News & Updates
June 3: Alberta Government Passed Order in Council - Use of Reserve Fund During Emergency
On June 1, 2020, the Government of Alberta passed an Order in Council making changes to the Condominium Property Act Regulations allowing condominium boards to borrow from reserve funds during states of emergency and requiring repayment of the borrowing within 2 years.
A summary of the changes is shown below:
When states of emergency have been declared, whether provincial, federal or municipal, Condominium Corporations are allowed to borrow reserve funds for operating expenses IF:
- The Corporation has received less in contributions than expected due to the emergency;
- The Corporation cannot adequately cover its expenses as a result of the above; AND
- The Corporation is not otherwise prohibited from borrowing from the reserve funds in its bylaws.
The only amount the Corporation can transfer from the reserve fund to the operating fund is the lesser of:
- The difference between budgeted contributions and actual contributions received;
- The shortfall between revenues received and expenses to be paid from the operating fund; or
- Any other limit in its bylaws for using the reserve fund in this manner.
Prior to transferring funds from the reserve fund two things must occur:
- A preliminary notice must be sent to owners with prescribed information about the borrowing, including:
- That the board intends to borrow from the reserve fund;
- The date the board intends to make the decision;
- Alternatives considered by the board and reasons for not adopting these; and
- A proposed revision to the reserve fund plan that states the amount being transferred and which shows a maximum 2-year repayment plan for any such borrowing;
- 75% of the board eligible to vote has to pass a resolution to approve the transfer of funds from the reserve fund and to approve the revised reserve fund plan.
Owners are still obligated to pay contributions on time.
A link to the Order is HERE.