According to the Appraisal Institute of Canada, a Reserve Fund Study is defined as a budget-planning tool which identifies the current status of a Reserve Fund and Funding Plan to offset the anticipated expenditures for major repairs and replacement of components and elements of assets, for which a corporation or association is responsible.
In simpler terms, a study essentially consists of a:
(1) General inspection of the corporation’s common property;
(2) An estimation of when the building’s common area components will need to be replaced and/or repaired over the next 30 years;
(3) Estimated costs for such associated replacements and repairs; and
(4) Funding scenarios—through spreadsheet analysis—that aim to portray the financial outlooks for both the current level of funding and a recommended level of funding (if different than the current level) that will provide for a sufficient reserve fund to cover future repair and replacement expenditures over the 30 year forecast period and beyond.
The Reserve Fund Study Report compiles the information of the study and relays its findings, in layman’s terms, to the corporation and prospective condominium buyers. Generally, the report is 70 to 100 pages in length and consists of two major parts: the physical analysis and the financial analysis.
Depreciation study, depreciation report, contingency reserve, reserve fund report, and reserve fund study are all, for the most part, synonymous terms. So too, it should be noted, while a reserve fund study report is considered a financial document, the report is not to be construed as investment advice.
The Board of Directors has the ‘final approval’ on determining the Reserve Fund Plan. The reserve fund plan is the budgeting approach set forth by the Board to address the year-over-year needed contributions to maintain the reserve fund at a sufficient level. However, it is important to note that, according to section 23 (5) of the Alberta Condominium Property Regulation, the plan must be based on and be in accordance with, the information and recommendation of the reserve fund study report.
Yes we are. As of January 2020, in accordance with the Alberta Condominium Property Regulations, it is now mandatory for individuals to hold "one" of the designations specified in 21.1 (1) of the Regulations in order to act as a reserve fund study provider.
Currently, Kent Strang of our team holds 2 of the specified designations listed in the regulations. Kent holds both a Certified Reserve Fund Planner (CRP) designation from the Real Estate Institute of Canada as well as a certificate from the Reserve Fund Planning Program (RFPP) at the University of British Columbia.
Yes we do. We carry 2 million in professional liability insurance (errors & omissions) and 1 million in general liability insurance.
The contact and/or client will need to provide the planner with:
• The most recent reserve fund study report completed;
• Any building condition reports;
• Specifications and “as-built” drawings (if available);
• Corporation bylaws;
• Past 3 years of audited financial statements;
• Past 5 years of historical building & site operating costs;
• Statements as to the current reserve fund balance and estimated contribution to the reserve fund;
• Minutes from board meetings (past 5 years if available);
• Details of invoices and quotes for recent major repair(s)/replacement(s);
• List of current maintenance contractors for mechanical, electrical, elevator and building & site repair, as well as contractor and technical information pertaining to any “green building elements” (if applicable).
Please feel free to contact us if you have any other questions and we will be happy to get back to you!