Reserve Fund Study

Industrial – Commercial – Residential

The law in Ontario requires that every condominium corporation establishes a Reserve Fund Study (Capital Replacement Plan) within the year following the registration, and periodic planning to determine whether the amount of money in the reserve fund and the amount of contributions collected by the corporation are adequate to provide for the expected costs of major repair and replacement of the common elements and assets of the corporation. This demand is stipulated in the Condominium Act. Its objective is to forecast future major repair or replacement of common elements of the building, to lower the risk of unexpected repairs, and to ensure that proper funds will be available for those repairs when the time comes.

Reserve Fund Studies include the following items:

  • Comprehensive analysis and visual physical condition survey of common element components such as the roof, exterior walls, windows, structure, common plumbing elements, common HVAC systems, common electrical systems, elevators, interior finishes, and other common site components
  • A description of the on-site physical assessment, inspection methods, and equipment (when applicable)
  • Review of the present condition and evaluation of life expectancy of components under the Reserve Fund Study
  • Inspect and investigate the need for major repairs to common elements of the corporation
  • Cost estimation for major repairs and/or replacement of Reserve Fund Study components
  • A 30-year plan that outlines future needs to repair or replace major components of the Reserve Fund Study
  • Cost analysis and cash allocation for future required repairs and replacement of the Reserve Fund Study items

Click here to see sample projects

Iten
Class 1
Class 2
Class 3
Site Visit
Yes
Yes
No
Condition assessment (based on visual inspection)
Yes
Yes
No
Component Inventory
Yes
No
No
Estimating the remaining life expectancy of main common components
Yes
Yes
No
Evaluating the fund status
Yes
Yes
Yes
Preparing a reserve funding plan
Yes
Yes
Yes
Form 15
Yes
Yes
Yes

Class 1

A Comprehensive Reserve Fund Study done within the first year of registration

Class 2

Reserve Fund Study with a Site Visit to update an existing study, and should be done alternately every three years with Class 3 (Reserve Fund Study without site visit).

Class 3

Reserve Fund Study without a Site Visit for updating an existing study, and should be done alternately every three years with Class 2 (Reserve Fund Study with site visit).

Major highlights and steps for preparation of the Reserve Fund Study include the following:

  • Identifying the common elements of the building that are the Corporation's maintenance responsibility as described in the legal documents of the Corporation, including the Declaration, Description, By-laws, and Schedules of the Corporation

  • Review of the financial situation, reported deficiencies and concerns, present maintenance, and any other pertinent information including the review of the following:

    • Audited financial statement of the Corporation
    • Reciprocal cost sharing agreements of the Corporation
    • Review the most recent Study of the Reserve Fund of the Corporation (if applicable)
    • Review the most recent notice of future funding of the Reserve Fund sent to the Owners (if applicable)

  • The 30-year period Reserve Fund Study is based on inventory, quantification and inspection of the building's common elements components including the following:

    • Interview with key building operation personnel regarding known problems, repair history, and future maintenance or replacement plans
    • Visual inspection of each of the common components where practical, to identify existing observed problem, general estimation of the current condition, and the general assessment of the remaining life expectancy for each of the common elements







  • The Reserve Fund Study includes a review of the following (where available and applicable):

    • All existing warranties, guarantees, and service contracts for each common element component
    • The as-built architectural, structural, mechanical, electrical, plumbing drawings of the property
    • The as-built specifications for the building
    • The as-built plans for underground site services, site grading, drainage, and landscaping as well as television, radio, or other communication services for the property
    • The repair and maintenance records and schedules

  • The 30-year period Reserve Fund Study is based on the inventory, quantification and inspection of the building's common elements components including the following:

    • Description
    • Estimation of the current condition
    • Estimation of a normal life expectancy
    • Estimation of the remaining life
    • Estimation of current replacement cost
    • Estimation of future replacement cost
    • Three different scenarios for a 30-years funding period of maintenance or replacement of the major common elements of the property

  • The Reserve Fund Study includes three different scenarios for a 30-year funding plan
  • Preparation of a draft Reserve Fund Study report for client review
  • Preparation of three hard copies and an electronic version (PDF format) of the final Reserve Fund Study