PART IV RESERVE FUND STUDIES Definitions 27. In this Part, “component inventory” means an inventory, in a reserve fund study of a corporation, of each item of the common elements and assets of the corporation that requires, or is expected to require within at least 30 years of the date of the study, major repair or replacement where the cost of replacement is not less than $500; “comprehensive study” means a comprehensive reserve fund study that meets the requirements of this Regulation; “updated study based on a site inspection” means a comprehensive study that has been revised so that it is current as of the date of the revision, where the revision is based on a site inspection of the property and where the revision has been conducted in accordance with the requirements of this Regulation; “updated study not based on a site inspection” means a comprehensive study that has been revised so that it is current as of the date of the revision, where the revision is not based on a site inspection of the property and where the revision has been conducted in accordance with the requirements of this Regulation. O. Reg. 48/01, s. 27. Classes 28. The following classes of reserve fund studies are established: 1. Comprehensive study. 2. Updated study based on a site inspection. 3. Updated study not based on a site inspection. O. Reg. 48/01, s. 28. Contents of studies 29. (1) A reserve fund study shall consist of a physical analysis and a financial analysis. O. Reg. 48/01, s. 29 (1). (2) The physical analysis shall consist of, (a) the component inventory of the corporation; and (b) an assessment of each item in the component inventory that states its actual or estimated year of acquisition, its present or estimated age, its normal expected life, its remaining life expectancy, the estimated year for its major repair or replacement, its estimated cost of major repair or replacement as of the date of the study, the percentage of that cost of major repair or replacement to be covered by the reserve fund and the adjusted cost resulting from the application of that percentage. O. Reg. 48/01, s. 29 (2). (3) The financial analysis shall consist of, (a) a description of the financial status of the reserve fund as of the date of the study; and (b) a recommended funding plan projected over a period of at least 30 consecutive years, beginning with the current fiscal year of the corporation, that shows the minimum balance of the reserve fund during the period and, for each projected year, (i) the estimated cost of major repair or replacement of the common elements and assets of the corporation based on current costs for the year in which the study is conducted, (ii) the estimated cost of major repair or replacement of the common elements and assets of the corporation at the estimated time of the repair or replacement based on an assumed annual inflation rate, (iii) the annual inflation rate described in subclause (ii), 9 (iv) the estimated opening balance of the reserve fund, (v) the recommended amount of contributions to the reserve fund, determined on a cash flow basis, that are required to offset adequately the expected cost in the year of the expected major repair or replacement of each item in the component inventory, (vi) the estimated interest that will be earned on the reserve fund based on an assumed annual interest rate, (vii) the annual interest rate described in subclause (vi), (viii) the total of the amounts described in subclauses (v) and (vi), (ix) the increase, if any, expressed as a percentage, in the recommended amount of contributions to the reserve fund over the recommended amount of contributions for the immediately preceding year, and (x) the estimated closing balance of the reserve fund. O. Reg. 48/01, s. 29 (3). (4) In preparing or updating the component inventory of the corporation, the person conducting the study shall review, (a) the declaration and description; (b) if any, the current by-laws or proposed by-laws of the corporation establishing what constitutes a standard unit; and (c) if there is no by-law described in clause (b), a copy of the schedule that the declarant intends to deliver or has delivered to the board under clause 43 (5) (h) of the Act. O. Reg. 48/01, s. 29 (4). (5) In preparing or updating the financial analysis described in subsection (3), the person conducting the study shall review, (a) the most recent audited financial statements of the corporation or, if section 60 of the Act does not require the corporation to appoint auditors, the most recent financial statements of the corporation; (b) all reciprocal cost sharing agreements, if any, of the corporation; (c) the most recent reserve fund study of the corporation; and (d) the most recent notice, if any, of future funding of the reserve fund sent to the owners under clause 94 (9) (a) of the Act. O. Reg. 48/01, s. 29 (5). Method of conducting studies 30. (1) The person conducting a reserve fund study shall sign it. O. Reg. 48/01, s. 30 (1). (2) A comprehensive study or an updated study based on a site inspection shall be based on, (a) a visual site inspection of the property, including a visual inspection of each item in the component inventory where practicable; (b) all other inspections of each item in the component inventory that the person conducting the study considers appropriate or necessary; (c) a verification of records of the corporation; and (d) interviews with those of the corporation’s directors, officers, employees and agents that the person conducting the study considers appropriate. O. Reg. 48/01, s. 30 (2). (3) As part of preparing the assessment described in clause 29 (2) (b) in a comprehensive study or updating the assessment in an updated study based on a site inspection, the person conducting the study shall review, (a) all existing warranties, guarantees and service contracts for each item in the component inventory; (b) the as-built architectural, structural, engineering, mechanical, electrical and plumbing plans for the property that are in the custody or under the control of the corporation; (c) the as-built specifications for the buildings that are in the custody or under the control of the corporation; (d) the plans for underground site services, site grading, drainage and landscaping, and television, radio or other communications services for the property that are in the custody or under the control of the corporation; (e) the repair and maintenance records and schedules in the custody or under the control of the corporation; and (f) all other records of the corporation that the person conducting the study requires in order to prepare the assessment. O. Reg. 48/01, s. 30 (3). (4) An updated study not based on a site inspection shall be based on a verification of records of the corporation and interviews with those of its directors, officers, employees and agents that the person conducting the study considers appropriate. O. Reg. 48/01, s. 30 (4). (5) In addition to the material that a reserve fund study is required to contain, the study may contain all further information and analysis that the person conducting the study or the board considers appropriate or necessary. O. Reg. 48/01, s. 30 (5). Time for studies 31. (1) A corporation created before the day section 94 of the Act comes into force shall conduct a comprehensive study within three years of that day except if, (a) on that day it has a comprehensive study that meets the requirements of this Regulation; and (b) it conducts an updated study based on a site inspection within three years of that day. O. Reg. 48/01, s. 31 (1). 