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A Strong Foundation: The Crucial Role of the Reserve Fund

Every condominium in Ontario is required to maintain a reserve fund. It's one of two funds; the other being the 🌐operating fund. Both of these funds have different purposes and are treated differently. The reserve fund is used only for paying for major repairs and replacements of the common elements of a condominium corporation while the operating fund is used to pay for all costs related to the operations of the condominium corporation on a day-to-day basis.

One can think of a reserve fund as a condominium piggy bank that every owner contributes to each month. A portion of the common element fees collected from owners is deposited into the reserve fund every month. The purpose of the piggy bank is to always be able to pay for necessary future repairs and replacements.

How Much Should Condo Owners Contribute to the Reserve Fund

This is the objective of the Reserve Fund Study, which you can read more about here. It lays out a formal plan for how much owners should be contributing to the Reserve Fund for the next 30 years.

The Condominium Act of Ontario requires that a study is conducted every three years. The Act also requires that every Condominium Corporation have an Investment Plan, which aims to protect and grow the fund. To learn more about this, check our our article Investing the Reserve Fund.


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