There’s more than one kind of reserve fund study
Q. We are new to the condo lifestyle and my husband just became a board member. The board is getting ready to have a reserve fund study completed and he is confused. The board informs him there are three kinds of reserve fund studies. Is this correct? We have read about reserve funds and why studies are necessary but we didn’t know there was more than one type. This is a brand new property. A. The Condominium Act of Ontario outlines three classes of reserve fund studies that are required by all condominium corporations. There is a comprehensive study, an updated study based on site inspection and an updated study not based on a site inspection.
A comprehensive study consists of a physical analysis and a financial analysis of the property and this type of study must be carried out within one year following the registration of the declaration creating the condominium corporation. This comprehensive study is the reserve study your board is currently preparing for.
An updated on-site study based on actual site inspection or off-site inspection means exactly that. Within three years of your current study, someone must conduct either an updated on-site inspection reserve fund study or updated off-site inspection reserve fund study, mainly to see how things are going. Your very first reserve fund study is very important in order for the engineers to calculate what major repairs and replacements will be required in which year.
It is mandatory under the Act that your corporation conduct updated reserve fund studies with and without on-site inspection of the property. These updates must alternate at three-year intervals. Those corporations who avoid reserve fund studies could face serious consequences should reserve funds
be found to be inadequate.