Reserve Fund

Purpose:

The purpose of this policy is to establish guidelines for the management and administration of the Reserve Fund. The Reserve Fund is a critical financial tool to ensure the long-term financial health of the condo corporation and protect the interests of all owners.

Definitions:

  • Reserve Fund: A special account maintained by the strata corporation solely for the purpose of major repair and replacement of common property and assets.

  • Reserve Fund Study: A comprehensive report prepared by a qualified professional that assesses the condition of common property, estimates the remaining useful life of major components, and recommends funding levels for the Reserve Fund.

  • Contingency Reserve: A portion of the Reserve Fund allocated for unexpected expenses and repairs not covered in the Reserve Fund Study.

Policy Statements:

  1. Governance:

    • The Council is responsible for the overall management and administration of the Reserve Fund.

    • The Council will ensure that the Reserve Fund is held in a separate account, distinct from operating funds.

    • The Council will establish and maintain a Reserve Fund Committee, consisting of council members and/or owners with financial expertise, to oversee the Reserve Fund.

  2. Reserve Fund Studies:

    • The Council will commission a Reserve Fund Study every [frequency specified in bylaws] years, or as required by the Strata Property Act.

    • The Reserve Fund Study will be conducted by a qualified professional, such as an engineer, architect, or building consultant.

    • The Council will review and approve the Reserve Fund Study, and implement its recommendations to the best of its ability.

  3. Funding:

    • The Council will ensure that the Reserve Fund is adequately funded to meet the projected expenses outlined in the Reserve Fund Study.

    • The Council will review the Reserve Fund balance annually and adjust contributions as necessary to maintain adequate funding levels.

    • Contributions to the Reserve Fund will be collected as part of the monthly strata fees, in accordance with the approved budget.

  4. Expenditures:

    • Expenditures from the Reserve Fund will be made only for the repair, replacement, or renewal of major common property and assets, as identified in the Reserve Fund Study or approved by the Strata Council.

    • Expenditures from the Contingency Reserve will be made only for unexpected expenses and repairs not covered in the Reserve Fund Study, with the approval of the Strata Council.

    • All expenditures from the Reserve Fund will be documented and reported to the owners.

  5. Investment:

    • The Council will invest the Reserve Fund in accordance with the investment policy adopted by the corporation, with the goal of preserving capital and generating reasonable returns.

    • The Council will review the investment performance of the Reserve Fund annually and make adjustments as necessary.

  6. Transparency and Communication:

    • The Council will provide regular updates to the owners on the status of the Reserve Fund, including the balance, expenditures, and investment performance.

    • The Council will make the Reserve Fund Study available to all owners upon request.

    • The Council will encourage owner participation in the Reserve Fund Committee and seek feedback on the Reserve Fund policy.

Review and Amendment:

This policy will be reviewed annually by the Council and amended as necessary to ensure its relevance and effectiveness. Any amendments to the policy will be communicated to all owners.

Disclaimer:

This policy is intended as a guideline and does not constitute legal advice. The Council is advised to consult with legal counsel for specific questions or concerns regarding the Reserve Fund.