In accordance with the Condominium Act, the budget also includes a reserve fund. A reserve fund is a separate trust account which all condominium corporations are required to establish in accordance with the Condominium Act. A portion of the common expenses paid by the owners is transferred monthly to the reserve account. The reserve fund is an important asset to cover the long-term maintenance of the property, contingencies, working capital, deficits and replacements. The Board may levy a special assessment to fund emergency repairs and unbudgeted capital expenditures.
The contributions made to a reserve fund must be based on a reserve fund study which will establish the amount to be contributed. In accordance with the Condominium Act, these reserve fund studies must be done regularly to ensure that the fund has adequate funds.