In Ontario, reserve fund studies for condominium corporations are categorized into three distinct classes, each with specific requirements and timing under the Condominium Act:
đ˘ Class 1 â Comprehensive Study
Timing: Must be completed within the first year after the condoâs declaration and description are registered.
Scope: Includes a physical inspection of the property; reviews corporation records; Interviews directors, employees, and agents; Establishes a 30-year financial projection for major repairs and replacements.
đ ď¸ Class 2 â Updated Study with Site Inspection
Timing: Conducted at least every three years, alternating with Class 3 studies.
Scope: Includes a site inspection; Updates the financial and physical analysis from the previous study; Often used when significant changes have occurred since the last study.
đ Class 3 â Updated Study without Site Inspection
Timing: Also conducted every three years, alternating with Class 2 studies.
Scope: No site inspection required. Relies on a review of records and interviews; Focuses on updating financial projections based on existing data
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[click] 2024-2026 Reserve Fund Study (PDF)
Category 2 Study (with site inspection)
Comment: This Reserve Fund Study was prepared by RIMKUS Engineering. This firm should not be invited to prepare any future RFS for Sussex Square. At the request of our Property Manager, RIMKUS was asked to prepare a category 3 study (no site inspection) RFS refused and convinced our PM to approve a category 2 inspection (with site visit). The study was prepared by a single structural engineer with two years of professional experience and reviewed by a RIMKUS engineer who never visited our building. It took more than one year for Rimkus to complete the study and several revisions.Â
The study was done by EXP Services. It covers 85 line items. It also includes a specific study about our three elevators. Each line item is adjusted to a compounded inflation rate of 2% which estimates how much money we will need to have in the fund to cover the expense at that time.
Category 3 Study (without site inspection)
Prepared by Keller Engineering Associates Inc. www.kellerengineering.com
Comparing the 2016 RFS (prepared by WSP Engineering) and the 2019 RFS (prepared by Keller Engineering): The 2016-2019 RFS prepared by WSP included over 100 line items while the Keller 2019-2021 RFS update includes barely 30 line items. But most line items in the Keller study include sub-categories which in the end cover more or less all the WSP line items. Another important difference is that all the WSP spreadsheet line items are adjusted to compounded inflation rate estimates i.e. if an item that would cost $100K to fix in 2019 is to be done in 2025 or 2030, the amount showed in the spreadsheet will appear as costing $120K or $150K. On the other hand, in the Keller updated study, that same item will be shown to continue to cost $100K in 2025 or 2030. It is the total cost in each year's column that is adjusted to the compounded estimated inflation rate. Our colleague P. Valois (304) spent many hours creating a spreadsheet for the 2019 RFS in which all line items and sub-categories are included and the future costs are adjusted to the compounded estimated inflation rate. This now permits owners to compare the 2016 study to the updated 2019 study. To download a copy of Mr. Valois' spreadsheet, [click] here. You will need to enlarge the PDF to see all figures clearly. )
Category 2 Study (with site inspection)
Prepared by WSP Canada Inc. 210 Gladstone Avenue, Suite 4001 Ottawa, Ontario K2P 0Y6 Tel. 613-237-2462 www.sepgroup.com
Stephanie Robinson, B.A. Sc. Project Manager; Jay Leedale, P. Eng. Technical Lead; Chris Carkner, B. Eng. Project Principal;Â
The following service contractors were contacted:Â Andre Larabie and Ryan Licari from Pyron Fire Protection Inc. (fire safety); Jeff Thomas of Baxtec Mechanical Services (plumbing and HVAC);Â Mike Dempsey, Thyssenkrupp (Elevator).
Category 2 Study (with site inspection)
Prepared by Keller Engineering Associates Inc. 1390 Prince of Wales Drive, Suite 107, Ottawa, Ontario K2C 3N6 Tel.: 613-224-1594 Fax: 613-224-1642Â
Matt Michaluk, P. Eng. ; (Author & Reviewer, Structural & Architectural); James Dahmer, P. Eng. (Author, Mechanical & Electrical)
Category 3 Study (no site inspection)
Prepared by Keller Engineering Associates Inc. 1390 Prince of Wales Drive, Suite 107, Ottawa, Ontario K2C 3N6 Tel.: 613-224-1594 Fax: 613-224-1642
Matt Michaluk, P. Eng . (Author & Reviewer, Structural & Architectural); James Dahmer, P. Eng.; (Author, Mechanical & Electrical)
Category 1 Study (first site inspection)
Prepared by Keller Engineering Associates Inc. 1390 Prince of Wales Drive, Suite 107, Ottawa, Ontario K2C 3N6 Tel.: (613) 224-1594 Fax: 613-224-1642
Matt Michaluk, P. Eng. (Author & Reviewer, Structural & Architectural); Heinz Keller, P. Eng. (Author & Reviewer)Â
More info about Reserve Funds...
