In basic terms, a reserve fund study is a report that assists condominium corporations in understanding what they own, how much money they have, the timing of potential replacements, future costs, and, ultimately, how to pay for the replacements when they are due. Today i will be addressing reserve funds and reserve fund investments. A reserve fund study is a financial document that is meant to act as a guide to. The updated studies alternate between nonsitebased updates, and sitebased updates where the engineer will revisit the site to perform a visual.
The owner requested several records, including audited financial statements, budgets, board meeting minutes, agm minutes, the most recent pic, bylaws, employment agreements with any directors, and management contract. Each of our studies complies with the requirements of the condominium act. It is a requirement under the condominium act 1998 that all existing and new condominium corporations establish a reserve fund. When a condominium unit is sold, the buyer must be told what the actual balance in the reserve fund is, as well as the balance that was recommended by the reserve fund study. Understanding reserve fund studies appraisal institute of. New condominiums must have a comprehensive reserve fund study type 1 done within the first year of registration. The provision for major repair and replacement of the common elements is done through a statutory reserve fund. Condominium special assessments what you should know before purchasing a condominium by john peart, ll. The first year in the life of a condominium corporation. A reserve fund study is a financial document that provides the basis for the funding of major repairs and replacement of the common elements and assets of the corporation. Overview of changes to ontarios condominium act by joe grant april 3, 2017. Architects with a certificate of practice, oaa engineers with a certificate of authorization, p. The condominium act and regulations define three different classes of.
Member of canadian institute of quantity surveyors, mciqs appraisers with membership in the appraisal. After the dog days of summer, queens park has resumed its work this week and the new condo act is high. A good reserve study may also function as a maintenance planning tool for the association. All cdw engineering reserve fund studies comply with ontario regulation 4801 general, made under the condominium act, 1998. Condominium reserve fund study oaa conference montreal 2014 5 1.
Robson carpenter llps condo management law blog a blog about condominium law in ontario. Subsection 1155 now reads as follows with amendment underlined. The cost of a reserve study mccaffery reserve consulting. Under the new condominium act, existing registered condominium corporations must prepare a reserve fund study within three years of may 5, 2001. Reserves held by banks above the required minimum level or cash reserve ratio mandated by regulations and laws. Reserve pro professional building inspections, inc. The reserve fund study creates a budget for maintaining the assets of the condo corp.
Minimum legal requirements are set out in sections 93, 94, and 95 of ontarios condominium. The act currently requires every board to engage a professional. To read information, use the down arrow from a form field. The purpose of a reserve fund study is to determine whether the amount of money in the reserve fund and the amount of contributions collected by the corporation. Condominium corporations must establish and maintain a reserve fund to cover the costs of major repairs to and replacement of the corporations real and personal property, common property and managed property. The condominium act in ontario requires that every condominium corporation establishes a reserve fund study capital replacement plan within the year following the registration. The board of directors approves the study, then informs owners of the results of the study.
To read the entire article, please click on the link at the bottom of this article. The reserve fund study must be prepared by a specialist, like an engineer. Condominium property act and regulations now requires that an. Molnar the province of ontario became the acknowledged leader, both in canada and the usa, in tightening up the provisions of the legislation with the ontario condominium act, 1998 and its subsequent regulations 4801 and 4901. Working reserves are normally in the form of vault currency. A reserve fund is a special account with a financial institution such as a bank. Some have even had their second update the one with the site visit. Ten questions on reserve fund studies may tower condominium. Reserve plus is a calgary based reserve fund study provider that was founded in 2012. A reserve fund study is a financial document that provides the basis for the funding of major repairs and replacement of the common elements and assets of the corporation condominium corporations in ontario are legally required to set up and maintain at least one reserve fund. Condominium reserve fund study oaa conference montreal 2014 8 condominium act regulates who can do a reserve fund study. The new act will provide for increased consumer protection through more detailed disclosure requirements prior to the sale of a condominium, mandatory post construction audits of the common elements after registration of the condominium project and ongoing reserve fund studies to ensure adequate funding is available for repairs throughout the. In addition to the daytoday operating activities, condominium corporations must also plan for major repairs, replacements and upgrades that are detailed in the reserve fund plan. Jul 08, 2016 protecting condominium owners act reserve funds.