10 (2) The reserve fund study that subsection 94 (4) of the Act requires a corporation created on or after the day section 94 of the Act comes into force to conduct within the year following the registration of the declaration and description shall be a comprehensive study. O. Reg. 48/01, s. 31 (2). (3) A corporation shall conduct a reserve fund study within three years of completing the reserve fund study that it is required to conduct under subsection (1) or (2), as the case may be, and after that, within every three years after completing the immediately preceding reserve fund study. O. Reg. 48/01, s. 31 (3). (4) A reserve fund study that a corporation is required to conduct under subsection (3) shall be, (a) a comprehensive study; (b) an updated study not based on a site inspection, if the immediately preceding reserve fund study for the corporation was a comprehensive study or an updated study based on a site inspection; or (c) an updated study based on a site inspection, if the immediately preceding reserve fund study for the corporation was an updated study not based on a site inspection. O. Reg. 48/01, s. 31 (4). Person conducting studies 32. (1) Subject to subsection (2), the following classes are prescribed as persons who may conduct a reserve fund study: 1. Members of the Appraisal Institute of Canada holding the designation of Accredited Appraiser Canadian Institute. 2. Persons who hold a certificate of practice within the meaning of the Architects Act. 3. Members of the Ontario Association of Certified Engineering Technicians and Technologists who are registered as certified engineering technologists under the Ontario Association of Certified Engineering Technicians and Technologists Act, 1998. 4. Members of the Real Estate Institute of Canada holding the designation of certified reserve planner. 5. Persons who hold a certificate of authorization within the meaning of the Professional Engineers Act. 6. Graduates of Ryerson Polytechnic University with a Bachelor of Technology (Architectural Science) — Building Science Option or Architecture Option. 7. Members of the Canadian Institute of Quantity Surveyors holding the designation of professional quantity surveyor. 8. Members of the Association of Architectural Technologists of Ontario holding the designation of architectural technologist, architecte-technologue or registered building technologist under the Association of Architectural Technologists of Ontario Act, 1996. O. Reg. 48/01, s. 32 (1). (2) A person who conducts a reserve fund study shall not, (a) be a director, officer or property manager of the corporation; (b) directly or indirectly, have an interest in, (i) a contract or transaction to which a director or officer of the corporation is a party in a capacity other than as a director or officer of the corporation, or (ii) a proposed contract or transaction to which a director or officer of the corporation will be a party in a capacity other than as a director or officer of the corporation; (c) be the spouse, same-sex partner, son or daughter of a director or officer of the corporation or son or daughter of the spouse or same-sex partner of a director or officer of the corporation; (d) be an owner as defined in the Act in relation to the corporation; or (e) be a person who lives on the property managed by the corporation under section 17 of the Act. O. Reg. 48/01, s. 32 (2). (3) In subsection (2), “same-sex partner” means either of two persons of the same sex who live together in a conjugal relationship outside marriage; “spouse” means, (a) a spouse as defined in section 1 of the Family Law Act, or (b) either of two persons of the opposite sex who live together in a conjugal relationship outside marriage. O. Reg. 48/01, s. 32 (3). (4) A person who conducts a reserve fund study shall be insured under a policy of liability insurance that includes, (a) coverage for liability for errors, omissions and negligent acts arising out of conducting or not conducting a reserve fund study, subject to the exclusions, conditions and terms that are consistent with normal insurance industry practice; (b) a policy limit for each single claim of not less than $1 million per occurrence; (c) an aggregate policy limit in the amount of not less than $2 million per year for all claims in the year or an automatic policy limit reinstatement feature; and (d) a maximum deductible amount of $3,500 per occurrence. O. Reg. 48/01, s. 32 (4). 11 (5) A person who conducts a reserve fund study shall ensure that the policy of liability insurance is valid at the time the reserve fund study is completed and is kept valid for a period of at least three years after that time. O. Reg. 48/01, s. 32 (5). (6) Upon request, the person shall provide to the corporation a certificate of the policy of liability insurance. O. Reg. 48/01, s. 32 (6). Plan for future funding 33. (1) Except in the case of a corporation to which subsection (2) applies, the prescribed period of time for the purpose of subsection 94 (8) of the Act shall be the fiscal year of the corporation following the fiscal year in which the reserve fund study is completed. O. Reg. 48/01, s. 33 (1). (2) In the case of all reserve fund studies that a corporation created before the day section 94 of the Act comes into force is required to conduct after that date under subsection 31 (1) and within 10 years after the date of the first reserve fund study that it is required to conduct after that coming into force date, the prescribed period of time for the purpose of subsection 94 (8) of the Act shall be 10 years from the date of that first reserve fund study. O. Reg. 48/01, s. 33 (2). (3) The notice that the board is required to send under subsection 94 (9) of the Act shall be in Form 15. O. Reg. 48/01, s. 33 (3).