Reserve fund study condominium Ontario
A reserve fund is like a savings account or insurance policy for special expenditures that may come up in the future.
In Ontario, a condo has to carry out a Reserve Fund Study "periodically," as per Section 94 of the Act. This generally has been interpreted to mean "every three years." However, 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 would be less expensive.
This study has to be undertaken by experts with a special designation. They may be members of the Appraisal Institute of Canada or other similar accredited groups such as the Ontario Association of Certified Engineers. The purpose of the study is to examine all the systems (i.e., heating) and other physical aspects (garage, balconies, windows) 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.
Our engineers present the results of this study to the 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 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 owners an overview of the reserve fund study and how they intend on implementing it. The board then has another 30 days to begin implementing the plan. 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.
For more info visit Condo Authority Ontario.
An outline of the major areas of expertise VOLT Engneering Inc. has to offer is as follow:
- Conceptual Studies, Property & Building Condition Assessment
- Performing reserve study of a property’s physical components and analysis of its reserve funds
- Conducting a Building Condition Survey before or during the purchasing process of an investment property is essential
- Performing design of reinforced concrete structures for houses and multi-story residential and commercial buildings
- Offering rehabilitation of parking garages, balconies and concrete corroded by age, weathering and salt damage
- Performing investigation, evaluation and rehabilitation of reinforced concrete, masonry brick buildings such as residential & commercial buildings and their associated structures, including balconies, and underground parking garages.
There are three types of reserve studies based on standards set by the Association of Professional Reserve Analysts and Community Associations Institute, differing in how exhaustively the Physical Analysis is conducted. These three types of reserve studies allow the association to select the "Level of Service" appropriate to their current budget preparation and disclosure needs. Listed beginning with the most exhaustive, they are:
"Full" reserve study (creation of the reserve study, involving creation of the component list, measuring/quantifying all reserve components, and development of the Useful Life, Remaining Useful Life, and Current Replacement Cost based on a diligent, visual on-site inspection). Note that for most associations, a "Full" reserve study only needs to be done once.
This includes:
- A description of the on-site physical assessment, inspection methods, and equipment (when applicable)
- Comprehensive analysis and visual physical condition survey of common element components
- Review of the present condition and evaluation of life expectancy of components under the Reserve Fund Study
- Inspect and investigate the need for major repairs to common elements of the corporation
- Cost estimation for major repairs and/or replacement of Reserve Fund Study component
- A 30-year plan that outlines future needs to repair or replace major components of the Reserve Fund Study
After a "Full" reserve study has been done, in subsequent years the association can choose between the two reserve study update options shown below:
"Update With-Site-Visit" reserve study (an update of an existing reserve study involving a diligent visual on-site inspection, but presuming that all components have been properly identified and quantified). This type of update is often performed every two to five years.
"Update No-Site-Visit" reserve study (an update of an existing reserve study without a site inspection, done by client interviews and interviews with knowledgeable vendors and service providers). This type of update is typically performed in the years in-between With-Site-Visit updates.