Did you know? The Condominium Act, active since 1998, requires that all condominiums have a reserve fund. In addition, it is mandatory that these funds be reviewed and studied every three years to ensure compliance and accuracy.
Curious to learn more about reserve funds and the importance of an engineer-inspected reserve fund study? We’ve collected the following insights of things you need to know:
1. What is a reserve fund?
A reserve fund is a particular financial account that is kept separate from the condo’s operating fund. The money in this account is to be used for paying repair cost. This fund accumulates as the owner deposits a monthly fee to ensure the condominium will be protected in case of emergency or a need for renovation.
2. What can a reserve fund be used to fix or replace?
Reserve funds can only be used for non-routine repairs and maintenance for the common elements of a condominium corporation. Such common elements could include pools, parking lots, roofs, windows, security systems and flooring.
3. What is a reserve fund study?
A reserve fund study is the study of how much money needs to be in a reserve fund to ensure the structure and the residents who live within a condominium will be supported with necessary repairs. Professional engineers, such as the team at Criterium-Jansen, must complete these reserve fund studies.
Once the data is compiled, the study is reviewed and approved by a board of directors, and the owners of the building will be informed of the action they need to take.
4. What’s involved in a reserve fund study?
Professional reserve fund studies include a detailed physical assessment and financial plan. Ensuring compliance and reliability, the study will consider:
- Parts of the building the corporation may (or will have to) repair or completely replace.
- An approximate estimate of when various components will need to be replaced or repaired.
- An approximate recommendation of how much money should be put aside into the reserve fund, as well as future insights and predictions.
5. What does the condominium need to provide for the study to be conducted?
In order for a reserve fund study to be conducted, a condominium needs to provide:
- Repairs or replacements that have been completed and when
- A summary of problems that have arisen (leaks, etc.)
- Accurate drawings of the building
- The declaration and description
- Cost sharing agreements and financial statements
- Documentation of previous reserve fund studies
- Details on the current annual contribution to the Reserve Fund
6. What factors can alter a reserve fund study?
Reserve fund studies can become inaccurate or change over time due to poor maintenance by the owner, natural disasters, poor weather, accidental damage, emergencies, etc. This is why condominiums need to have a reserve fund study completed during the first year a building is erected, and every three years after.
Contact Criterium-Jansen Engineers Today!
Are you ready to complete your reserve fund study? Our Criterium-Jansen Engineers are highly skilled, detail-oriented, professional, and enthusiastic to start on your case. Simply give us a call today, and we’ll arrange to meet with you as soon as possible.