Many condo owners may not fully understand what the reserve fund is in a condo corporation. It is important that you know the amount that is in the fund when purchasing because it provides you an idea of the financial standing of a corporation. A condominium corporation must set up a reserve fund for the major repair and replacement of common elements. These can include the roof, exterior of the building, roads, sidewalks, sewers, heating, electrical, plumbing, elevators, laundry and recreational facilities.
The corporation hires a qualified professional such as an architect or engineer to conduct a reserve fund study. This study:
- recommends how much money is needed for the reserve fund
- includes a site inspection that estimates how long the major components of the condominium, together with replacement costs of each component, will last
- is designed to help keep the condo property in good repair
- reduces the risk that owners will need to pay a special assessment to make sudden major repairs
- Must be presented to the board for approval.
Contact me if you are looking to purchase a newly built or resale condominium.
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