Building deterioration is a fact of life. Smart building owners make sure they have a plan for all the predictable future repairs and replacements their property will need. Across Canada, condominiums, strata corporations, and coproprietaires use reserve fund studies to guide their plans for future funding.
For condominium corporations, a reserve fund study is a legal requirement in almost every province and territory in Canada.
What is a reserve fund study? A reserve fund study is your plan for preserving your condo, from roof to foundation and from curb to fence. It is a financial planning and budgeting document that details major repairs and future replacement costs of common elements for a condominium corporation. In order to prepare the report, a specialist is brought in to conduct a physical assessment of property assets, analyze the reserve fund, and offer recommendations to ensure sufficient funds are available to cover all projected costs.
The plan allows you to start saving now to help avoid large future special assessments. As a result, your condo board will be able to make informed decisions that will protect your investment.
McIntosh Perry is one of Canada’s oldest and most trusted reserve fund study providers. We provide reliable capital expenditure plans for residential, commercial, institutional, and industrial buildings.
Ask for a free proposal for your next reserve fund study today. Call toll free 1-888-348-8991.
Why Choose McIntosh Perry as your Reserve Fund Study Provider?
There are many factors that set us apart from other reserve fund study companies.
It all adds up to a comprehensive study package that helps make the job of both property managers and condo boards easier.
Types of Reserve Fund Studies
We provide comprehensive reserve fund studies as determined by your provincial regulations. For example, in Ontario, we provide all three of the classes defined by the Ontario Condominium Act:
A full study that includes all study elements. A Class 1 study is required when a condominium first incorporates and periodically after that, depending on which province you live in.
An updated study that includes a site inspection. Periodically, a very thorough review and update of the study is needed to confirm life expectancies in real-world conditions.
An updated study without a site inspection. These generally alternate with Class 2 studies. The basis of the update is the record-keeping of the condominium corporation since the prior study.
The new information certificates require that statements be made about the reserve fund balance relative to the plan. To assist, we offer quarterly reviews to ensure that an independent third party supports any statement being made, acknowledges the implications of deviations from the plan, recommends smaller, more frequent adjustments if needed, and makes the mandatory updates more manageable.
How often is a reserve fund study needed? Generally, a condominium property can expect to do one type of study or another every three years. If you’d like to learn more about reserve fund studies, please consult our FAQs.
Featured Reserve Fund Study Projects
- Waterclub Towers, Reserve Fund Studies
- Solaris 1 and 2 at Metrogate, Reserve Fund Studies
- Palace Pier, Reserve Fund Studies
- York Region Condominium Corporation 1406 (Class 1 Reserve Fund Study)
- The Met 2 (Class 2 Reserve Fund Study)
- Metropolitan Toronto Condominium Corporation 1381 (Class 2 Reserve Fund Study)
- Simcoe Standard Condominium Corporation 307 (Class 2 Reserve Fund Study)
- York Region Standard Condominium Corporation 1133 (Class 3 Reserve Fund Study)
Reserve Fund Study FAQ
A study will provide some or all of the following, depending on the class:
A physical analysis of the property:
- Inventory of assets, common elements, and shared facilities
- Review of maintenance and/or repair records
- Site inspection to confirm building condition by our engineers and technicians
- Year of acquisition
- Present age
- Normal life expectancy
- Assessment of the remaining life expectancy including adjustments for condition
- Estimated year for repair or replacement
- Estimated total replacement cost
- Proportionate share if applicable
- Percent of replacement cost to be reserved if total replacement is unlikely
- Adjusted replacement cost of each item as of date of the study
A financial analysis of the reserve fund:
- Cash flow projections up to 60 years if needed
- Opening balance
- Recommended contributions for each fiscal period that are destined to reach annual increases in the order of the provincial consumer price index as quickly as possible, preferably in the first decade
- Indications of any needed other contributions such as loans, operating transfers, borrowing proceeds, or special assessments
- Planned future value of expenditures, including loan repayments for any borrowing that may have been required. Our future values take into account published construction price indexes for various census metropolitan areas and calculations from there for suburban and rural areas as may be applicable
- Estimates of interest earnings based on the average of the opening and closing balances being available for investment at rates equivalent to short-, medium-, and long-term GIC rates.
- Closing balance
The cost is determined by the size, location, and type of construction comprising the corporation assets and common elements. Generally speaking, reserve fund studies start at a few thousand dollars. You’ll find that when you compare price quotes, McIntosh Perry is very competitively priced. Click to request a reserve fund study quote online.
We start with two great assets: our materials science expertise and our extensive database of real-world replacement costs. These help us determine when the repair or replacement of your building’s assets will need to happen, and what the starting cost will be. Future major repair and replacement costs are determined on four levels of information:
- Actual historical data relative to the property; if you know how much it cost to replace your roof last time we work with that
- Contractor quotations, based on professionally prepared specifications and details, for the repair or replacement of the common element components that may not have been implemented yet – we usually add in a contingency to reflect the possibility that completing the proposed work may cost more than planned, if not already included in the base bids
- Similar data from nearby sites, our extensive database of real-world replacement costs combined with our materials science expertise make these estimates very reliable
- Cost estimates based on authentic published cost sources (such as RS Means) combined with our quantity take-offs of the common elements
These costs are then adjusted for factors like changes in the building construction price indexes for: Census metropolitan areas, urban, suburban, or rural localities as applicable to your property.
It used to be known in Ontario as the Form 15. This is a document presented to the condo unit owners that includes a summary of the study, summary of the current and future plan for contributions to reserve, and notice of any deviations from the recommended plan that the board may have decided to implement.
Some key points to check include:
- ARC/Unit – the adjusted reserve cost per unit is usually in the $65K to $130K range depending on the size, type, location, and quality of the corporation’s assets. Variations from this range may be explained by the unit boundaries, shared facilities, or unique founding document characteristics.
- Min CB – the minimum closing balance is an indicator of risk tolerance for the board – we recommend no lower than $500/unit though one client asked us to set it at the level of their last special assessment that another consultant told them to implement.
- Max CB – there is no valid reason for planning to save more money than the adjusted reserve cost for the major repair and replacements of the common elements
- Max RL – the maximum remaining life of the assets versus the plan duration should capture at least one cycle of major repair
Working with these key points, we check, and cross-check, a number of ratios and indexes to be sure that the proposed plan is rational, sensible, and palatable to all current and future owners.
Peace of Mind – Now and For the Future
McIntosh Perry has the in-house expertise to efficiently provide all aspects of your study. Most of the expert consultants we need are all under the same roof. Our longevity in the field has created many professional affiliations to supplement any expertise that may be required.
Want to get more from your reserve fund study? Contact McIntosh Perry today – call toll free 1-888-348-8991.