What is the Condo Reserve Fund?

Condo Reserve Fund – Why is it important?

You’re buying a condo.  What is the condo reserve fund that your lawyer is referring to?

The Condominium Act requires all condos to maintain a reserve fund for major repairs of common elements of the condo.  This could be things like fixing broken equipment in your gym, or repairing the lobby or hallways in your condo..

The Reserve fund is funded by the a portion of the maintenance fees you pay each month as an owner of the condo.  If you sell you unit the amount of your unused reserve fund contributions are not refunded to you and remain n the fund.  As common areas will deteriorate over time, the reserve fund will consist of payments from existing owners and previous owners.

An inadequate reserve fund can have devastating financial consequences for the owners.  In fact, there was a situation in Ottawa where the major brick work had to be done, the fund was not sufficient and resulted in each home owner faced a huge cost.

Anyone buying a condo unit should carefully review or have your lawyer review the status certificate to verify the state of the reserve fund before committing to the deal.  You don’t want to be caught with any nasty surprises.