A piece of the city · Seller
A report you have paid for and probably never read
Your building's next thirty years are already written down.
You assume the reserve fund is the board's problem. It is a commissioned engineering opinion on what your building will need and what it will cost, projected at least thirty years out. And it surfaces in the middle of your sale, in the status certificate a buyer's lawyer reads.
A commissioned opinion, not a board's guess
The reserve fund study is engineering work the corporation is required to have done.
It inventories what the building owns in common (roof, envelope, garage, windows, mechanical plant, the lifts), estimates what each will cost to repair or replace, and projects the cost forward over a legislated minimum of thirty years against what the fund is expected to take in.
Under section 94 of the Condominium Act, 1998 the corporation must have these studies carried out periodically: a comprehensive study first, then updates at least every three years. The Condominium Authority of Ontario publishes the guide that explains the cycle.
- Instrument
- Condominium Act, 1998, s. 94: periodic reserve fund studies
- Requirement
- Inventory, cost, and a projection over a legislated minimum of thirty years
- Status
- A corporation record. Owners can ask to see it; the status certificate a buyer receives names the most recent study and attaches the notice that summarizes it
- Standing
- The Act, the regulations and the study itself govern
Who reads it before you do
A buyer's lawyer meets it inside the status certificate condition: the certificate states the class and date of the most recent study and attaches the notice that summarizes it, beside the fund's current balance.
Which is why a study that is old, or that shows the fund well behind its own projection, does not stay a boardroom document. It arrives in the middle of somebody else's decision to buy.
It is not a prediction about the market. It is a schedule of what your building will need.
The question that is not the balance
The balance in the fund is the number everyone asks about, and on its own it says very little: a fund can be large and still be behind, if the study says the roof is due. The study carries its own benchmark, so the useful comparison is the balance against the first years of the projection, not against the next building's balance.
What to ask, about your own building
Two questions, both answerable, neither one usually asked.
- Ask the corporation for the date of the most recent study. Then ask what has been completed since.
- Ask for the current reserve fund balance, and for what the study's first years project.
- Write the two beside each other. That gap is what the next buyer's lawyer will see.
- Find the largest item in the study and the year it is scheduled. Then ask whether that year has moved.
- Read the four together. A study is only reassuring if its own schedule is being met.
The type decides whether there is a study, not whether there is a schedule. A condominium has the study: a dated, commissioned document that will be read by a stranger during your sale. A semi has the equivalent in the roof and the shared wall, held only in the neighbours' memories, which is precisely why it becomes an argument. A detached house keeps no such record at all, so a buyer prices the absence of one, and the seller is the only person who can produce it. A converted loft is usually a condominium, so it has a study, and the study is where the original building's systems show up.
The type changes who wrote it down. It does not change that somebody will ask.
Why we send this
A building's future spending is written down years before it arrives, in a document the owners paid for and most have never opened. Knowing what it says is the difference between answering a question and being asked it twice.
So we read the record. One thing about how this city is actually run, in enough detail that you can check it yourself and get the same answer. No figures we cannot source, no forecasts, nothing that expires in a fortnight.
How you can benefit from this: knowing what a building's own documents say before a buyer's lawyer asks about them.
Kal Ayyoub · Realtor® · RARE Real Estate Brokerage · 416spaces.com
Not advice. Nothing here is legal, engineering or financial advice, and nothing here is a valuation or a prediction about any building's condition or about the market. The diagram is schematic and carries no real building's figures. No figure in this piece is a price.