Your Reserve Fund Isn't Big Enough

Chances are, your condominium’s reserve fund isn’t as large as it needs to be. In December 2020, the Office of the Auditor General of Ontario released a report (Value-for-Money Audit: Condominium Oversight in Ontario), highlighting some troubling realities for condo owners and board members.

One major issue? Developers often set initial condo fees too low, leading to financial shortfalls down the road. In fact, 73% of responding condo boards reported significant increases in condo fees within the first two years of registration. Additionally, the majority of condo boards managing buildings constructed between 1980 and 2000 found themselves needing to increase reserve fund contributions by an average of 50%—a clear sign that these reserves were initially inadequate to cover necessary repairs.

Why Even a ‘Sufficient’ Reserve Fund May Not Be Enough

Even buildings that seem financially stable face modern challenges. Supply chain disruptions, inflation, and rising construction costs make it harder to keep up with necessary repairs and replacements. On top of that, reserve funds typically account for “like-for-like” replacements, meaning valuable upgrades, modernization efforts, and other ineligible costs may require additional funding. Many boards are now forced to consider raising condo fees or taking out loans to cover shortfalls—an especially tough sell when owners are already feeling financial pressure.

How to Get Your Condo Fees Under Control

So, what can you do? Some boards opt to keep fees artificially low, hoping to maintain popularity with owners. But delaying necessary contributions only pushes the problem further down the road. Eventually, the bill comes due—often in the form of higher costs, deferred maintenance, or even dreaded special assessments.

At Vertical City, we want to equip condominium owners and board members with the tools to better understand and manage their community's financial future. Our online Toolkit empowers condominium boards to identify potential savings, optimize spending, and build a more resilient long-term financial plan for owners. By using our Toolkit, boards can take proactive steps to safeguard property values and make more informed decisions regarding their reserve fund contributions, which can contribute to more stable and predictable fee structures over time.

Don’t wait until a financial crisis forces tough decisions. Start taking control of your reserve fund today.