Province Amends Regulations to Clarify Deposit Insurance Requirements
Paul G. Mendes, Partner
Phone: 604-685-4894
Email: pgm@lmlaw.ca
The Provincial Government has amended Strata Property Regulation 6.11 (OIC 101-2019 pdf) to clarify deposit insurance requirements for monies invested by strata corporations. Strata corporations will now be able to keep deposits in bank accounts that are not fully insured. Strata’s concerned about deposit insurance on large balances should talk to their strata manager about switching accounts to a credit union or other approved financial institution with unlimited deposit insurance.
The following is from the government’s official release:
“In 2014, this part of the Strata Property Regulation was amended to modernize and simplify the requirements for permitted investments for funds collected through a 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 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.
These amendments are part of ongoing efforts to reduce regulatory barriers and are expected to reduce the administrative burden on strata corporations.”
WHAT WE DO: Lesperance Mendes has been advising strata corporations and strata property owners since 1997. To find out more about how we can help you and your strata, contact Paul G Mendes, Partner at 604-685-4894 or email pgm@lmlaw.ca.
THIS ARTICLE IS NOT LEGAL ADVICE: This article provides general information and should not be relied on without independent legal advice.