Under the amendments to the condominium act, if a reserve fund were to fall below the level set out in regulations, the board would be required to obtain an outside opinion on whether it should conduct a study on the adequacy of the fund before the next required periodic study. Most ontario condominiums have already or should be having their reserve fund study updates done. These may be scheduled or the result of an unforeseen event and usually require greater outlays of time, energy and expense. Member of canadian institute of quantity surveyors, mciqs appraisers with membership in the appraisal. Special assessments can be charged by your condominium corporation on top of regular monthly fees and the board of directors can charge a special assessment without getting permission from condo owners. Condominium special assessments what you should know before purchasing a condominium by john peart, ll. Jul 08, 2016 protecting condominium owners act reserve funds.
A specific line item for each capital component of the condominium that will require repair or replacement. According to ontarios bill 106, protecting condominium owners act, condominium corporations are required to maintain a reserve fund and must ensure that it is adequate to pay for major repairs and replacement of the common elements and any assets of the corporation as they age. Reserve fund studies for condominiums in ontario, to comply with the condominium act and associated regulations. Reserve fund studies include both a physical assessment and a financial plan. A reserve fund study is a financial document that is meant to act as a guide to. Condominium reserve fund study oaa conference montreal 2014 8 condominium act regulates who can do a reserve fund study. Condominium act, 1998 notice of future funding of the reserve fund under subsection 94 9 of the condominium act, 1998 to all owners in halton condominium corporation no. Notice of future funding of the reserve fund under. Until such a study is done, the condo corporation must still deposit at least 10% of the monthly common expenses into.
Reserve pro has been providing qualified reserve fund studies in southern. Dec 23, 2009 clause b of the definition of eligible security in subsection 1155 of the condominium act, 1998 is amended to include certain financial instruments issued by institutions located in ontario insured by the deposit insurance corporation of ontario dico. Recent amendments that have not yet been enacted will clarify what is meant by adequate, broaden the purpose of reserve funds and define major repairs. Robson carpenter llps condo management law blog a blog about condominium law in ontario. It is a requirement under the condominium act 1998 that all existing and new condominium corporations establish a reserve fund. Overview of changes to ontarios condominium act by joe grant april 3, 2017. Robson carpenter llps condo management blog robson.
Working reserves are normally in the form of vault currency. Understanding condominium corporation reserve funds and. The adequacy of the fund is assessed by making financial projections up to 30 years into the future with the aid of a reserve fund study performed by a qualified analyst in compliance with provincial legislation. In basic terms, a reserve fund study is a report that assists condominium corporations in understanding what they own, how much money they have, the timing of potential replacements, future costs, and, ultimately, how to pay for the replacements when they are due. A reserve fund is a special account with a financial institution such as a bank. You will certainly recall that bill 106 the act to amend our 1998 condominium act and to enact other condorelated legislation was introduced to the legislative assembly of ontario for first reading on may 27, 2015. At a minimum, each reserve fund study will cover the following basics. Ten questions on reserve fund studies may tower condominium. This marks another excerpt from the ontario governments website publications on this new act and what it means. Every condominium in ontario must have a reserve fund to pay for major repairs and replacements of the common elements and assets of the condominium see sections 9395 of the act and the regulations. Condominium property act and regulations now requires that an. The condominium act, 1998 requires that all condominiums have a reserve fund. Recent amendments that have not yet been enacted will. Since the inception of the company, reserve plus team of engineers have been providing clients with accurate, reliable and innovated reserve fund study solutions that help condominium corporations forecast and manage major capital projects and budgets.
Condominium corporations must establish and maintain a reserve fund to cover the costs of major repairs to and replacement of the corporations real and personal property, common property and managed property. The current condominium act requires that boards must undertake periodic reserve fund studies as a way of ensuring that a corporations fund is adequate. Condominium register in accordance with the regulations made under this act and the instructions of the director of titles. Minimum legal requirements are set out in sections 93, 94, and 95 of ontarios condominium. However, such studies can be expensive, especially for small condos that have tiny budgets. Until such a study is done, the condo corporation must still deposit at least 10% of the monthly common expenses into the reserve fund. We are looking for investment options for our reserve fund, right now the money is just sitting in.
