How Condo Reserve Fund Contributions Are Set in Ontario

Your monthly condo fee probably includes a line for the reserve fund. It can feel like a mystery number that rises or falls without much explanation. Understanding where it comes from helps you judge whether your building is saving sensibly.

This article walks through how the amount is set, how it is divided among owners, and what you can do if you think it is wrong. It is general information. Whether and how an owner can challenge a particular decision depends on the facts, so a lawyer can confirm your options.

Where the contribution comes from

Each corporation must contribute to its reserve fund an amount reasonably expected to cover future major repairs and replacements. That amount is set by a reserve fund study and a funding plan. The goal is to save steadily rather than raise money in a panic when a major component fails.

The fund exists for major repair and replacement of the common elements and assets of the corporation. It is not a general pot for day-to-day costs.

How the board decides the amount

The board decides the contribution. The CAO says it should be cautious if choosing to deviate from professional advice, and departing from the study could create director liability.

There is a set process after each study. The board must review it within 120 days of receiving it and propose a plan for adequate future funding. Within 15 days of proposing the plan, it must send owners a notice of future funding with a summary of the study, a summary of the plan and a statement of any areas where the plan differs from the study. The plan is implemented 30 days after it is sent to owners and the auditor.

How your share is worked out

Reserve fund contributions are part of the common expenses. Each unit pays a percentage share fixed by the declaration, based on unit size, parking space and locker. So two owners in the same building can pay different reserve amounts, and the difference comes from the declaration, not from a board choice.

If the fund falls short, the corporation can face further costs. Special assessments are shared by owners in the same percentages used for common expenses, and owners must pay their portion.

If you think the amount is wrong

Whether a contribution is too high, too low or properly set usually comes down to the study and the plan. The documents you can check include:

• The most recent reserve fund study, including its component list and funding plan
• The notice of future funding, especially any statement of areas where the plan differs from the study
• A status certificate, which includes a statement on the reserve fund

Which route an owner can take to challenge a decision depends on the facts and the governing documents, and the right step may differ from case to case. A lawyer can confirm what applies to you. Keep in mind that reserve contributions are common expenses, and unpaid common expenses can lead to a lien that includes interest and reasonable legal costs. Withholding payment while you dispute the amount is risky.

What to do next

• Ask for the latest reserve fund study and notice of future funding.
• Check the study date and what contribution it recommends.
• Compare the recommendation with what the budget actually collects.
• Keep paying your fees on time while you ask questions.
• Get legal advice before taking any formal step against the board.

A written, polite request for the documents is usually the best first move, and it creates a record.

Frequently asked questions