How Often Must an Alberta Condo Corporation Do a Reserve Fund Study?

If you own a condo in Alberta, part of your monthly contribution goes into a reserve fund for big repairs like roofs, elevators and parking structures. A reserve fund study is how the corporation works out how much that fund should hold.

Owners often ask how often the study has to happen, who is allowed to do it, and what to do if the corporation is behind. This article walks through the general rules under the Condominium Property Act and its Regulation.

This article covers the law of Alberta.

What the reserve fund is for

The corporation must establish and maintain a reserve fund reasonably sufficient to provide for major repairs and replacement of its property, common property and managed property. The corporation must keep it in a separate bank account.

The study is the tool that estimates what those future repairs will cost and when they will be needed. The Regulation requires the corporation to retain a reserve fund study provider to study the depreciating property.

Reserve fund money may not be used for capital improvements unless removal of the money is authorized by special resolution (or is necessary for compliance) and sufficient funds remain. In plain terms, the fund is meant to protect the long-term repair needs of the building.

How often the study is required

Alberta.ca says the study should consider a 30-year timeframe. The five-year clock runs from the approval of the most recent plan, not from the date of the last report, so it is worth checking when your board approved its plan.

Who can do the study and what happens after

The study must be done by a qualified individual. Directors, officers, employees, condominium managers, owners and occupants are excluded as providers. Studies done for a developer or interim board need an arm's-length provider.

After receiving the report, the board must approve a reserve fund plan setting the funding method and amounts, so that sufficient funds are available through owners' contributions or another reasonable method. Owners must get a copy before funds are collected under it.

• Reserve fund money may pay for the required study and report.
• Owners should receive an annual reserve fund report with the AGM package.
• One exception: a corporation is exempt from the study where title to every unit is held by the same owner or group of owners and the units are rented to tenants who are not purchasers or intended purchasers.

What happens if the corporation falls behind

Alberta.ca says a reserve fund that is not adequately maintained may force the board to levy special assessments. A missed or outdated study makes it harder to know whether contributions are enough.

A special levy may fund unexpected and urgent maintenance, repair or replacement, operating shortfalls, increasing the reserve fund balance to meet the reserve fund plan, capital improvements, or satisfying a judgment against the corporation. The board may determine contributions, including a special levy, by resolution, and an owner vote at a general meeting is generally not needed. The exception is a levy for a capital improvement, which needs a special resolution of the owners first.

As soon as possible after approving a special levy, the board must inform each owner of its purpose, total amount, how each unit's share was calculated, the owner's amount and the payment dates. An owner who disagrees with a special levy can raise it with the board.

If a corporation does not follow the Act, the Regulation or its bylaws, the Court may remedy improper conduct, which includes non-compliance with those rules. Disputes about condominium matters may also go to the Condominium Dispute Resolution Tribunal. Any party to a dispute may apply to the Tribunal, but no Court action may start once a Tribunal hearing has concluded, and no Tribunal application can be filed if a Court action has commenced on the same dispute. Which route fits, and whether the Tribunal can hear a particular complaint, depends on the facts and is worth confirming with a lawyer.

What to do next

• Ask the board in writing when the condominium plan was registered and when the last reserve fund plan was approved.
• Request the reserve fund plans, reports and annual reports. The corporation must provide prescribed documents within 10 days of a written request.
• Check that the study provider was not a director, employee, manager or owner.
• Compare the plan with your annual reserve fund report.
• If the study is overdue, raise it with the board before considering a dispute process, and get legal advice if it is not resolved.

Frequently asked questions