Getting an outside firm to complete a reserve study comes with its own challenges. Understanding reserve fund studies appraisal institute. Reserve fund study february 8, 2018 by cpleaadmin a physical inspection of the condominiums depreciating property e. The money deposited into the fund comes from a portion of the money paid by unit owners for either common expenses or by way of special assessments plus any interest or investments that are legally allowed. Using our reserve fund study analysis software we are able to. However, such studies can be expensive, especially for small condos that have tiny budgets.
Oncondo submissions served as one of the four discussion streams that comprised stage. On september 20, 2019, the ministry of government and consumer services announced a proposal to entrust the fledgling condominium authority of ontario with administering and revising certain condo act forms of the 19 forms proposed to be. A spreadsheet outlining the cost of replacement of each item. Learn about latest condo act changes for ontario know new. A specific line item for each capital component of the condominium that will require repair or replacement. Condominium special assessments what you should know. After years of consultation, and pleas for reform, the government of ontario introduced bill 106, protecting condominium owners act, in the spring of 2015. Notice of future funding of the reserve fund under. Reserve fund study accuracy canadian condominium institute. The act currently requires every board to engage a professional to. In ontario, a condo has to carry out a reserve fund study periodically, as per section 94 of the act.
All condominium corporations had to have reserve funds, but reserve fund studies were not required. Overview of changes to ontarios condominium act by joe grant april 3, 2017 major changes are coming to the legislation governing condominiums in ontario. This is accomplished by having a reserve fund study performed. The money collected for this reserve fund can only be used to pay for the items that the reserve fund planner has listed in the study and plan. Under the amendments to the condominium act, if a reserve fund were to fall below the level set out in regulations, the board would be required to obtain an outside opinion on whether it should conduct a study on the adequacy of the fund before the next required periodic study. Does the majority of the condo association need to vote to reallocate funds or can the board reallocate the funds as needed without a vote if they make the condo association. Can one reserve fund by reallocated to another to accomplish the improvement. According to ontarios bill 106, protecting condominium owners act, condominium corporations are required to maintain a reserve fund and. A reserve fund is set up to provide enough money to pay for the condominium corporations responsibilities to maintain and repair the property as required by the act and the condominium corporations declaration. Pursuant to section 94 of the act, a new condominium corporation has to conduct a reserve fund study within the year following the registration of the declaration. Until such a study is done, the condo corporation must still deposit at least 10% of the monthly common expenses into.
Special assessments can be charged by your condominium corporation on top of regular monthly fees and the board of directors can charge a special assessment without getting permission from condo owners. Bylaws of the corporation may have rules about special assessments and may include provisions for owner input. Questions about the accuracy of reserve fund studies rfs come up regularly. This step has made an important contribution towards improving the management of condo communities. The purpose of the reserve fund study is to ensure there are sufficient funds available to make major repairs to, or replace the common element components and assets of the condominium corporation. Since the inception of the company, reserve plus team of engineers have been providing clients with accurate, reliable and innovated reserve fund study solutions that help condominium corporations forecast and manage major capital projects and budgets. Every condominium in ontario must have a reserve fund to pay for major repairs and replacements of the common elements and assets of the condominium see sections 9395 of the act and the regulations. Condos here are a fairly new thing and not too many people are overly familiar with operating them. Reserve study software and integrated facilities maintenance software. According to ontarios bill 106, protecting condominium owners act, condominium corporations are required to maintain a reserve fund and must ensure that it is adequate to pay for major repairs and replacement of the common elements and any assets of the corporation as they age. You will certainly recall that bill 106 the act to amend our 1998 condominium act and to enact other condorelated legislation was introduced to the legislative assembly of ontario for first reading on may 27, 2015.
Boards should be referring to it on a regular basis and treat it as a planning document to assist in ensuring the financial health of the condominium s reserve fund. Best practices for reserve fund studies by law, condominium corporations in ontario must obtain a comprehensive reserve fund study report, which is updated every three years. Another small amendment to our condo act came into force on december 15, 2009, this time by virtue of bill 218, the ontario tax plan for more jobs and growth act, 2009 clause b of the definition of eligible security in subsection 1155 of the condominium act, 1998 is amended to include certain financial instruments issued by institutions located in. We have performed over reserve fund studies for a variety of condominium types including highrise residential, townhome, stacked townhome, shared facilities, freehold, vacant land, commercial and industrial ranging in size. Reserve pro has been providing qualified reserve fund studies in southern. Operating expenses vs condo reserve fund expenditures. In a recent decision the condominium authority tribunal cat was asked to rule on an owners request for records.
