Reserve Fund Studies

What is a Reserve Fund?

A Reserve Fund is an account set aside for the long-term repair and replacement of building systems and site improvements. As contributions are collected, interest is earned on the balance, and the balance is drawn down for qualifying repairs and replacements.

What is a Reserve Fund Study?

A Reserve Fund Study examines the adequacy of the Reserve Fund, and recommends actions to ensure the fund remains adequate. For condominium corporations in Ontario, a Reserve Fund is considered adequate when it meets anticipated repair and replacement costs for a period of at least 30 years. While non-condominium property owners are not bound by this requirement, our not-for-profit and private business clients often find the condominium standard suitable to their needs.

Why engage Otto & Company to conduct your Reserve Fund Study?

Otto & Company is approved to conduct Reserve Fund Studies. The Ontario Condominium Act (1998) and Ontario Regulation 48/01 specify that condominium corporations must engage a Reserve Fund Planner who is independent, having no financial interest in the property. The Planner must also hold an approved credential. The Regulation includes "Members of the Appraisal Institute of Canada holding the designation of Accredited Appraiser Canadian Institute" - that's us!
Otto & Company brings 15+ years of experience. We have conducted hundreds of studies for condominium and non-condominium properties ranging from single-building industrial properties to townhouse condominium complexes to downtown hi-rise buildings.
Otto & Company works with you. We are consultative, approachable, and collaborative. We support you every step of the way from gathering required documents to educating Board members on Reserve Fund Planning specifics.

How does Otto & Company conduct Reserve Fund Studies?

1. We begin by collecting relevant documents and conducting interviews to inform our analysis. We work to understand the Reserve Fund income and expenses as projected into the future.

2. To analyze Reserve Fund expenses we consider quantities, condition, repair history and replacement costs for each component covered by the Reserve Fund. For non-condominium properties, we can include every building system, or only those specified by the owner. For condominium corporations, the Act specifies that the Study address only the Common Elements, which are those parts of the Condominium held in common, and not exclusive to any unit. The resulting component inventory is presented as a table showing anticipated age, effective age, remaining life, and replacement cost in today’s dollars. This table serves as the foundation for the cashflow projections.

3. To analyze Reserve Fund income we consider the annual rate of regular contributions, any anticipated special assessments (if needed), and interest income. We will review audited/unaudited financial statements describing the Reserve Fund performance since the prior Reserve Fund Study and forward-looking budgets.

4. With both income and expense analysis in-hand, we create a projection showing the anticipated income, expenses, and closing balance for each year over the next 30+ years. We then determine the status of the fund. If the fund's present course is inadequate, our report will include recommended changes to contribution rates, anticipated expenses, or investment strategies to ensure the Reserve Fund remains sustainable and adequate.

5. We prepare the Reserve Fund Study report and review it with you to gather your feedback and answer any questions. Once the feedback has been addressed, we issue the final report, and a draft Notice of Future Funding (if requested).

When should you contact Otto & Company to start your Reserve Fund Study?

A Reserve Fund Study engagement can take up to a week's worth of effort and may span 3-4 weeks in elapsed time. Our calendar tends to fill up early, so please contact us today!

For a free consultation or proposal
Call (519) 432-2232 and speak with one of our consultants,
E-mail us at [email protected],
or click here to request a price quote!

To provide prompt & reasonably priced appraisal & consulting services, that are both verifiably accurate and at a quality level that meets or exceeds our clients requirements.