This document contains both information and form fields. Pursuant to section 94 of the act, a new condominium corporation has to conduct a reserve fund study within the year following the registration of the declaration. Reserve study software and integrated facilities maintenance software. The owner requested several records, including audited financial statements, budgets, board meeting minutes, agm minutes, the most recent pic, bylaws, employment agreements with any directors, and management contract. The condominium act in ontario requires that every condominium corporation establishes a reserve fund study capital replacement plan within the year following the registration. Further amendment to condo act increases choice for. According to ontario s bill 106, protecting condominium owners act, condominium corporations are required to maintain a reserve fund and must ensure that it is adequate to pay for major repairs and replacement of the common elements and any assets of the corporation as they age. In addition to the daytoday operating activities, condominium corporations must also plan for major repairs, replacements and upgrades that are detailed in the reserve fund plan.
Condominium reserve fund study oaa conference montreal 2014 5 1. Form 15 condominium act, 1998 notice of future funding of the. We have performed over reserve fund studies for a variety of condominium types including highrise residential, townhome, stacked townhome, shared facilities, freehold, vacant land, commercial and industrial ranging in size from just 4 units to over. To read the entire article, please click on the link at the bottom of this article. A good reserve study may also function as a maintenance planning tool for the association. A reserve fund study provider is someone who is permitted to act as a reserve fund provider under the condominium property regulation and is knowledgeable about depreciating declining property, including its operation, maintenance, and the costs associated with. Best practices for reserve fund studies by law, condominium corporations in ontario must obtain a comprehensive reserve fund study report, which is updated every three years. The updated studies alternate between nonsitebased updates, and sitebased updates where the engineer will revisit the site to perform a visual inspection of the development. At long last, theres a glimmer of hope that the terrible new condo act forms introduced in 2017 may soon be improved. After years of consultation, and pleas for reform, the government of ontario introduced bill 106, protecting condominium owners act, in the spring of 2015. Reserve fund study february 8, 2018 by cpleaadmin a physical inspection of the condominiums depreciating property e. Reserve plus is a calgary based reserve fund study provider that was founded in 2012.
Understanding reserve fund studies appraisal institute of. We are informed that the regulations in the amended condominium act, when. On september 20, 2019, the ministry of government and consumer services announced a proposal to entrust the fledgling condominium authority of ontario with administering and revising certain condo act forms. Getting an outside firm to complete a reserve study comes with its own challenges. The cost of a reserve study mccaffery reserve consulting. Further amendment to condo act increases choice for investing. Bylaws of the corporation may have rules about special assessments and may include provisions for owner input. The condominium act and regulations define three different classes of. Condo association reserve fund guidelines condo control central. Some have even had their second update the one with the site visit. A spreadsheet outlining the cost of replacement of each item. Another small amendment to our condo act came into force on december 15, 2009, this time by virtue of bill 218, the ontario tax plan for more jobs and growth act, 2009 clause b of the definition of eligible security in subsection 1155 of the condominium act, 1998 is amended to include certain financial instruments issued by institutions located in.
Reserve fund study ontario association of architects. The new act will provide for increased consumer protection through more detailed disclosure requirements prior to the sale of a condominium, mandatory post construction audits of the common elements after registration of the condominium project and ongoing reserve fund studies to ensure adequate funding is available for repairs throughout the. A condominium reserve fund is a fund used for major repairs of the capital assets of the corporation. All cdw engineering reserve fund studies comply with ontario regulation 4801. Boards should be referring to it on a regular basis and treat it as a planning document to assist in ensuring the financial health of the condominium s reserve fund. Condo corporations must hire a reserve fund study provider to complete the study. Overview of changes to ontarios condominium act by joe grant april 3, 2017 major changes are coming to the legislation governing condominiums in ontario. According to ontarios bill 106, protecting condominium owners act, condominium corporations are required to maintain a reserve fund and. In a recent decision the condominium authority tribunal cat was asked to rule on an owners request for records. The board of directors approves the study, then informs owners of the results of the study. The first year in the life of a condominium corporation. By law, condominium corporations in ontario must obtain a comprehensive reserve fund study report, which is updated every three years. Learn about latest condo act changes for ontario know new. This is accomplished by having a reserve fund study performed.
