Strata Corporation Contingency Fund Investments

We have been advised of a revision to the Strata Property Act Regulation that will come into effect in July 2014 that will increase the types of investments that a strata corporation can invest in. Interested parties can view the Order in Council.

The following is an excerpt from the Real Estate Council:

May 15, 2014

Effective July 2014, section 6.11 of the Strata Property Regulation is amended to allow strata corporations to invest in a range of high quality investments, such as certain bonds and fixed income exchange traded funds. The amendment also eliminates riskier investments (such as individual stocks, preferred shares, foreign bonds, mortgages and mortgage backed securities).

The changes, which are intended to simplify and modernize the provisions governing investments for money held in contingency reserve funds and collected on special levies, came in response to feedback from strata councils and investment experts. Strata councils will soon be managing over a billion dollars in contingency reserve funds. The amendments to the Regulation are a recognition of the importance of saving for future repairs through these funds and the desirability of maximizing the return on investment subject to appropriate constraints on risk and liquidity.

The majority of investments currently used by strata corporations will qualify under the new regulation, and any non-qualifying investments are grandfathered until they mature or are sold. Two existing sections of the Regulation (6.12 and 17.5) that grandfathered earlier investments (those predating the existing regulation) are now unnecessary and have been repealed.