Start Up Rules in British Columbia
In Alberta, there are no defined rules for the accounting and budgeting on start-up. However, this is not the case in British Columbia.
The British Columbia Strata Act has defined rules, obligations, on the startup and turnover to the owners after development. These are detailed in Part 3 of the Act and Regulations.
Some key provisions we must highlight are:
The developer must pay all common property expenses that accrue to the end of the first month in which the first strata unit is conveyed to a unit owner
After this month:
- there can be no related party transactions with the developer, that is, expenses paid to parties related to the developer
- the developer must set up a contingency reserve fund with a contribution equal to 5% of the annual operating fee assessment multiplied by the number of years since the deposit of the strata plan to land titles, to a maximum of 25% of the annual operating expenses; this amount cannot be spent in the interim period; the interim is the period that ends on the Ist month after the AGM
- the developer must prepare an interim 12 month budget for the interim period, which includes a 5% contribution to the reserve fund
- any surplus in the interim period must be refunded to the owners, and the developer must cover any shortfall
The regular annual budget, determined and managed by the Board of Directors begins in the first month after the AGM