Dear Paul: Our condo board only wants to contribute a small dollar amount to the reserve fund. I’m part of the board as well and tried to explain that this is not sufficient because at some point, we will incur large expenses and we will have to contribute to making the repairs. Is there a minimum amount that the reserve fund is required to have? Thank you!
Dear C: First, the board has the authority to set the contribution level that owners will pay into the reserve fund as part of their monthly common element fees. This amount is usually determined when the board strikes the budget for the next fiscal year. There is no minimum or maximum amount for contributions. In some jurisdictions owners must approve the contribution level. In Manitoba however, the board does not need the owners’ approval unless required by the declaration or bylaws.
Second, the reserve fund is not required to have a specific amount, however, since condo corporations are required to complete a reserve fund study every five years, the study will indicate the ideal (recommended) amount required to meet future obligations. Remember that this is an estimate based on available information. If the reserve fund falls short of this amount, it will be reflected in the audit report. The owners could complain to the board and request that contributions be increased if they are too low. Increased contributions would bring the reserve fund closer to the recommended amount. When a major expense arises and the reserve fund is insufficient, the board may have to implement a special assessment. There are no limits to special assessments and the owners have no choice but to pay. Good Luck!