Q: This is our first reserve fund study and we need to know what information is required. We haven’t decided who will perform the study but need to have our information in order. This study should have been prepared two years ago, but the past board of directors neglected to do this. Are these reserve fund studies the law?
A: In order for a professional engineer or consultant to conduct the study, he or she will require the built drawings and specifications, the declaration and description, any reciprocal cost-sharing agreements, previous reserve fund studies, the most recent audited financial statements, the current annual contribution to the reserve fund, repairs and replacements to the common elements that have been completed and in what year, scheduled future projects and any outstanding concerns that need to be reviewed, such as water penetration.
Reserve fund studies are not optional, they are mandatory under the Condominium Act of Ontario. Directors who refuse to conduct such a study will open the door to possible legal action from the unit owners, who will suffer increased financial burden as a result of the delay. Such actions will also jeopardize the officers and director’s insurance coverage as well as resale value of the units. In order to avoid serious consequences, it is imperative that studies are completed every three years as required.
Marilyn Lincoln is a condo owner, director and author of The Condominium Self Management Guide 2nd ed. Please send questions to firstname.lastname@example.org To order a copy of her guide send $ 39.95 plus $ 4.98 shipping and handling to The Condo Guide, 163 Thaler Ave. Suite 302, Kitchener, Ont., N2A 1R4.