What is a condo reserve fund and how do I know if my condo's fund is healthy in Ontario?
A condo reserve fund is an account the condo corporation keeps only for major repairs and replacements. It is separate from the day-to-day budget, and part of your monthly condo fees goes into it.
The corporation must obtain reserve fund studies. The first one, a Class 1 comprehensive study, is due within the first year after registration, and after that Class 3 and Class 2 updated studies alternate at least every three years. Within 120 days of receiving a study, the board must review it and propose a plan for adequate future funding. Owners must get notice within 15 days of the plan being proposed, and it takes effect 30 days after it is sent to the auditor and owners.
To judge whether a fund is healthy, read the latest study and the board's funding plan together. Look at what the study says will be needed, whether the plan closes any gap, and how recent the study is. If the fund looks short, a special assessment is one way a board can raise money. A lawyer or accountant can help you read the numbers for a specific building.
Key takeaways
- The reserve fund is an account the corporation keeps only for major repairs and replacements.
- The first reserve fund study is due within the first year after registration, and updated studies follow at least every three years.
- The board must review each study within 120 days and propose a plan for adequate future funding.
- A special assessment is one way a board can raise money if the fund falls short.