Which fund is described as the key to good strata management?

• A. Operating Fund
• B. Contingency Fund
• C. Reserve Fund
• D. Capital Fund

Answer: (B)

The contingency fund is the financial safety net for a strata corporation. It’s specifically designed to cover unexpected expenses, urgent repairs, or cost overruns on work that wasn’t planned in the operating budget. By having this cushion, the strata can handle surprises without forcing sudden, large special levies or borrowing, which helps keep annual contributions stable and the financial plan on track.

The operating fund covers day-to-day expenses, while the reserve (or capital) fund is meant for planned major repairs and long-term replacements. Those plans are important, but they aren’t meant to absorb unforeseen costs. A well-funded contingency fund provides the flexibility needed to respond to the unexpected, supporting smoother governance and financial stability.