Reserves held by banks above the required minimum level or cash reserve ratio mandated by regulations and laws. This generally has been interpreted to mean every three years. A reserve fund study is a financial document that provides the basis for the funding of major repairs and replacement of the common elements and assets of the corporation. New condominiums must have a comprehensive reserve fund study type 1 done within the first year of registration. Condominium special assessments what you should know. We have performed over reserve fund studies for a variety of condominium types including highrise residential, townhome, stacked townhome, shared facilities, freehold, vacant land, commercial and industrial ranging in size. Learn about latest condo act changes for ontario know. In ontario, a condo has to carry out a reserve fund study periodically, as per section 94 of the act. Can one reserve fund by reallocated to another to accomplish the improvement.
Using our reserve fund study analysis software we are able to. Architects with a certificate of practice, oaa engineers with a certificate of authorization, p. The ontario condo act specifies that a reserve fund can be used only for replacement and major repairs but not maintenance or regular repairs that result from normal wear and tear. Oncondo submissions served as one of the four discussion streams that comprised stage. To read information, use the down arrow from a form field. This step has made an important contribution towards improving the management of condo communities. On september 20, 2019, the ministry of government and consumer services announced a proposal to entrust the fledgling condominium authority of ontario with administering and revising certain condo act forms of the 19 forms proposed to be.
The purpose of the reserve fund study is to ensure there are sufficient funds available to make major repairs to, or replace the common element components and assets of the condominium corporation. Understanding reserve fund studies appraisal institute. A reserve fund is set up to provide enough money to pay for the condominium corporations responsibilities to maintain and repair the property as required by the act and the condominium corporations declaration. The act gives the board one of the necessary tools in this regard. Does the majority of the condo association need to vote to reallocate funds or can the board reallocate the funds as needed without a vote if they make the condo association. The money collected for this reserve fund can only be used to pay for the items that the reserve fund planner has listed in the study and plan. The reserve fund study must be prepared by a specialist, like an engineer. A guide for putting together a condo association reserve fund condo. Molnar the province of ontario became the acknowledged leader, both in canada and the usa, in tightening up the provisions of the legislation with the ontario condominium act, 1998 and its subsequent regulations 4801 and 4901.
The purpose of a reserve fund study is to determine whether the amount of money in the reserve. The act currently requires every board to engage a professional to. Can the condo association board utilize reserve funds to make needed improvements. Reserve pro professional building inspections, inc. A reserve fund is a special account with a financial institution such as a bank, loan and trust corporation or credit union. The reserve fund study creates a budget for maintaining the assets of the condo corp. The act currently requires every board to engage a professional. Condos here are a fairly new thing and not too many people are overly familiar with operating them. The money deposited into the fund comes from a portion of the money paid by unit owners for either common expenses or by way of special assessments plus any interest or investments that are legally allowed. The provision for major repair and replacement of the common elements is done through a statutory reserve fund. Questions about the accuracy of reserve fund studies rfs come up regularly. Reserve fund study for condominiums in ontario ben engineering. Under the new condominium act, existing registered condominium corporations must prepare a reserve fund study within three years of may 5, 2001. I will be referring from time to time in this article to the ontario condominium act, 1998 as the.
Other jurisdictions require both reserve funds and reserve fund studies, which assess the lifetime of major assets, the cost of replacing them and the contributions. Today i will be addressing reserve funds and reserve fund investments. A reserve fund study is a financial document that provides the basis for the funding of major repairs and replacement of the common elements and assets of the corporation condominium corporations in ontario are legally required to set up and maintain at least one reserve fund. Condominium corporations in ontario are legally required to set up and maintain at least one reserve fund. All references to section numbers refer to sections in the condominium act sm 2011, c. The purpose of a reserve fund study is to determine whether the amount of money in the reserve fund and the amount of contributions collected by the corporation. After the dog days of summer, queens park has resumed its work this week and the new condo act is high. All cdw engineering reserve fund studies comply with ontario regulation 4801 general, made under the condominium act, 1998. All condominium corporations had to have reserve funds, but reserve fund studies were not required. The updated studies alternate between nonsitebased updates, and sitebased updates where the engineer will revisit the site to perform a visual. Reserve fund study accuracy canadian condominium institute. This account is separate from the condominiums operating fund, and it is used to pay for major repairs and replacements to the condominium. When a condominium unit is sold, the buyer must be told what the actual balance in the reserve fund is, as well as the balance that was recommended by the reserve fund study.