strata may only spend on recurring expenses at previous-budget levels, plus emergencies.

How much does a strata have to put into the contingency reserve fund? The regulation sets a minimum of at least 10% of the budgeted operating fund contribution for the year after the first AGM. That is a floor, not a plan — the right number comes from the funding models in your depreciation report.

Can strata fees be different for units of the same size? Yes. Fees are allocated by unit entitlement, which is fixed on the strata plan and does not always track floor area. Expenses tied to limited common property, or to defined types of strata lots, can also be allocated to only the benefiting lots.

Related reading

• What Do Strata Fees Cover in BC? A Plain-English Breakdown
• How Much Should a BC Strata's Contingency Fund Be? (+ How to Estimate)
• What Happens When a BC Strata Goes Over Budget
• Your Depreciation Report Says You're Underfunded — Now What?
• The BC Strata AGM Prep Guide: Notice, Quorum & Timeline

The Province's overview of budgeting and strata fees is a good second source, and the budget contents are prescribed in the Strata Property Regulation.

Building a budget owners will actually approve is the core of strata financial management. Onehive prepares budgets, packages and AGM materials for strata communities across Metro Vancouver — request a proposal.