RESERVE FUND STUDY
Reserve Fund Study  &
Reserve Fund Study Update for Condominiums

Our Licensed Professional Engineers in Ontario prepare Condominium Reserve
Fund Study and Reserve Fund Study Updates for Condominium Apartments,
Condominium Townhouses, Commercial Condominium Buildings and Industrial
Condominium Buildings in Toronto, Mississauga, Brampton, Oakville, Burlington,
Vaughan, Richmond Hill, Aurora, Newmarket, Markham, Pickering, Ajax, Whitby and
Oshawa.
Our fee for typical Condominium Reserve Fund Study Update as follows:
Comprehensive Reserve Fund Study (Class 1)  
Typical Industrial Buildings- $1,875: Typical Commercial Buildings - $1,975
Typical Retail Buildings- $2,175; Typical High Rise Apartment Building - $3,475

Reserve Fund Study Update with Site inspection (Class 2)
Typical Industrial / Commercial Buildings - $1,575;
Typical Retail Buildings - $1,675; Typical High Rise Apartment Building - $2,475

Reserve Fund Study Update (Class 3)
Typical Industrial / Commercial Buildings - $1,275
Typical Retail Building - $1,475; Typical High Rise Apartment Building - $1,875

Large condominium buildings with several amenities may cost more.






















Reserve Fund Studies are mandatory for all existing and newly registered condominium corporations as
the Ontario Condominium Act, 1998 and its subsequent Regulations 48/01 and 49/01 require all existing
and new  condominium corporations to have a "Reserve Fund Study" undertaken and the
condominium
corporation maintain a separate fund to be used solely for the  purpose of paying for the major repair
and replacement of the common elements and assets of the
condominium corporation,  including
exterior wall claddings,  roofing, garage, balconies, windows, doors, HVAC systems, site elements
including roads, sewers etc. The
reserve fund can NOT be used for upgrades and regular maintenance
repairs due to normal wear and tear. A designated portion of the monthly common element fees paid by
the owners fund the
reserve fund. Avoiding a Reserve Fund Study or Reserve Fund Study Update is a
violation of the Ontario Condominium Act.

Reserve Fund Study ensures all condominium unit owners pay their share of replacement and repair
costs based on their period of ownership. Potential condominium buyers are becoming more aware of
the significance of Reserve Fund Study and rely on Reserve Fund Study to decide whether or not to buy.

The Reserve Fund Study informs the Board of Directors of the condominium corporation whether the
amount of money in the reserve fund and the amount of contributions collected from the unit owners for
the reserve fund are adequate to provide for the expected costs of major repair and replacement of the
common elements and assets.  All monies in the reserve fund account have to be placed in easily
accessible and very safe and secure investments, such as GICs or government bonds, and not in the
stock market or any other risky venture.

If the condominium corporation has never had a Reserve Fund Study, a Comprehensive Study including
a site inspection  and involves a great deal of information gathering to first develop a inventory of those
items that have varying and limited "life cycles". Such items as roofs, building cladding, garage,
balconies, windows, doors, HVAC systems, plumbing & electrical systems, site services, paving,
landscaping, etc. are identified and should be quantified. New condominiums must have a
Comprehensive Reserve Fund Study (Level 1) done within the first year of registration. The reserve
fund studies have to be updated every three years  as per Section 94 of the Condominium Act.

A Reserve Fund Study Update  basically takes the original information and updates the key parameters
such as common elements, age, costs, current reserve amounts and  contributions. The component
inventory is reviewed and verified, then a condition assessment is conducted of each item (based on
visual inspections) and their life cycle costing is updated. The first Reserve Fund Study Update can be
without a site inspection (Level 3). The next Reserve Fund Study Update is with an inspection (Level 2)
with the need for site inspections alternating between each Reserve Fund Study Update. The same
types of tables prepared as part of the original Reserve Fund Study are again submitted, with the
updated information. Updated interest and building component inflation rates are applied to the current
replacement costs and an updated 30 year cash flow projection is calculated to determine the revised
contribution requirements. Reserve Fund Study Updates must be done in the proper sequence and with
regularity. This is to ensure that the reserve funds are maintained at proper levels and with appropriate
contribution adjustments

The following information will be required tp prepare the reserve fund study:
  • As-built drawings and specifications
  • The Declaration and Description.
  • Reciprocal cost sharing agreements
  • Previous reserve fund studies.
  • The most recent audited financial statements.
  • What the current annual contribution to the Reserve Fund is.
  • Repairs or replacements to the common elements that have already been completed and when.
    Similarly, scheduled future work needs to be accounted for.
  • A summary of problems being encountered by the Corporation that should be reviewed.

