Condo corporations are required to maintain a “reserve fund”. The money held in the reserve fund account is used to fund major repairs to the condo’s common elements. Onsite reserve fund studies are conducted every six years, with updates to the studies (without site inspection) occurring at the three year mark between the onsite studies. The purpose of the studies is to project major repairs for the upcoming 30 year period, as well as the anticipated cost of the repairs, in order to avoid unexpected and significant expenses to condo owners. The study will conclude with a recommendation as to how much money must be set aside on a year to year basis to ensure there is enough money to fund the cost of anticipated repairs.
Of importance here is to note: 1) whether the condo board has implemented the funding recommendations in the study, 2) whether the condo board anticipates there will be sufficient funds in the reserve fund to pay for upcoming repairs, and 3) to understand why they have deviated from the recommendations should that be the case.
Reserve fund studies aren’t fool proof and so unexpected circumstances can still give rise to a need for more cash flow due to problems that weren’t anticipated by the study. Have your lawyer review the relevant condo documents and advise you on reserve fund study matters – they in turn can work with your realtor to deal with any reserve fund issues that might be revealed.
-written by: Andre Munroe
Andre Munroe is the official lawyer of Ottawa Condo Network. He specializes in condominium sales and purchases under the local law firm Kelly Santini. Click here to read his bio or to contact him directly.