- The reserve fund is kept only for major repairs and replacements.
- The first study is due within the first year after registration, then updated studies follow at least every three years.
- A board can levy a special assessment through common expense fees without owner approval, although the governing documents may contain provisions about special assessments, and each owner's share uses the same percentage as their common expense fees.
A reserve fund study tells you whether a condo is setting aside enough money for big future repairs. If you are buying or already own, it is one of the most useful documents you can read.
This article explains how often studies are required, what the board must do after receiving one, and what to look for if you suspect the fund is underfunded.
What the reserve fund is for
The reserve fund is an account a condo corporation keeps only for major repairs and replacements. It is funded in part through your condo fees, since fees pay for reserve fund contributions.
The study estimates future repair and replacement needs and whether the fund can cover them. It is not a promise about the building's condition, but it shows how the corporation plans to pay for what is coming.
How often a study is required
The first reserve fund 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.
The study you hold will identify who prepared it and which type it is. If the date looks old, ask the board whether a newer one has been completed.
What the board must do with the study
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. The plan takes effect 30 days after it is sent to the auditor and owners.
Read the notice and plan carefully. They show whether the board intends to raise contributions, and that affects your future fees.
Spotting an underfunded fund
No single figure proves a fund is in trouble, and a lawyer or accountant can help interpret the numbers. These are practical questions to ask when you read the study and the board's plan.
- Does the study conclude the current contributions are adequate, or does it recommend increases?
- Is there a gap between the fund balance and the repairs the study expects?
- Has the board adopted a funding plan, and does it actually raise contributions?
- Are major items such as roofs, windows or elevators coming up soon?
- Is the study recent, or has the schedule of updates been missed?
- Have special assessments been mentioned in meeting minutes or status certificates?
Why it can lead to special assessments
A board can levy a special assessment through common expense fees without owner approval, although the governing documents may contain provisions about special assessments. Each owner's share uses the same percentage as their common expense fees.
If an owner does not pay a special assessment, the corporation gets a lien on the unit covering the unpaid amount, interest and all reasonable legal costs of collecting it. A weak reserve fund can therefore turn into a direct cost for you.
What to do next
- Ask for the most recent reserve fund study and the board's funding plan.
- Note the study's date, type and who prepared it.
- Compare the plan to the repairs the study expects.
- Review your declaration and by-laws for anything about special assessments.
- Before you buy, have a lawyer review the condo documents.
Frequently asked questions
How often must a reserve fund study be done?
The first, a Class 1 comprehensive study, is due within the first year after registration. Class 3 and Class 2 updated studies then alternate at least every three years.
What must the board do after getting a study?
It must review the study and propose a plan for adequate future funding within 120 days. It must give owners notice within 15 days of proposing the plan.
Can the board charge a special assessment without a vote?
Yes, a board can levy a special assessment through common expense fees without owner approval, although the governing documents may contain provisions about it. Your share follows your common expense percentage.
Can I use the reserve fund for everyday costs?
The reserve fund is kept only for major repairs and replacements. Everyday costs such as cleaning and maintenance are paid through condo fees.
Sources
- Condominium Authority of Ontario – Reserve Funds and Reserve Fund Studies — condoauthorityontario.ca
- Condominium Authority of Ontario – Special Assessments — condoauthorityontario.ca
- Condominium Authority of Ontario – Common Expenses — condoauthorityontario.ca
Links go to official government, court and regulator pages. The law changes — confirm you are reading the current version.
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