A reserve fund study is the mandatory, periodically-updated engineering and financial report an Ontario condo corporation uses to plan decades of major repairs and set the contributions needed to pay for them.
The Condominium Authority of Ontario sets the cadence: a class 1 study is required within the first year after a corporation's declaration and description are registered, and after that class 3 and class 2 studies alternate at least every three years. The financial analysis “must include… a recommended funding plan projected over a period of at least 30 consecutive years” A board must review the study within 120 days of receiving it and propose a funding plan ensuring adequacy by the fiscal year after the study was completed, then send owners a notice of the future funding plan within 15 days, on a mandated form. The statutory hooks are s.32 of O.Reg. 48/01 and ss.37(1) and 94(8) of the Condominium Act, 1998.
What “underfunded” looks like, per a published breakdown: a current balance far below the study's own projection; condo fees kept artificially low, suppressing contributions under the recommended level; an outdated study built on stale cost estimates; and major near-term repairs identified with no funding lined up to match. The consequence for a buyer is direct — exposure to a special assessment that “can range from a few hundred to many tens of thousands of dollars per unit”
One published illustration makes the shortfall concrete: a study projects a reserve balance of $2 million by a certain date, but the corporation's fund actually holds $800,000 — a gap serious enough that a special assessment becomes likely unless the board raises contributions immediately. A buyer's lawyer reviewing the status certificate for a target unit checks the reserve-fund statement against that study's own projection, not just against the current condo-fee amount.
See also: Special assessment · Status certificate
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