A reserve fund is a pool of money collected and invested by the condo corporation to be used for major capital costs and repairs to the condominium as and when needed (e.g. repairing balconies, replacing the roof, repairing the underground garage, etc.). Prior to the new Condominium Act, condo corporations had to contribute at least 10% of monthly common expenses paid by owners to a reserve fund. Under the new Condominium Act, these contributions must still be made until the condo corporation prepares a reserve fund study, which must be done by May 2004.
Reserve Fund Study
This is a professional evaluation and report of the remaining life expectancy of each part of your building, the estimated replacement costs, and a plan for ensuring that the reserve fund be sufficient through recommended appropriate contributions from common expenses or otherwise. These studies must be updated at least every three years. After a study is conducted, your board of directors must propose and implement a plan to finance the reserve fund. The financing plan must achieve a sufficient fund level to satisfy the findings of the reserve fund study within 10 years from the first reserve fund study done between May 2001 and May 2004.