If you are an owner in a condominium corporation in Manitoba, your condo corporation is required to have a Reserve Fund Study completed. These are complex financial documents, therefore it is important to understand the requirements, as well as whom may prepare your study. Below is a brief overview of frequently asked questions regarding the reserve fund study process.
Q: In simple language, what is a Reserve Fund Study?
A: A Reserve Fund Study is a plan for the long term funding of the shared physical components of your Condominium Corporation. The study provides a path for budgeting for those longer term expenditures on physical building components which do not occur every year. The specific requirements for the study are described in the Condominium Act and Regulation.
Q: Who needs a Reserve Fund Study in Manitoba?
A: All Condominium Corporations in Manitoba must complete a Reserve Fund Study, however the deadline for different condominium corporations will vary.
For corporations completing their first report, the deadline is 3 years from the Act coming into force (which was February 1, 2015), therefore the deadline for most condominium corporations will be February 1, 2018.
For corporations whom conducted a reserve fund study after February 1, 2013 but prior to February 1, 2015, these corporations will have up to the end of the fifth year covered by the study to update the report, assuming the board believes the current study substantially meets the requirements in sections 19 to 23 of the Condominium Regulation.
For corporations created on or after February 1, 2015, their first reserve fund study must be completed within 3 years of the date the declaration and plan were registered.
Q: Does the Reserve Fund Study need to be updated?
A: Yes, the study must be updated on a five year cycle following the initial report. The five years is calculated as being the end of the fifth year covered by the study or most recent update.
Q: Who may conduct a Reserve Fund Study?
A: Subject to limitations noted in Sections 25(2) of the Regulation (requirements for arms-length relationship), the following persons may conduct a reserve fund study:
- a person who holds a valid registration under The Architects Act to practice as an architect in Manitoba;
- a person who holds a valid registration under The Engineering and Geoscientific Professions Act to practice as a professional engineer in Manitoba;
- a person who holds a valid certificate as a certified applied science technologist or certified engineering technologist under The Certified Applied Science Technologists Act;
- a member of the Appraisal Institute of Canada who holds a valid designation as an Accredited Appraiser Canadian Institute;
- a member of the Real Estate Institute of Canada who holds a valid designation as a Certified Reserve Planner.
Additional individuals may conduct a reserve fund study for certain classes of condominiums under 10 units, so long as the person is knowledgeable – in the board's opinion and based on reasonable and objective criteria – about the items or types of items included in the component inventory, their operation or maintenance and their repair or replacement cost.
Q: Does our Condominium Corporation have to follow the recommendations in the Reserve Fund Study?
A: No, the Condominium Corporation is under no obligation to follow the recommendations, but rather the Condominium Board must "consider the reserve balance that is recommended" in the Study (see part 144(2) of the Act).
As noted above, a Reserve Fund Study is a complex financial document, and may take weeks to months to complete. Therefore, it is important for the condo board to address this requirement in a timely fashion well before the legislated deadline, in order to comply with the requirements of the Condominium Act.
NLD Consulting specializes in Reserve Fund Studies, the same studies that are required by the Condominium Act of Manitoba. The February 1st, 2018 deadline will come quickly so visit their website for a free proposal www.manitoba.reserveadvisors.ca or call them at 204-815-5280.