A reserve fund is a special account with a financial institution such as a bank, loan and trust corporation or credit union. According to ontario s bill 106, protecting condominium owners act, condominium corporations are required to maintain a reserve fund and must ensure that it is adequate to pay for major repairs and replacement of the common elements and any assets of the corporation as they age. Reserve fund study for condominiums in ontario ben engineering. Recent amendments that have not yet been enacted will. Other jurisdictions require both reserve funds and reserve fund studies, which assess the lifetime of major assets, the cost of replacing them and the contributions. The condominium act, 1998 requires that all condominiums have a reserve fund. Condo association reserve fund guidelines condo control central. All cdw engineering reserve fund studies comply with ontario regulation 4801. These may be scheduled or the result of an unforeseen event and usually require greater outlays of time, energy and expense. Understanding condominium corporation reserve funds and. The updated studies alternate between nonsitebased updates, and sitebased updates where the engineer will revisit the site to perform a visual inspection of the development. This generally has been interpreted to mean every three years.
All references to section numbers refer to sections in the condominium act sm 2011, c. Robson carpenter llps condo management blog robson. We have performed over reserve fund studies for a variety of condominium types including highrise residential, townhome, stacked townhome, shared facilities, freehold, vacant land, commercial and industrial ranging in size from just 4 units to over. The purpose of a reserve fund study is to determine whether the amount of money in the reserve. This document contains both information and form fields. Can the condo association board utilize reserve funds to make needed improvements.
I will be referring from time to time in this article to the ontario condominium act, 1998 as the. At a minimum, each reserve fund study will cover the following basics. Recent amendments that have not yet been enacted will clarify what is meant by adequate, broaden the purpose of reserve funds and define major repairs. Further amendment to condo act increases choice for investing. Reserve fund study ontario association of architects.
By law, condominium corporations in ontario must obtain a comprehensive reserve fund study report, which is updated every three years. Condominium act, 1998 notice of future funding of the reserve fund under subsection 94 9 of the condominium act, 1998 to all owners in halton condominium corporation no. Reserve fund studies for condominiums in ontario, to comply with the condominium act and associated regulations. At long last, theres a glimmer of hope that the terrible new condo act forms introduced in 2017 may soon be improved. Notice of future funding of the reserve fund under subsection 94 9 of the condominium act, 1998 condominium act, 1998 to. Condominium register in accordance with the regulations made under this act and the instructions of the director of titles. A guide for putting together a condo association reserve fund condo. Reserve fund studies include both a physical assessment and a financial plan. This account is separate from the condominiums operating fund, and it is used to pay for major repairs and replacements to the condominium. The current condominium act requires that boards must undertake periodic reserve fund studies as a way of ensuring that a corporations fund is adequate. The act gives the board one of the necessary tools in this regard. We are informed that the regulations in the amended condominium act, when.
Condo corporations must hire a reserve fund study provider to complete the study. Until such a study is done, the condo corporation must still deposit at least 10% of the monthly common expenses into the reserve fund. The adequacy of the fund is assessed by making financial projections up to 30 years into the future with the aid of a reserve fund study performed by a qualified analyst in compliance with provincial legislation. Most ontario condominiums have already or should be having their reserve fund study updates done. Form 15 condominium act, 1998 notice of future funding of the. On september 20, 2019, the ministry of government and consumer services announced a proposal to entrust the fledgling condominium authority of ontario with administering and revising certain condo act forms. Learn about latest condo act changes for ontario know. This marks another excerpt from the ontario governments website publications on this new act and what it means. The ontario condo act specifies that a reserve fund can be used only for replacement and major repairs but not maintenance or regular repairs that result from normal wear and tear. We are looking for investment options for our reserve fund, right now the money is just sitting in. Condominium corporations in ontario are legally required to set up and maintain at least one reserve fund.
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