Every condominium in Ontario is required to maintain a reserve fund, which serves as a financial safeguard for major repairs and replacements. Alongside the operating fund, which covers daily operational expenses, the reserve fund ensures that the condominium corporation can meet its long-term maintenance obligations without placing sudden financial strain on owners.
One way to think about the reserve fund is as a condominium piggy bank—every owner contributes a portion of their common element fees each month to keep it funded. The goal is simple: to ensure that when major repairs or replacements arise, the money is available.
How Much Should Condo Owners Contribute?
Determining the appropriate contribution levels for a reserve fund is the purpose of the reserve fund study. This study provides a structured financial plan outlining how much owners should contribute over the next 30 years to maintain the financial health of the fund.
To ensure the reserve fund remains adequate, Ontario’s Condominium Act mandates that a reserve fund study be conducted at least once every three years. Additionally, each condominium corporation is required to have an investment plan, designed to protect and grow the fund over time.
For a deeper look into effective reserve fund management strategies, check out: Building a Strong Future: Effective Reserve Fund Management.
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