Strata Property Regulation amendment clarifies deposit-insurance requirements
March 7, 2019
BY Kevin Zakreski
Yesterday, amendments to the Strata Property Regulation were announced that deal with deposit insurance for strata-corporation funds. OIC 101/2019 provides for an amendment to the definition section of the regulation (section 1.1), defining the term insured account for the purposes of the Strata Property Act to mean “an account with a deposit, all or part of which is eligible to be insured by the Canada Deposit Insurance Corporation or guaranteed by the Credit Union Deposit Insurance Corporation of British Columbia.” The order in council also amends section 6.11 of the regulation by repealing paragraph (a) and replacing it with the following: “a savings account or chequing account at a financial institution outside of British Columbia with a deposit, all or part of which is eligible to be insured by the Canada Deposit Insurance Corporation.” Finally, the order in council repeals everything in paragraph (b) before subparagraph (ii) and replaces it with the following: “a term deposit or a guaranteed investment certificate, if all or part of the deposit or certificate (i) is eligible to be insured by the Canada Deposit Insurance Corporation or guaranteed by the Credit Union Deposit Insurance Corporation of British Columbia.”
The ministry’s strata-housing webpage explains the background and rationale for these changes:
In 2014, this part of the Strata Property Regulation was amended to modernize and simplify the requirements for permitted investments for funds collected through special levy or held in a contingency reserve fund. The Regulation specified that certain investments (savings and chequing accounts, term deposits, and guaranteed investment certificates (GICs)) must be in accounts at financial institutions that are a member of the Canada Deposit Insurance Corporation (CDIC) or the Credit Union Deposit Insurance Corporation of British Columbia (CUDIC), and the deposit must be eligible for deposit insurance.
Accounts at financial institutions that are members of CUDIC have unlimited deposit insurance protection. However, as CDIC limits deposit insurance to the first $100,000 of the total amount on deposit, some strata corporations interpreted Regulation 6.11 to mean that the entire amount on deposit must be insured and believed they are required to divide their investments across many accounts to ensure no account exceeds the $100,000 limit. Many strata corporations have account balances well in excess of $100,000, and it was never intended that strata corporations administer a multitude of accounts to keep balances under the deposit insurance limit.
To reduce confusion and the perceived administrative burden on strata corporations, the language in Regulation 6.11 has been amended to clarify that that a strata corporation is compliant with the Regulation in situations where only a portion of an account is eligible for deposit insurance. The amendment takes effect immediately.