Reserve Fund and Special Assessment
Wednesday Jun 23rd, 2021Share
Today is the third video in the series of Condominium.
Today we talk about Reserve fund and special assessment.
What is Reserve Fund?
A Reserve Fund is the amount of money which is used for Major Repairs and Replacements based on life expectancies of Common Elements and Condominium Corporation Assets.
Minimum 10% of the budget amount for contributions to the common expenses would be put in the reserve fund account.
A Reserve Fund Study is required to determine how much money needs to be in the fund to ensure the repairs can be paid for in the future.
In fact, a 30-year Cash Flow Table is developed in the Reserve Fund Study to make sure there would not be any shortfall position.
If the Reserve Fund Planner found out that there is not sufficient fund for the major repair and replacement, a Special Assessments will be suggested to the Board of Directors and will be charged on top of regular monthly maintenance fees.
Special Assessments will happen in one of the following situation.
- Unforeseen expenses: A major expenses may arise like replacing exterior windows, repairing the underground parking or maintaining the roof when the balance in the Reserve Fund Account is very low.
- Under-Budgeting: The actual cost of major repair is more than the estimated expenses.
- Losing a lawsuit: If there is current judgement against the condominium, the condominium corporation could not pay the judgement from the operating fund.
The board of directors can charge a special assessment without having permission from the condominium owners.
If you have any questions about today’s topic, please contact me by phone 416-399-9981 or email to me email@example.com.
This video is one of four videos in this series. Thank you.