Board Required to Produce Funding Plan for Reserve Fund

Gerry Hyman has another article for the Toronto Star.  Let’s discuss the questions:

QUESTIONIs it illegal for the board to budget less for contributions to the reserve fund than the amounts specified in the reserve fund study?

ANSWER:  The corporation is required to maintain a reserve fund that will be sufficient to pay for the expected major common element repairs and replacements for the next 30 years. Those amounts will be set out in the reserve fund study, which must be updated every three years.

Within 120 days of receiving a study, the board must propose a plan for the future funding of the reserve fund that meets the requirements of the Condominium Act. The plan may differ from the study, but the unit owners must be sent a summary of the plan and a statement indicating any areas in which the plan differs from the study.

If the board has reason to believe the contributions required exceed the amounts required by the Condominium Act, the board may prepare a reserve fund plan showing lesser (contributions.)

The Board may also contribute less money to the Reserve Fund one year if they contributed more than required during the previous fiscal period and/or if they spent less money than anticipated.  For example, if the condominium had a surplus in in the Operating Fund in 2018, the surplus from that could be placed in the Reserve Fund.  As such, less contributions could be placed in the Reserve Fund in 2019.

However, either way it might be very short sighted to do this.  The Board cannot be certain that things may break down sooner than anticipated or work may end up costing more than planned.  It is far more prudent to make sure you have some spare money in the Reserve Fund just in case something goes wrong in the future.

Another question raised was:

QUESTION:  Can a condo board pass a rule forbidding owners to allow their dogs on the property of other unit owners?

ANSWER:  Yes, if the board concludes that such dogs will constitute unreasonable interference with the use and enjoyment by other owners of their property. The board must send a notice to all of the owners, with a copy of the rule stating when it will become effective, and advising that at least 15 per cent of the owners may requisition an owners’ meeting to vote on the rule.

Yes this is fair, and the Board could go one step further and have a no dog rule.  This has occurred in some condominiums.  Dog owners need to remember to take care of their dogs – although in many cases its a few dog owners who ruin it for others.

Another question was:

QUESTION:  Our board contracted the replacement of all balcony doors and windows in our building’s 178 units. No inspections of the common element components to be replaced were carried out and there were no consultations with the unit owners. Can the corporation do this?

ANSWER:  The corporation is required to carry out necessary replacements to the extent that the doors and windows had deteriorated and required updating. In that event, notice to or approval by the unit owners was not required.

If the replacements were for the purpose of adding to, altering or improving those common elements which did not require replacement, the corporation could only proceed in accordance with Section 97 of the Condominium Act. That section requires the corporation to notify all of the owners, describing the proposed common element modifications, advising whether the modifications will reduce or eliminate the owners’ use of their units or of the common elements, advising of the estimated cost and indicating how it will be paid. The board must also advise that owners of at least 15 per cent of the units may requisition an owners’ meeting to vote on whether the modifications should be carried out.

If the condominium’s Engineer has recommended the work be done, and the work has been specified for in the Reserve Fund Study, the Board is within its rights to do the work.  And it could be beneficial to do the work before the doors and windows begin to fail and rain and outside air starts entering units.  Rain water, especially, can cause major issue as water damage can easily cost thousands of dollars in repairs.  It is wise to fix the doors and windows before issues start causing problems.  It may seem an unnecessary expense but may actually cost the condominium less money in the long run.

About Edward Brain

I am a long time condo activist and have a background in Business Administration.
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