Definition: A reserve fund study is an examination of a condominium building or buildings by a qualified engineering company for the purpose of establishing future expenses. To goal is to determine whether the reserve fund is sufficient to handle anticipated renovations, repairs and upgrades.
Mandated By Law
Condominium laws are usually created at a local or provincial (state) level, so this will vary from area to area.
Laws may mandate that condominiums complete a ‘Reserve Fund Story’ at pre-determined intervals, for example: Every 5 years.
Completed by qualified company
A qualified company, such as an engineering company, is hired to examine every aspect of the condominium structure(s). All major components of the condo project are examined and evaluated as to their current condition, and expected life expectancy. These major components can include:
- Electrical Systems
- Plumbing Systems
- Exterior Structure
- Heating System
- Hallways, Carpeting and Lights
- Parking lot, Fencing etc.
- Any items which may deteriorate over time
Engineers will estimate how much life is left in any of these systems, and what the expected cost of replacement will be.
They create a budget and an estimated monthly contribution (Condo Fees) requirement to satisfy this budget.
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