Since life can be full of surprises, it’s always important to have a rainy-day fund.
Who knows when an unexpected expense will crop up or you will be out of work and you need some money…and fast.
The same principle applies to your condo building, which is why a building reserve fund comes in handy.
After operating expenses are deducted, the money that accumulates from your building’s monthly maintenance fees accumulates in a reserve fund. Although most condo residents, Property Managers and Board members can agree that having a building reserve fund is necessary for maintenance and repairs to the building’s common areas, the finer details are often debated.
What is a condo’s reserve fund actually intended for? Can it be used for renovation work? Here are some of the most common issues concerning your condo building’s reserve fund and renovation work.
What Type of Work is Not Covered by the Reserve Fund?
Only certain types of renovation work can be paid out of the reserve fund.
Both maintenance work and regular repairs that are a result of normal wear and tear are not covered by the reserve fund. Instead, they need to be covered by your building’s regular operations budget.
Thinking about replacing your lobby’s broken tiles with marble? Great idea!
Keep in mind, however, that even if you have enough money in the reserve fund to cover this cost, you won’t be able to use that fund. Instead, the difference between your current floor and the expensive marble choice must be covered by your building’s regular budget.
The same goes for many other types of cosmetic upgrades, too.
What Type of Work Does the Reserve Fund Cover?
The Ontario Condo Act stipulates that a building’s reserve fund can only be used for replacement and major repairs.
Examples of major repairs or replacements that can be covered by the fund include your building’s: roof, elevator, sidewalks, sewer system, heating/air conditioning/electrical/plumbing systems, parking facilities and exterior.
For example, re-caulking your building’s windows is important maintenance work that would be covered by the regular budget. In this case, only actual window replacement could be covered by the reserve fund.
You Have Questions? We Have Answers!
Since it’s difficult to know what upgrades can be completed using your building’s reserve fund, you need a trusted condo expert!
CDC is your community partner when it comes to lobby and common elements refurbishment projects! Let us show you some options for renovating your building’s common spaces. Contact us today for more details.
By Sarah McKenzie