Regarding Reserve Fund Reports
If you’re a condo owner here in Alberta, chances are you’ve heard at least passing mention of the ubiquitous reserve fund study – but what about reserve fund reports?
“Wait,” you might find yourself thinking, “Reserve fund studies? Reserve fund reports? Aren’t those just two different names for the same thing?”
To which we’d respond: actually, no! While reserve fund reports and reserve fund studies are part of the same reserve fund process, these two documents actually share subtle differences that are key to call out in order to properly speak to a condo board’s overarching approach to ongoing maintenance and budgeting forecasting.
Read on to learn more as we dig into the details of reserve fund reports, draw a line of distinction between reserve fund studies and the report itself, and speak to what your condo community should be doing to set itself up for reserve fund success.
A Closer Look at Reserve Fund Reports
Let’s Start at the Beginning: What’s a Reserve Fund Report?
Regular readers of our blog will likely recall that we’ve spoken to reserve fund studies before – but how exactly does this undertaking relate to whatever a reserve fund report is supposed to be?
To clarify, a reserve fund study can be boiled down to a thorough assessment of the major components of your condo building that a qualified individual (usually an engineer or someone with a similar knowledge and background) conducts for your condo community on a regularly recurring schedule.
This inspection – the reserve fund study – eventually results in the creation of the star of today’s blog: your condo’s very own reserve fund report.
This invaluable, informative document can then be used to advise your condo board on not just the current overall health of your building, but also regarding what sorts of preventative maintenance your condo board can get ahead of in order to keep any catastrophic failures from happening, while also shining a light on when to conduct this sort of maintenance in the first place.
That All Makes Sense! So, How Often Do We Need One?
The Alberta Condo Act (or the Alberta Condominium Property Act, if you’re feeling fancy) requires that condo corporations complete a reserve fund study – and subsequent reserve fund report – at least once every five years.
In addition to maintaining compliance with the legislation laid out in the Act, following this sort of an inspection schedule will help to keep your condo building from being faced with any unexpected expensive repairs that might otherwise require the implementation of a special levy to pay for.
Not a bad deal for a once-every-five-years task, hey?
That Sounds Like Some Important Work! Whom Should We Get To Do It?
Your building’s reserve fund report is only as trustworthy and reliable as the individual you get to conduct the inspection in the first place – so, make sure you pick the right person for the job! There are a whole host of individuals who can legally conduct your building’s reserve fund study and ensuing reserve fund report, including Quantity Surveyors, Architectural Technologists, Certified Engineering Technologists, those certified within the meaning of the Architects Act or Professional Engineers Act, holders of a CRP designation, and more.
It can be tempting to try and save a bit of money here, but cutting corners when it comes to your reserve fund report is never really a good idea. Sure, you might come out ahead in the short term, but you’re setting yourself up for disaster in the coming years if you bring someone on who maybe isn’t quite as qualified as they should be to conduct an inspection as detailed and important as this.
Instead, consider investing the time and money into someone who’s going to be thorough and do the job right. After all, you’re basing the next five years of planning, maintenance, and spending on this report, so you’ll want it to be as accurate and comprehensive as possible.
Any Advice on the Finances of Reserve Fund Reports?
When it comes to budgeting and setting money aside to address reserve fund report results, the best way to do so is not by considering dollar amounts, but by instead focusing on percentages. Typically (although things vary from building to building), most condo corporations should be setting aside anywhere between 15-40% of their budgeted income toward reserves.
Further, it’s important to take your reserve fund’s starting point into consideration– and again, here, we look towards percentages and evaluate the “percentage funded.”
If you’re reserves are sitting at 100% funded, you’re sitting in a good spot and have cash on-hand equal to the deteriorated or spent fraction of your reserve’s funding levels. If you’re sitting at closer to, say, 25% funded, though, your funds are 75% depleted, and you’ve got some work ahead of you to make that back up in order to avoid running out of money for projects that might be looming on the horizon. The closer you can keep that fund to 100%, the easier a time you’re going to have in the long run.
Leading the Way in Reserve Fund Innovation
Reserve fund reports can be tricky and complicated things, but we’re experts on the subject matter. We’ve helped condo corporations through the reserve fund process for years now, and are even helping to forge a new way forward in how reserve funds are managed by working with local asset management company BiLD. It’s innovative living reserve fund study technology specifically – a leading-edge service offering that creates a dynamic reserve fund report that updates and changes according to the current status of your condo building.
Whether with a helping hand through BiLD’s forward-thinking technology or through our years of industry experience, we lead when it comes to reserve fund innovation – and we couldn’t be happier to share that expertise with all those condo corporations we’re proud to call our clients.
Have you got more questions about reserve fund reports? Looking to learn more about preventative maintenance? Wondering how all these condo management concepts come together? Give us a call – we’ll be happy to help you find your footing when it comes to reserve fund reports and get you pointed in the right direction today!