As-built drawings and specifications will be reviewed prior to visiting the site to become familiar with
the overall design and construction schemes and the drawings are used to "take-off" quantities such as
roofing, exterior wall cladding, asphalt, hallway finishes etc that will assist in preparing the replacement
/ repair cost budgets. To understand the present condition of the common elements, visual site
inspections are performed.  .

The Reserve Fund Study will contain a Physical and Financial Analysis:
  • Background Information about the Corporation in general, where it is, its age, a general
    description of the property as a whole.
  • Inspection Report - Based upon the results of the site inspection, the report will provide an
    itemized overview description of the major common elements. This will include general condition,
    the need and timing for remedial work or replacement and any other information that the Board
    should be aware of.
  • Information Tables - There is typically a table that summarizes the common elements in terms of
    current age, life expectancy, remaining service life and current and future cost budgets.
  • Expenditure Tables - The data from the Information Tables is summarized to show in a tabular
    format when the itemized common element repair/replacements are estimated to take place. For
    each year, these expenditures are summed. The annual projections must be a minimum of 30 years
    commencing in the year the Study (and updates) is prepared.
  • •Cash Flow Tables - Based upon the estimated expenditures, different contribution plans can be
    provided. Often, one plan includes the contribution level currently being used as a form of
    comparison to other scenarios.
  • As part of the Financial Analysis, the study must in recommended funding plan projected over 30
    years from the date of the study.

The recommended funding plan must show:
  • Cost estimates of major repairs and replacements based upon current costs.
  • Cost estimates adjusted to account for an assumed inflation rate. The inflation rate must be stated
    in the study.
  • Opening balance of the reserve fund account.
  • 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 common elements and assets.
  • Estimate of the interest earned on the reserve fund contributions based upon an assumed
    interest The study shall state the assumed interest rate. The Condominium Act requires that
    interest generated by the Reserve Fund is reinvested into the Fund.
  • The percentage increase in annual contributions to the reserve fund for each year of the 30 year
    study.
  • The estimated closing balance of the reserve fund for each year.

For any year, the year's contributions plus what is in the fund must exceed the estimated expenditures
that year, which must be then maintained for all subsequent years. Condominium Corporations must
show positive cash flow for the first fiscal year after the study is completed and for all years thereafter.

After receiving the final Reserve Fund Study, the Board has 120 days to decide how to implement the
plan recommended in the study or put forth another reasonable plan that outlines the future funding of
the Reserve Fund.  It is recommended that the Board request a Draft of the Reserve Fund Study so that
Board and Property Management to review the Reserve Fund Study prior to it being finalized.  This will
not trigger the "120 day" time line to prepare a plan and gives the Board and Property Management
adequate time to determine the plan which can then be included in the final reserve fund study report.
Within 15 days of proposing the plan, the board shall send a notice to all owners, containing a summary
of the reserve fund study, a summary of the proposed plan and a statement indicating the areas if any in
which the proposed plan differs from the study. The auditor shall also receive a copy of the reserve
fund study and a copy of the proposed plan and a copy of the notice sent to the owners. Upon receiving
direction from the Board of Directors, the Reserve Fund Study is finalized and submitted. Typically
Reserve Fund Study and plan are sent to owners at the same time as the budget because
implementation of the study may affect the budget. Summary of the reserve fund study and the summary
of the proposed
funding plan are then indicated in the status certificate. The Board shall implement the
funding plan within the next 30 days.






















Replacement of aging components in old condominium buildings needs huge sum of money. Proactive
maintenance is very important extend the life of the aging building components and old equipments.

Condominiums cost money to maintain, and that is primarily what the monthly condominium maintenance
fees are for.  Only a small portion of that monthly condominium maintenance fee goes into the reserve
fund. Each condominium building is different, and every condominium is free to raise maintenance fees
and raise the contribution to the reserve fund. If a major expenditure was contemplated, and the
reserve fund was not adequate to cover it, then a special assessment may be necessary.   A new
building will have a much lower reserve fund than an old building. Any new condominium building MUST
start off with money in the reserve fund, which is paid by the condominium developer as per the
Condominium Act which states
“A developer’s initial budget must include an annual contribution to the reserve fund that is based upon
calculations of the estimated long-term repair and replacement costs and life expectancies of the
common elements and assets of the corporation. The contribution must be the greater of the calculated
amount or 10% of the other common expenses until such time as a reserve fund study has been carried
out.


