What happens to a strata's year-end surplus or deficit?
The year ends and the operating account has more, or less, than the budget predicted. The Act says exactly what may be done with the difference, and refunding it to owners is not on the default list.
Last reviewed November 10, 2026, against the current Strata Property Act, Strata Property Regulation and Standard Bylaws on BC Laws.
The short answer
Under section 105 of the Strata Property Act, an operating surplus must be handled in one or more of three ways: transferred to the contingency reserve fund, carried forward as part of the operating fund, or used to reduce the next year's operating contribution. Anything else needs a 3/4 vote. An operating deficit must be eliminated during the next fiscal year.
An operating surplus
A surplus is the amount of operating fund contributions not needed to meet operating expenses for the fiscal year. Section 105(1) gives three options, alone or in combination:
- Transfer it to the contingency reserve fund.
- Carry it forward as part of the operating fund, as a surplus.
- Use it to reduce the total contribution to the next fiscal year's operating fund.
These apply "unless the strata corporation determines otherwise by a resolution passed by a 3/4 vote". So a refund to owners, or spending the surplus on something new, needs a 3/4 vote at a general meeting.
| Option | Effect |
|---|---|
| Transfer to the reserve fund | Builds the reserve. Once there, the money is subject to the reserve fund spending rules. |
| Carry forward | Keeps a cushion in the operating account for uneven bills. |
| Reduce next year's contribution | Lowers next year's fees, once. Fees rise again the year after. |
| Something else | 3/4 vote required. |
Who decides
The Act says the surplus "must be dealt with" in those ways, without saying whether council or the owners choose among them. In practice the choice is shown in the proposed budget and so is approved by the owners at the AGM: the budget must show the opening balance in each fund and all sources of income (Regulation 6.6). A prior-year surplus applied to reduce fees appears as a line in the new budget. Showing the treatment openly in the budget and the minutes avoids argument.
Sample minute wording: The treasurer reported an operating surplus of $9,460 for the fiscal year ended December 31, 2025. The proposed budget transfers $5,000 of the surplus to the contingency reserve fund and carries forward $4,460 in the operating fund. MOVED and SECONDED that the budget for the fiscal year ending December 31, 2026, be approved as presented. CARRIED (34 in favour, 3 opposed).
StrataMinutes can take this off your plate. Money decisions are the ones owners, buyers and the tribunal read most closely. Have the minutes prepared for you, with every motion and vote count recorded. Your first month is free.
An operating deficit
If operating expenses exceed the total contribution to the operating fund, the deficit must be eliminated during the next fiscal year (section 105(2)). The next budget must therefore raise enough to cover both the coming year's expenses and last year's shortfall. Ways to do that:
- a line in the next budget, "prior year deficit recovery", funded by strata fees,
- a special levy approved by a 3/4 vote, or
- applying an accumulated operating surplus from earlier years, if one exists.
A deficit cannot simply be left on the books, and it should not be covered by quietly dipping into the reserve.
Can the reserve fund cover a shortfall?
Only temporarily and only in narrow circumstances. The strata may lend money from the contingency reserve fund to the operating fund if the loan is to be repaid by the end of that fiscal year and is to cover temporary shortages caused by expenses falling due before the monthly contributions for them have been collected, such as an annual insurance premium paid in January (section 95 and Regulation 6.3). Owners must be informed of the amount and purpose as soon as feasible. That is a cash-flow tool, not a way to fund overspending. Spending reserve money on operating expenses is otherwise not permitted, since the reserve is for expenses that occur less often than once a year (section 92).
Reading it in the financial statements
The financial statement sent with the AGM notice must show the opening and current balances of the operating fund and the contingency reserve fund, income, and expenditures including unapproved ones (Regulation 6.7). To find the surplus or deficit, compare total operating income with total operating expenses for the year, then check the operating fund balance carried forward. A strata that shows a small surplus every year is budgeting well. Large surpluses every year mean fees are higher than needed. Repeated deficits mean the budget is unrealistic. See financial statements at the AGM.
Surpluses and selling owners
An owner who sells is not entitled to a return of contributions to the contingency reserve fund (section 101), and has no claim on an operating surplus either. The surplus stays with the strata corporation and benefits whoever owns the lot when it is applied.
Good practice
- Budget a modest operating contingency so ordinary surprises do not produce a deficit.
- Review actual spending against the budget monthly or quarterly at council meetings.
- Explain the year-end result in a sentence in the treasurer's report.
- Favour transfers to the reserve when the depreciation report shows it is underfunded.
See treasurer duties.
Questions councils and owners ask
Can a strata refund a surplus to owners?
Only if approved by a 3/4 vote at a general meeting. The default options are the reserve fund, carry forward, or reducing next year's contribution.
How long does a strata have to fix a deficit?
The deficit must be eliminated during the next fiscal year.
Can council move a surplus to the contingency reserve fund?
Yes, that is one of the three permitted ways to deal with it. Showing it in the budget and minutes is good practice.
Can the reserve fund pay operating bills?
Only as a short-term loan for a temporary cash shortage, repaid by the end of the same fiscal year.
Does a selling owner get a share of the surplus?
No.
Year-end decisions, clearly minuted
StrataMinutes prepares AGM and council minutes that record how a surplus or deficit was dealt with, in wording that matches the financial statements.
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For a 30-lot strata, that is under $1 a lot each month. Have the strata pay: free council approval kit.
This page is general information for BC strata corporations, not legal advice. Your strata's own filed bylaws may differ from the Standard Bylaws. See the current text of the Strata Property Act and the Strata Property Regulation on BC Laws.
Related guides
Annual Budget
Reserve Fund (CRF)
Financial Statements
Reserve Fund Spending Rules
Strata Fee Increases
Treasurer Duties