|A Condominium reserve fund is like a "savings account" for special expenditures that may come up in the future. All Mississauga Condos are required to have a reserve fund in a bank account that is not part of the general budget account. The money in this account has to be put into easily accessible and safe investments, such as GICs or Government Bonds; not in the stock market or any other risky venture.|
Periodically, condos need to do a Reserve Fund Study Generally every three years. Such studies can be expensive, especially for small condos that have tiny budgets. A good rule is to do an initial comprehensive reserve fund study and, then, 3 years later, do an update. (which is less expensive)
This study must be done by experts and the purpose of the study is to examine all the condo building systems (heating/cooling) and other physical aspects (garage, balconies, windows, pool) and give a reasonable expectation as to when they will need to be replaced or have non-routine repairs and how much this will cost at that projected time in the future.
The engineers present the results of this study to the condo board along with a fundraising plan. For instance, they may suggest that 10% of the condo fees go into the fund with an increase of 1% each year for the next ten years.
The condos Board of Directors have 120 days during which to decide how to implement this plan or put forth another reasonable plan. After this, the board has 15 days to send to the condominiums owners an overview of the reserve fund study and how they intend on implementing it. Generally, this study and plan are sent to owners at the same time as the budget because implementation of the study may affect the budget.
So, all owners receive a summary of the reserve fund study along with an explanation of how it will be put in place. This is then indicated in the status certificate.
What’s the Condos Reserve Fund For?
The condos reserve fund can only be used for replacement and non-routine repairs of common elements and assets of the condo:
- Replacement of roof, windows, boiler, carpets, and security system.
- Non-routine repairs to the chiller, the swimming pool, and the parking areas.