“What is a Contingency Reserve Fund (CRF) and why could there be a loan outstanding to the Contingency Reserve Fund (CRF)?

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Contingency Reserve Fund (CRF) means a fund for common expenses that usually occur less often than once a year or that do not usually occur in a strata corporation. The Contingency Reserve is an amount of money set aside by law to equal not less than 5% of the annual budget.

On occasion, the Strata complex may encounter an extra-ordinary expense that has not been foreseen, and therefore not included in the annual budget. In these instances, the funds can be raised by a Special Resolution being passed at an Extra-Ordinary Meeting, or if time permits, at the AGM. It's important to note that funds raised by these levies are due and payable by the owner on the day they are passed.

On occasion when a special levy is assessed, each owner has an upcoming bill for their portion that is due as soon as the special assessment is approved. As an owner you are then required to pay your portion based on the schedule that the strata approve. Some owners are late on their payments and some owners do not pay until they are chased by collections. The challenge this provides, is that the work required to complete the special levy needs to be paid now; as such, a loan will be taken from the contingency reserve fund to pay the contractors while they chase down the owners who still owe money. Until all the owners have paid their special levy, there will be an outstanding loan due to the CRF fund.

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