27 Jul What is The Reserve Fund Study?
A Reserve Fund Study is a forecasting tool designed to help the Condo Board prepare for major repair and replacement projects for a property. It determines how much money needs to be in the fund to ensure that the repairs can be paid for in the future.
It is prepared by a specialist, like an engineer, approved by the board of directors, and then the owners are informed of the results of the study.
The reserve fund study is used to:
1) Highlight the current status of the Reserve Fund.
2) Recommend what funds need to be set aside for major expenditures of common areas.
3) Outline a funding plan to offset ongoing deterioration.
The Condo Board should review which items make up the study to make sure all major components are included, and what portion of the budget is set aside in relation to other elements.
The study should also outline:
– Estimated useful life.
– Remaining lifespan.
– If the budget is proportioned correctly to take into account increases in cost.