What Is the Reserve Fund Study in an Ontario Condo and How Does It Affect Fees?
A reserve fund study is a report on the major repairs and replacements a condo corporation will face and whether its reserve fund can pay for them, and the funding plan that follows helps set your future condo fees. The reserve fund is an account a condo corporation keeps only for major repairs and replacements. The first study, a Class 1 comprehensive study, is due within the first year after registration. 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. It must send owners notice within 15 days of proposing the plan, and the plan takes effect 30 days after it is sent to the auditor and owners.
Condo fees pay for reserve fund contributions among other costs, and each unit's share is a percentage set by the declaration. A board can levy a special assessment through common expense fees without owner approval, although the governing documents may contain provisions about special assessments. If you are buying, ask a lawyer to review the latest study and plan.
Key takeaways
- The reserve fund is an account kept only for major repairs and replacements.
- The first study, a Class 1 comprehensive study, is due within the first year after registration, and Class 3 and Class 2 updated studies then 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.
- Condo fees include reserve fund contributions, and a board can levy a special assessment through common expense fees without owner approval, although the governing documents may contain provisions about special assessments.