Question to our office via email.

I phoned your office in January and asked a question regarding “Unapproved Expenditures” Part 6, Section 98 subsections (2 & 3) in the Strata Property Act. My question concerned subsection 2(b)—“if the bylaws are silent as to the amount, less than $2 000 or 5% of the total contribution for the current year, whichever is less”.

In subsection (3) it states that “The expenditure can be made out of the operating fund or contingency reserve fund if there are reasonable grounds to believe that an immediate expenditure is necessary to prevent significant loss or damage, whether physical or otherwise.” There is no stated financial limitation—so my question quite simply is this: "does the same expenditure limitation also apply to subsection (3)?"

Our current strata council has been using this section without any apparent regard for the limitations. For example: 98 (3) has been used for a new furnace/boiler at $8 000 + taxes. In my opinion this is a misuse of this section. It should have been processed by special resolution under Section 96 (b) which states “The strata corporation must not spend money from the contingency fund unless the expenditure is (b) first approved by a resolution passed by a ¾ vote at an annual or special general meeting, or authorized under section 98”.

You might wonder why I am so interested in an answer to my question. I have had over 20 years of condominium council experience, approx 10 years as President. As a point of interest I should add that I was the President of record and advised our joining your organization in 2006. Through the Condo Act of BC and now the Strata Property Act, I have always believed that a council has an obligation to conduct the business of the Strata Corporation in accordance with the legislative regulations etc. enacted by the Province of BC. I have made comments from time to time about the Act but the answer has always been: "Well it doesn’t say I can't do it." It's like talking to the wall. This problem with 98 (3) is a case in point. Let me make it quite clear that this is not a diatribe against the strata council. My aim is quite simply to correct their impression of the use of 98 (3), as they presently view it. Your viewpoint would be much appreciated.

Email reply

Feb 11, 2008—3:20 PM Subject: Re: Strata Property Act. David Kristmanson responding.

I think that the answer to your question lies in the interpretation of the term "emergency". Section 98 subsection (3) probably has no reference to an upper dollar figure because it is conceivable that an emergency could arise in which an immediate expenditure of funds in excess of the $2 000 or the bylaw limit was necessary (e.g. the roof has blown off). For an interpretation see Mangan, The Condominium Manual, page 160. Also, section 98 (5) of the Act states “Any expenditure under subsection (3) must not exceed the minimum amount needed to ensure safety or prevent significant loss or damage”.

I don't know how your boiler failure should be viewed. My guess would be that temporary repairs would be covered by subsection (3) but boiler replacement would have to go the usual route as stated in section 96. We agree with your concern about Councils not respecting section 98. Unfortunately the Act does not provide much help to owners who wish to force Councils to obey the rules. We believe that the Act is due for revision and this is one glaring omission that needs correction. I am circulating your letter and my response to the other Directors and if there are any additional comments I will forward them to you.