Reserve fund study
Why is it important to conduct a reserve fund study?
Since certain provisions of Bill 16 came into effect on January 10, 2020, all syndicates of co-owners in Quebec are required to carry out reserve fund studies every five years. The Bill amends Article 1071 of the Civil Code of Quebec, removing the provision for a minimum contribution to the contingency fund of 5% of common expenses. The amendment now stipulates that the amount, which is used to finance major repairs or replacement of common areas or equipment, must be determined based on the recommendations contained in the reserve fund study. The reserve fund study consists of preparing a detailed report of all repairs required or anticipated in order to maintain the physical and functional integrity of the building and its components over the long term. According to these new requirements, the study must be carried out by a professional recognized for this purpose.
How is a reserve fund study conducted?
The contingency fund study is conducted following an inspection of the condition of the building and its common elements. Depending on the declaration of co-ownership, the common areas and components of a building can include the building envelope, windows, balconies, roof, parking garage, as well as any other common property such as mechanical and electrical systems.
What is included in our reserve fund studies?
The reserve fund study offered by Genispec includes:
- Visual inspection of the building and common areas
- Estimate of the costs associated with correcting observed deficiencies and evaluation of required maintenance work with applicable deadlines
- Inspection of systems with estimates of replacement costs and life expectancies
- Analysis of the status of the contingency fund
- Recommendations for establishing a building maintenance program
- Proposed contribution scenarios
Our contingency fund studies suggest different scenarios tailored to the specific needs of condominium corporations (called syndicates of co-owners in Quebec) and building managers. If the study reveals that the fund is insufficient, Bill 16 allows each existing condominium syndicate up to 10 years to inject additional amounts into their reserve fund to cover the shortfall.