Interest-Free Loans vs Special Levies for Funding Big Projects

A mid-size envelope refurb on a typical Squamish strata can mean a meaningful one-shot levy per door, or a much smaller monthly amount spread over a decade on a loan. The arithmetic is what determines whether the AGM is calm or hostile. Until 2018 the only practical answer to a capital project was a special levy: every owner pays a lump sum based on unit entitlement, or the strata files a lien. Since 2018, BC stratas can also borrow from a bank or credit union and repay through monthly fees. That changes the math, and it changes the conversation at council. The strata loan vs special levy BC decision is now a real choice, and councils need to understand both options before bringing a capital project to the AGM. Here's how to think about it.

The two options at a glance

A capital project in a BC strata can be funded in three ways, two of which are owner-paid and one of which is the CRF:

1. Contingency reserve fund (CRF) under s. 96. The strata's savings account. Approved by 3/4 vote for the expenditure. Costs nothing extra to owners beyond what they've already paid in fees.
2. Special levy under s. 108. One-time charge to every owner proportionate to unit entitlement. Approved by 3/4 vote at a general meeting.
3. Strata corporation loan. Borrowing from a bank or credit union, repaid through monthly fees. Approved by 3/4 vote at a general meeting since 2018 amendments.

Most major projects use a combination. A typical Squamish envelope project pulls from the CRF first, then funds the remainder by some mix of levy and loan. The choice between levy and loan is what we'll focus on here.

How a strata loan actually works

The 2018 amendments to the Strata Property Act allowed strata corporations to borrow money from chartered banks and credit unions. The loan is secured against the strata's right to collect fees, not against common property or individual units. A small number of BC lenders now offer strata-specific lending products, your broker or manager can identify the active lenders at the time of any specific transaction.

Mechanics:

• Approval. 3/4 vote at a general meeting under s. 108-equivalent rules.
• Term. Typically 5 to 15 years.
• Rate. Generally comparable to current commercial mortgage rates at the time of borrowing.
• Security. The strata's right to collect fees, plus a small reserve covenant.
• Repayment. Principal and interest collected through monthly fees.
• Default. The lender can compel the strata to levy owners to cover missed payments.

The loan documents look similar to a commercial loan and require legal review. Lenders also want to see the strata's recent financial statements, depreciation report, AGM minutes approving the loan, and project quotes. Expect 6 to 10 weeks from approval to funding.

How a special levy actually works

Special levies are the traditional way to fund capital projects in BC and remain by far the most common. The mechanics under s. 108:

• Approval. 3/4 vote at a general meeting.
• Notice. Owners get 2 weeks' notice with the resolution specifying the levy amount, purpose, and payment schedule.
• Payment. Lump sum or instalments (typically 2 to 4 instalments over 6 to 12 months).
• Per-unit calculation. Levy amount divided by total unit entitlement, charged proportionally.
• Default. Strata files a lien under s. 116, can force unit sale to recover.

Levies are simple, fast, and avoid interest costs. The downside is concentrated cash impact: every owner has to come up with their share within months. For owners on fixed incomes, that can be devastating.

A capital project example

Suppose a mid-size Squamish strata needs to fund a partial envelope refurbishment. After applying the available CRF balance, a meaningful remainder must be funded through some combination of levy and loan.

The total dollar cost ranking is clear: levy is cheapest, loan is most expensive. But that's not the only consideration.

When a special levy makes sense

A special levy is the better choice when:

• The strata is mostly owner-occupied with strong cash reserves
• The project is one-time and not part of a larger capital program
• Owners are aligned on funding the project quickly
• Total project cost is modest relative to unit values (e.g., under 5% of unit value)
• The strata wants to avoid taking on long-term debt

Special levies preserve maximum financial flexibility for the corporation. No monthly debt service obligation, no lender covenants, no refinancing risk. Many councils we work with default to levy and only consider a loan when affordability problems surface.

When a loan makes sense

A strata loan is the better choice when:

• A meaningful minority of owners can't afford a lump-sum levy
• The project is large relative to typical owner cash reserves
• Multiple capital projects are stacking up over 5 to 10 years
• The strata wants to spread cost over the same period as the asset's useful life
• Owners on fixed incomes (retirees) form a significant cohort

Loans match cost to time. If the new envelope is good for 30 years, financing it over 10 years means current owners pay for value future owners will receive, but spread over time, not all at once. This intergenerational fairness argument is one of the stronger reasons to use loans.

Mixed financing: levy + loan

The right answer for many stratas is a blend. Use the CRF for what it's funded for, special levy for the affordable portion, and a loan for the rest. A balanced split costs more than a pure levy but spreads the cash impact enough to keep every owner on side.

Drafting the resolutions requires care. Each piece (CRF expenditure, levy, loan authorization) is a separate 3/4 vote under s. 108 and related sections. The AGM notice has to specify each resolution clearly, and owners vote on each separately. CRT decisions involving combined levy-and-loan structures have generally upheld the financing, but they have repeatedly emphasized the importance of clear, separate resolutions for each piece.

AGM mechanics for both options

The notice of the general meeting must include:

• The specific resolution text (loan terms, levy amount, or both)
• A description of the project being funded
• The vote threshold (3/4)
• The financial implications for each owner

For loans specifically, the notice should include the lender's term sheet or commitment letter. Owners need to see the rate, term, and total cost before they vote. Trying to approve a loan without a specific lender locked in is a common mistake, owners get spooked by uncertainty.

Our AGM guide covers the meeting mechanics, and our budgets guide walks through how the financing decision flows into the next year's operating budget. For the CRF rules that govern the savings component, see strata CRF BC.

When to start the financing conversation

The single best time to start the loan vs levy conversation is the moment the depreciation report flags a major upcoming expense. That's typically 5 to 10 years before the work is needed, which gives council time to build the CRF, communicate with owners, and consider lender options.

If your strata is already inside 12 months of a major project and the CRF won't cover it, council needs to decide quickly. We do a lot of capital-financing strategy work for Sea-to-Sky stratas, reach out and we'll model out the levy vs loan scenarios for your specific project and ownership profile.