As of May 5, 2001, Reserve Fund Studies (RFS) became mandatory under the 1998 Condominium Act. All existing corporations had 3 years (until May 5, 2004) to get a RFS done.
Reserve Fund Studies Must Contain
- A Physical Analysis of Common Element Components
a) Reviews the condition and life expectancy of the components
b) Comments on site conditions that may affect life expectancy
c) Estimates remaining life or need for major repairs
- A Financial Analysis
a) Estimates costs for major repairs or replacements
b) Provides a 30-year projection for when major repairs or replacements will be necessary
c) Develops a cash flow scenario to show how to properly fund the reserve
Five Important Facts about Reserve Fund Studies
- Corporations created on or after May 5, 2001, must obtain a comprehensive study within
one year of registration.
- Corporations created before May 5, 2001, must obtain a comprehensive study by May 5, 2004,
OR conduct an updated study based on a site inspection, if a comprehensive study that meets
the requirements of Ontario Reg. 48/01 is already in hand.
- There are three classifications of studies:
a) Comprehensive – consists of a physical analysis and a financial analysis
b) Update based on a site visit – can be done if there is already a comprehensive study done that meets the requirements of Ontario Reg. 48/01.
c) Update not based on a site visit – can only be done if the study just prior was a comprehensive study or an update based on a site visit.
- A reserve fund that is found to be inadequate must be brought up to an acceptable level within
15 years of the date the first reserve fund study is done, on or after May 5, 2001.
- Within 120 days of receiving a study, the corporation must present to the owners a financial
plan for funding the reserve.