If you’re buying a condo, you should understand the condominium reserve fund. This is money set aside by the condo corporation to cover major repairs and replacements over time—things like roofing, siding, windows, and parking lots.
In Newfoundland, the Condominium Act requires every condo corporation to have a reserve fund. They must also complete a reserve fund study every ten years. This study outlines how much money the corporation should collect to maintain the property properly.
You help fund this through your monthly condo fees. A portion goes into the reserve fund. If the fund isn’t large enough when a big repair comes up, owners may have to pay a special assessment. That’s an extra lump sum out of pocket.
When reviewing condo documents, pay close attention to the reserve fund balance, the age of the building, and the last reserve fund study. Ask if any major repairs are coming up. If the fund looks low and the building needs work, budget for possible extra costs.
As an owner, you have a right to see the reserve fund study and financials. Ask your lawyer or real estate agent to get those during your review period. It’s better to know before you buy.
Understanding the condominium reserve fund helps you make a more informed decision. It also helps you avoid surprises later.
