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A reserve fund study is a periodic assessment, conducted by a qualified professional, of a condominium corporation's common-element components and the adequacy of its reserve fund and contributions to cover major future repairs and replacements.
Under Ontario's Condominium Act, 1998, a corporation must complete a comprehensive Class 1 study within the first year after registration, then alternate updated studies — a Class 2 study with a site inspection and a Class 3 records-only study — at least every three years after that. Each study projects at least 30 years of expected major repair and replacement costs across the building's components, and the board must review it within 120 days and propose a funding plan.
For a broker, this ties directly into the status certificate a buyer's lawyer reviews before closing: together, the two documents gauge how likely a special assessment or steep fee increase is in the near term. Lenders and appraisers can be wary of a condo with a visibly underfunded reserve, since a looming special assessment affects a borrower's real carrying costs and, in severe cases, the building's insurability and resale value.
Ontario requires a study every 3 years: under the Condominium Act, 1998, a corporation must have a comprehensive Class 1 study done within the first year after registration, then alternate Class 3 and Class 2 studies at least every three years after that.
Projects 30 years forward: a study's financial analysis must include a recommended funding plan projected over at least 30 consecutive years, covering every common-element component expected to need major repair or replacement in that window.
Board must act on it: the board must review the study within 120 days of receiving it and propose a funding plan, then notify owners of that plan and any way it differs from the study's recommendation.
Read alongside the status certificate: link status certificate — a buyer's lawyer typically reviews the reserve fund study together with the status certificate to assess whether a special assessment or steep fee increase is likely in the near term.
Definitions reflect Canadian federal and provincial rules as of the “Updated” date above. Not advice for any specific file.
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