The reserve fund is levied by the corporation according to its by-laws to be used or expended for major repair or replacement of common element assets such as roofs, elevators, building exteriors, parking facilities, corridors, hallways, sidewalks and landscaped areas. Reserve funds are collected as part of the common element fees paid by the unit owners. Reserve fund expenditures are restricted and cannot be used for other expenses such as routine maintenance.
Provincial regulations require condominiums with 10 or more units to conduct a comprehensive reserve fund study every 10 years, with updates to the studies conducted at five-year intervals or when significant changes occur to the condo corporation’s assets. While smaller complexes are not required to conduct the studies, many do so voluntarily as part of their planning processes, and regulations require that smaller corporations set aside 10 percent or more of their annual budget each year to be deposited into their reserve fund.
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