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CAO Guide on Condo Reserve Funds

Need to understand what reserve funds are? Our in-depth guide will outline what they are and how to properly plan for and manage them.

About the guide

This guide helps directors, owners and other members of condo communities learn about reserve funds. The content of the guide was determined by the Condo Authority after consultations with the sector.

A reserve fund is like savings account that a family might use for emergencies related to the upkeep of their home. However, the contributions to the reserve fund are mandatory.

A reserve fund is a distinct fund maintained by the condo corporation that can only be used for the purpose of major repair and replacement of the common elements and assets of the corporation. The fund cannot be used for any alterations or improvements to the corporation’s common elements.

Section 93 (4) of the Condo Act requires collection of reserve funds

Section 94 (1) of the Condo Act requires periodic studies to determine if reserve funds are adequate


Reserve fund basics

In Ontario, all corporations are required to maintain at least one reserve fund, funded by owners via their common expense fees. The first part of the guide covers the following topics:

  • Other reserve fund basics
  • Minimum balance
  • Financial management and the consequences of a poorly funded reserve fund


Reserve fund studies

The Condo Act requires condo corporations to conduct studies to determine whether the money in the reserve fund is adequate. Learn about the details and types of reserve fund studies:

  • A comprehensive study (class 1)
  • An updated study with a site inspection (class 2)
  • An updated study without a site inspection (class 3)
  • What a study contains and who can conduct it
  • Plans and notice for future funding

It is important to note that the reserve fund study is only ever able to provide an estimate of future costs and may be an underestimation of repair and replacement costs as unexpected expenses may arise.


Best practices for ensuring a healthy reserve fund

There is no one-size-fits-all approach for reserve funds and studies, but there are several factors and best practices to consider:

  • Condo governance and management
  • Finding the right RFS provider and the entire RFS process
  • Anticipating related project costs and understanding how the study is drafted


Project oversight and reserve fund spending

Condo boards are ultimately accountable for these projects. Learn about what that entails:

  • Project phases
  • Long-term planning
  • Establishing a construction committee


Frequently asked questions for owners and boards

This section provides answers to commonly asked questions that owners and boards have about reserve funds.


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