A reserve fund is money set aside by a condo corporation to cover the cost of major repairs and replacements — things like roof work, elevator overhauls, parking structure repairs, and window systems. In Ontario, condo corporations are legally required to maintain one. The health of that fund is one of the most important things you can evaluate when buying a condo, because if the fund runs short, you pay the difference through a special assessment.
Under Ontario's Condominium Act, every registered condo corporation must conduct a reserve fund study at least every three years. That study is carried out by a qualified engineer or specialist who projects the cost of future repairs and recommends how much the corporation should be collecting from owners each month through maintenance fees.
The corporation is required to fund the reserve at a level deemed "adequate" — but what's adequate on paper and what's actually comfortable are two different things. Some buildings are chronically underfunded, and the gap only shows up when a major repair bill lands.
There's no single number that signals a healthy reserve — it depends on the building's age, size, and construction type. But as a working benchmark, a well-funded building typically has a reserve that covers at least 70–100% of the projected needs identified in the most recent reserve fund study.
You can request the reserve fund study and the most recent financial statements as part of a status certificate review. The key figures to look at: current balance, annual contributions, and any flagged upcoming major expenses.
If you're upgrading from one condo to another, you already know what it's like to own in a building. A reserve fund shortfall in your next building means your monthly costs could spike unexpectedly, or your resale value could take a hit when buyers' lawyers flag the same issues.
The reserve fund isn't the most exciting part of buying a condo. But it's one of the most consequential, and it's one of the clearest signals of how a building has been managed over time.