THE RESERVE FUND
Many people ask me where the monthly condo fees go when you own a condo. They also are curious to know what the reserve fund is all about. I thought it would be useful to post the basics of a reserve fund and what the monies cover in most condo buildings.
A portion of the monthly condo fees goes into a reserve fund account. The monies are used for replacement and non-routine repairs of the common elements of a condominium. These could include, replacement of roof, windows, boiler, chiller, carpets, parking areas, security systems and any of the building amenities.
It is mandatory for every condominium to have a reserve fund and a study of such fund every three years. By law, every condominium has to have a reserve fund in place. These monies need to be in an account where it is easily assessable and cannot be in the stock market or a high risk investment. They are normally placed in a GIC or government bonds.
Before purchasing a condominium, it is important to make sure you or your solicitor review how much money is in the buildings reserve fund and see if there are any upcoming repairs that need to be paid for.
Read more about condominiums:
What are Common Elements?
The Status Certificate
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