Davidson Houle Allen LLP Condominium Law (Sussex Square Legal Advisors) http://davidsoncondolaw.ca/category/reserve-funds/
In Ontario, reserve fund studies for condominium corporations are categorized into three distinct classes, each with specific requirements and timing under the Condominium Act:
đ˘ Class 1 â Comprehensive Study
Timing: Must be completed within the first year after the condoâs declaration and description are registered.
Scope:
Includes a physical inspection of the property.
Reviews corporation records.
Interviews directors, employees, and agents.
Establishes a 30-year financial projection for major repairs and replacements.
đ ď¸ Class 2 â Updated Study with Site Inspection
Timing: Conducted at least every three years, alternating with Class 3 studies.
Scope:
Includes a site inspection.
Updates the financial and physical analysis from the previous study.
Often used when significant changes have occurred since the last study.
đ Class 3 â Updated Study without Site Inspection
Timing: Also conducted every three years, alternating with Class 2 studies.
Scope:
No site inspection required.
Relies on a review of records and interviews.
Posted on June 24, 2016
A Reminder About Reserve Funds and Status Certificates and why Reserve Funds studies should cover a 45-years period.
If a condominium corporation is aware of any circumstances that may result in an increase in the common expenses (that is, an increase beyond inflation), this must be disclosed in Paragraph 12 of the status certificates. Therefore, something may need to be mentioned in Paragraph 12 of the status certificates if it appears that contributions to the reserve fund may need to increase (beyond inflation).
For example, some features of the common elements may not be covered by the reserve fund study; such as, if those features wonât require replacement until after the reserve fund study period. If so, I recommend that the condominium corporation give careful consideration to the following: Is it possible that the annual contributions to the reserve fund will need to increase when those features âcome into the study periodâ at some time in the future? If so, this may need to be mentioned now in Paragraph 12 of the status certificates.
As mentioned in my blog post last November, the reserve fund study period (currently required to be âat least 30 yearsâ) is also expected to be increased, likely to âat least 45 yearsâ, as part of the anticipated amendments to the Condominium Act and Regulations. Depending upon the particular condominium, this may mean that features not currently covered by the reserve fund study will be covered (if and when the study period increases to at least 45 years). Again, if this could result in an increase in the annual reserve fund contributions, this may need to be mentioned now in Paragraph 12 of the status certificates.
A Condominiumâs âNaturalâ Reserve Fund Contribution
Condominium Boards are often faced with difficult decisions about whether or not to make a lump sum contribution to the reserve fund. When asked to consider these questions, I often think about the condominiumâs ânaturalâ reserve fund contribution.
Hereâs what I mean by that: to me, the ânaturalâ contribution is the condominiumâs normal annual contribution, assuming a normal reserve fund balance. Itâs like the âperfect annual contributionâ for the condominium, based on normal life expectancies and replacement costs for the various reserve fund components, once any deficiencies have been addressed.
If a condominiumâs annual reserve fund contribution is at or near the ânaturalâ level, then the reserve fund contributions should closely reflect the true long-term repair and replacement costs for the condominium. The result should also be that the condominium fees are at a normal or natural level for the particular condominium, which arguably makes the most sense for marketability of the units. Furthermore, with annual contributions at the ânaturalâ level, the reserve fund balance shouldnât grow to an excessively high level at any time down the road.
On the other hand, if a condominiumâs annual reserve fund contribution is âhigher than naturalâ, this will mean âhigher than natural condominium feesâ, and the condominium will tend to build up an excessive reserve fund balance as the years go by.
In some cases, a special assessment (or a loan, subject to by-law approval) may be a good way to keep the annual reserve fund contributions closer to the natural level. In other words, in some cases it may make sense to âboost upâ the reserve fund balance, so that ongoing annual contributions can be at the natural level. This is something for consideration of the Board in a given case.