Typically a  condominium with monthly maintenance fees over $0.70/sq ft is likely more than 10 years old.
If the monthly maintenance fees are $0.80/sq ft or more, it’s likely that there was a massive repair such
as major repair of parking garage, balcony or facade that drained the reserve fund and necessitated an
increase in monthly contributions. Some condominiums are very exceptional. 25 The Esplanade in
Downtown Toronto owned by Metro Toronto Condominium Corporation # 850 is a well-run and well-
maintained 1988 built  33 storey high building with $0.46/sq ft maintenance fees due to the income from  
2008 rental parking spaces in the building. In today’s pre-construction condominium market, some
developers will set monthly maintenance fees artificially low, sometimes as low as $0.40/sq ft. While the
developer is responsible for any budget shortfall in the first year of the condominium corporation’s
operations, it’s in years two, three and four that the condominium  board and its residents start to
realize how ridiculous $0.40/sq ft was. Lanterra Developments built 24 storey condominium building at 22
Wellesley Street East  increased the monthly maintenance fees by 37% in the first year and  almost 200%
within the first four years.

Our Licensed Professional Engineers in Ontario prepare Condominium Reserve Fund Study and
Reserve Fund Study Updates for Condominium Apartments, Condominium Townhouses, Commercial
Condominium Buildings and Industrial Condominium Complexes in Toronto, Mississauga, Brampton,
Oakville, Burlington, Vaughan, Richmond Hill, Aurora, Newmarket, Markham, Pickering, Ajax, Whitby and
Oshawa.

Our fee for typical Condominium Reserve Fund Study Update as follows:
Comprehensive Reserve Fund Study (Class 1)  
Typical Industrial Buildings- $1,875: Typical Commercial Buildings - $1,975
Typical Retail Buildings- $2,175; Typical High Rise Apartment Building - $3,475

Reserve Fund Study Update with Site inspection (Class 2)
Typical Industrial / Commercial Buildings - $1,575;
Typical Retail Buildings - $1,675; Typical High Rise Apartment Building - $2,475

Reserve Fund Study Update (Class 3)
Typical Industrial / Commercial Buildings - $1,275
Typical Retail Building - $1,475; Typical High Rise Apartment Building - $1,875

Large condominium buildings with several amenities may cost more.

BUILDING EXPERTS CANADA
416 332 1743 (24/7)
Text us @ 416 727 8336
Email : buildingexpertscanada@yahoo.com
5215 FINCH AVENUE EAST TORONTO ON M1S0C2
Professional Engineers Ontario - Certificate of Authorization # 100205934

We have recently completed Reserve Fund Study Updates at the following condominiums:
High-rise Condominium Apartment Building in Mississauga
Industrial Condominium Building in Mississauga
Commercial Condominium Building in Markham
Commercial Retail Condominium Building in Oakville
Medium Size Condominium Office Building in Mississauga
Condominium Townhouse Building in Pickering
High-rise Condominium Apartment Building in Richmond Hill
Mid-rise Condominium Apartment Building in Brampton
Condominium Retail Commercial Building in Ajax
Condominium Commercial Building in Burlington
Condominium Industrial Building in Vaughan
High-rise Condominium Apartment Building in Toronto
Townhouse Condominium Complex in Oshawa
Mid-rise Condominium Apartment Buildings in Toronto
Stacked Condominium Residential  Building in Toronto
Small Commercial Condominium Building in Aurora
Industrial Condominium Building in Toronto
Low-rise Residential Condominium Building in Brampton
Small Commercial Condominium Building in Newmarket
High-rise Condominium Apartment Building in Mississauga
Industrial Condominium Building in Mississauga
Commercial Condominium Building in Markham
Commercial Retail Condominium Building in Oakville
Medium Size Condominium Office Building in Toronto
Condominium Townhouse Building in Pickering
High-rise Condominium Apartment Building in Richmond Hill
Mid-rise Condominium Apartment Building in Toronto
Condominium Retail Commercial Building in Mississauga
Condominium Commercial Building in Burlington
Condominium Industrial Building in Vaughan
High-rise Condominium Apartment Building in Toronto
Townhouse Condominium Complex in Oshawa
Mid-rise Condominium Apartment Buildings in Toronto
Stacked Condominium Residence Building in Brampton
Small Commercial Condominium Building in Ajax
Industrial Condominium Building in Aurora
Low-rise Residential Condominium Building in Newmarket
Small Commercial Condominium Building in Brampton