What is a Reserve Fund Study?

A reserve fund study involves the carrying out the following tasks:

  • determining the depreciating common property components that will require replacement at intervals longer than 1 year, estimating their replacement scheduling and replacement cost;
  • evaluating the Corporation's current funding practices;
  • presenting various scenarios for funding the replacement of the depreciating common property components.

This process involves the following steps:

1. Investigation

  • Reviewing the operating budget in consultation with the board members and/or property manager;
  • Reviewing the Corporation’s plans, by-laws, and rules, in order to establish all obligations of the Corporation, and therefore all anticipated expenses not covered by the operating budget;
  • A reasonable inspection or review of the condominium property, as well as any available building plans and specifications.

This enables the provider to develop an understanding of the building conditions, component quantities, and allows a closer evaluation of the anticipated expenses.

Note: This "building investigation" or "quantity survey" may not be necessary on a reserve fund study "review" or "update", if there has not been a significant passage of time since the provider conducted such an investigation, and if there are no other reasons or indications that a new building investigation should be conducted.

2. Listing of Anticipated Expenses

  • The provider prepares a list of the anticipated expenses, including the estimated amounts and the years in which the expenses are expected to be incurred.
  • Adjustments should be made for assumed inflation.

3. Presentation of Options

  • The provider presents possible reserve fund planning options for consideration of the Corporation.
  • Each option should include calculations of interest, which is assumed will be earned in the fund, and should include a reasonable "minimum buffer" or "low point" for the fund over the "life of the study".
  • The "life of the study" should be long enough to cover replacement of every significant component of the building(s).

The options may include:

  • contributions which are fixed (increasing only by inflation);
  • contributions which are to increase (ie., increasing beyond inflation);
  • contributions which are to decrease;
  • one or more special assessments;
  • a combination of two or more of the above.

A reserve fund study involves the carrying out the following tasks:

  • determining the depreciating common property components that will require replacement at intervals longer than 1 year, estimating their replacement scheduling and replacement cost;
  • evaluating the Corporation's current funding practices;
  • presenting various scenarios for funding the replacement of the depreciating common property components.

This process involves the following steps:

1. Investigation

  • Reviewing the operating budget in consultation with the board members and/or property manager;
  • Reviewing the Corporation’s plans, by-laws, and rules, in order to establish all obligations of the Corporation, and therefore all anticipated expenses not covered by the operating budget;
  • A reasonable inspection or review of the condominium property, as well as any available building plans and specifications.

This enables the provider to develop an understanding of the building conditions, component quantities, and allows a closer evaluation of the anticipated expenses.

Note: This "building investigation" or "quantity survey" may not be necessary on a reserve fund study "review" or "update", if there has not been a significant passage of time since the provider conducted such an investigation, and if there are no other reasons or indications that a new building investigation should be conducted.

2. Listing of Anticipated Expenses

  • The provider prepares a list of the anticipated expenses, including the estimated amounts and the years in which the expenses are expected to be incurred.
  • Adjustments should be made for assumed inflation.

3. Presentation of Options

  • The provider presents possible reserve fund planning options for consideration of the Corporation.
  • Each option should include calculations of interest, which is assumed will be earned in the fund, and should include a reasonable "minimum buffer" or "low point" for the fund over the "life of the study".
  • The "life of the study" should be long enough to cover replacement of every significant component of the building(s).

The options may include:

  • contributions which are fixed (increasing only by inflation);
  • contributions which are to increase (ie., increasing beyond inflation);
  • contributions which are to decrease;
  • one or more special assessments;
  • a combination of two or more of the above.