How Much Should Your Condo Board Contribute to the Reserve Fund?
Practical Guidance for Smarter Condominium Governance in the Sarnia and London Areas
At Sapphire Condominium Management, we’ve helped dozens of boards across Sarnia, London, and Southwestern Ontario understand and manage their reserve fund planning. With over $60 million in reserves and budgets under our care, we’ve seen how strategic funding decisions protect both the physical asset and the owners’ financial peace of mind.
This article explains how reserve fund contributions are calculated, what’s required under the Ontario Condominium Act, and what your board should know when budgeting.
What is the Reserve Fund?
The reserve fund is a pool of money set aside to cover major capital expenditures, not regular repairs, but big-ticket items like:
Roof replacements
Exterior wall repairs
Window and balcony upgrades
Elevator replacements
Roadway resurfacing and underground garage work
Unlike your operating budget, which covers yearly costs, the reserve fund ensures your building stays safe, functional, and financially prepared for future needs.
How the Reserve Fund Study (RFS) Works in Ontario
Every Ontario condo corporation must conduct a Reserve Fund Study (RFS) to assess long-term capital repair needs and outline a 30-year funding plan. The RFS must be updated every three years, alternating between the following classes:
Class 1 – Full study with physical inspection (required within 12 months of registration)
Class 2 – Update with site visit and revised projections
Class 3 – Financial update with no site visit
Once a Class 1 study is done, your board alternates between Class 2 and Class 3 every three years.
The study provides a recommended annual funding schedule, which the condominium is legally required to follow. This ensures enough money is available when major repairs are needed, and avoids financial shortfalls.
How Contributions Are Determined
The funding amount is not arbitrarily chosen—the Reserve Fund Study itself sets it out. Your board must budget based on the funding plan outlined in the RFS, and collect those contributions from unit owners as part of their monthly condo fees.
At the time of registration, the developer or initial owners must provide an initial lump sum contribution to the reserve fund, creating the baseline balance required to begin funding future capital expenditures.
Boards that underfund the reserve (by collecting less than the study recommends) often face large, unexpected shortfalls down the road. These can result in unpopular special assessments or even loans, both of which can be avoided by sticking to the RFS contributions.
Final Word for Board Members
If you’re serving on a condominium board in Sarnia, London, or anywhere in Ontario, understanding and properly funding your reserve account is one of your most important responsibilities. The reserve fund isn’t optional—it’s a legal and financial safeguard for your entire community.
With proper planning and regular study updates, your board can avoid emergency decisions, special assessments, and owner pushback—while preserving the long-term value of your building.
Need help interpreting your Reserve Fund Study or assessing whether your current contribution level is sufficient?
Contact us today, managers who will always answer your questions: click here!
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