Reserve Funds: Proposed Amendments to the Condominium Act
The opening session at the CCI/ACMO National Condominium Conference on November 12th was a plenary discussion on the proposed amendments to the Condominium Act.
I was particularly interested in certain comments from the panel about anticipated amendments in relation to Reserve Funds and Reserve Fund Studies.
Here are the comments that I found interesting:
1. Definition of “adequate”
The amendments to the Condominium Act and Regulations are expected to include a definition of “adequate”, as well as new time frames for condominium corporations to plan for their reserve funds to be “adequate”. The panel members said:
- The anticipated definition of “adequate” is expected to say that a reserve fund is “adequate” when the annual contribution to the fund can remain constant, increasing only by the assumed rate of inflation from one year to the next.
- The amendments are expected to say that condominium corporations will have to plan for their reserve funds to be “adequate” within a period of three years following each reserve fund study. In other words, condominium corporations will have a three-year grace period following each reserve fund study, during which the corporation can plan for lump sum contributions or for annual contributions to increase beyond inflation.
2. Study Period
The Reserve Fund Study period (currently required to be “at least 30 years”) is expected to be increased, likely to “at least 45 years”. The idea is to try to capture “long lasting” features (such as plumbing infrastructure) that often fall outside a 30-year study period, and therefore can result in large required increases when those features ultimately enter the study period.
For more information on reserve funds, see our previous blog post.