Reserve Fund: 14/06/23
The provided information pertains to the reserve fund in a condominium corporation. Here are the main points:
- Establishment and Maintenance: The corporation is required, subject to regulations, to establish and maintain a reserve fund. The purpose of the reserve fund is to provide for major repairs and replacements that are not of an annual nature.
- Covered Property: The reserve fund must cover the repair and replacement of the real and personal property of the corporation, common property, and managed property.
- Permissible Use of Funds: Funds from the reserve fund may be used for various purposes, including conducting reserve fund studies and reports required by regulations, obtaining expert reports on the condition of the properties, and other purposes specified in the regulations.
- Validity of Prior Bylaw: If a corporation had a bylaw in place before a specific amendment, requiring the repair and replacement of property of an owner of a bare land unit, the collection and expenditure of funds for such purposes are considered valid if they occurred after the bylaw took effect under the Act and would comply with the current requirements if the amendment had been in force at that time.
- Restrictions on Capital Improvements: Funds from the reserve fund cannot be used for capital improvements unless authorized by a special resolution or necessary for compliance with health, building, maintenance, and occupancy standards required by law. Sufficient funds must remain in the reserve fund to meet the requirements for major repairs and replacements.
- Ownership of Reserve Fund: The money in the capital replacement reserve fund belongs to the corporation and cannot be refunded or distributed to individual unit owners unless the owners and the property cease to be governed by the Act.
- Exclusions from Capital Improvements: Certain replacements, such as replacing obsolete property with a contemporary equivalent or a lower-cost equivalent, are not considered capital improvements. The regulations may prescribe other types of replacements that are excluded.
It’s important to note that specific regulations and requirements regarding reserve funds may vary depending on the jurisdiction and local legislation.
