A healthy Condominium Corporation should be run like a financially healthy home with money set aside for rainy-day expenses. When looking at buying into any condominium complex, check the reserve fund to make sure there is a surplus for future maintenance. A reasonable rule of thumb is that there should be about $1,200 per unit in the reserve and fees should be in the 10 cents per square foot range. New units need less maintenance and therefore require less of a reserve. Conversely apartment condominiums have higher expenses because of amenities that are included (i.e. swimming pools, heating, parking, elevators etc.).
Reserve Fund Study
The purpose of a reserve fund study is to inventory the depreciating common and corporate property needing to be repaired or replaced within the next 25 years, assess the present condition, estimate when each component of the depreciating property will need to be repaired or replaced, and estimate the costs of repairs to and replacement of the depreciating .
Reserve Fund Report
Once completed, the person who carried out the Reserve Fund Study must prepare and submit to the Board a written report setting out the qualifications and independence of that person, the findings of the study, and any other matters that are considered relevant.
Reserve Fund Plan
The condominium board must, after receiving and reviewing the reserve fund report, approve a reserve fund plan under which a reserve fun is to be established, if one has not already been established, and set forth the method of and amounts needed for funding and maintaining the fund. The corporation must provide the owners with copies of the approved reserve fund plan prior to the collection of any funds.