Reserve Fund Studies
What is a Reserve Fund Study?
Reserve fund studies give boards, owners and buyers information about how much money the reserve fund should contain to pay for major repairs and replacements to the common elements (for example, a roof or heating system).
The reserve fund study will accomplish the following:
- Maintains asset values by contributing to a well-managed reserve fund.
- Equalizes contributions that have been established to cover future costs.
- Develops a stable funding plan that meets the needs of existing and future condo owners.
- Anticipates future expenditures by being proactive instead of reactive.
Who needs a Reserve Fund Study?
Manitoba’s new Condominium Act came into force on February 1, 2015. Under the new act every condominium corporation must have a reserve fund study completed and updated every five years.
When must the studies be done?
Condominium corporations created before February 1, 2015 must have a reserve fund study done within three years, unless the following two conditions are met:
- the corporation has had a study done in the two years before the act came into force, and
- the board believes that its current study substantially meets the requirements in sections 19 to 23 of the Condominium Regulation.
Even if the two conditions are met, these corporations still need to update the reserve fund study by the end of the fifth year covered by the study.
What are the components of a Reserve Fund Study?
There are two components to a reserve fund study – the Physical Analysis and the Financial Analysis.
Physical Analysis – How long do things last?
- What are the common elements?
- What is the condition and age of the common element?
- When will the common elements need to be replaced?
Financial Analysis – How much do things cost?
- How much will it cost to replace the common element?
- How much money do we have now?
- How much money do we need to save each year?
Need more information? Call us today to book your appointment.
You can minimize the cost of your reserve fund study if you have the following information:
- Original building drawings
- Past investment reports
- Summary of past repairs
- Equipment lists
- Financial statements