Toll Free: 1-888-250-6696 A Reserve Fund Study is mandatory for every condominium in Ontario, and should be updated within the periods established by the Condominium Act. This uniform requirement offers many advantages including keeping buildings in better condition, thereby maintaining higher property values. However, if the Reserve Fund Study is not done appropriately or is done to excess, it might adversely affect the value of the units. The owners certainly benefit if their building remains in an adequate condition because it would retain its value within a competitive market. The municipality also benefits because that same building would not be neglected. This also keeps neighbouring property values up as compared to other neighbourhoods within the same jurisdiction or other neighbouring municipalities. However, regular maintenance periodical major repairs, and replacements can result in dramatic costs. Collecting money from unit owners on short notice to pay for the replacement or repair of one or more of the common elements within the condominium is a hard task to perform and sometimes even impossible. To solve this problem, the legislator has decided that every condominium must undergo a Reserve Fund Study. This enables the condominium to collect money via its property management company in advance; this money would then be designated for future major repairs or replacement of common elements. Lawmakers determined that the Reserve Fund Study should cover a period of 30 years and would take into consideration every item for which repair or replacement would cost more than $500. The money for the Reserve Fund is collected from the unit owners in small amounts spread over years and is included within the monthly maintenance fee paid by each unit every month. The collected money for the Reserve Fund is invested in short to medium term conservative investments, that can produce additional interest income, but can be converted to cash on short notice. Collecting money in advance over an extended period of time for the Reserve Fund offers and has many advantages. However, the challenge is to achieve an optimum balance between the actual needs and the amount of money being collected every month as part of the maintenance fee. If this amount is too low, the money in the fund may not be sufficient when some major repair of replacement is needed, thereby causing deficit. On the other hand, collecting more money than actually required would needlessly increase the monthly maintenance fees paid by unit owners of the condominium. Comparing two similar condominium buildings within the same neighbourhood, with similar characteristics, and of similar physical condition, if the only major difference between them is the monthly maintenance fee, the market value of the unit with the higher maintenance fee would be lower than the one with the lower fee. Obviously, buyers, especially those purchasing for investment purposes, are deterred by the high monthly expenses and would prefer another building with lower monthly maintenance payments. Achieving the right balance between the actual needs and the money collected for the Reserve Fund is very important and has a far reaching influence on the property value.