A condominium Reserve funds have two primary purposes:&nbsp;One is to cover unforeseen emergency expenses; the second purpose is to collect funds over time to pay for major expected repairs like elevators and roofs.Most condo boards will choose to invest the reserve funds in conservative investments where there is very little chance of a loss.&nbsp; Unfortunately returns will often be less than the rate of construction inflation. Economically it might make less sense to collect funds for an expenditure far in the future in times when inflation in Canada is going thought the roof. While the official inflation numbers are at 7.7 per cent in May, the highest since January 1983. BoC issued a warning that they expect inflation to officially be over 8% and stay there a few months. The grocery bills certainly went up by 20% at the least. So Reserve Funds may be losing spending power due to inflation. The Condo board might be further ahead to plan to borrow money when needed with a ten year repayment plan. The important thing for condo owners is that they understand and agree with their board's plan for dealing with these large expenditures.As reported by the Globe&amp;Mail, condominium maintenance experts are warning that chronic low-balling of future building repair costs is leaving new owners unprepared for potentially major fee hikes in the coming years. The worst-case scenarios in the latest research paper by Sally Thompson of Synergy Partners Consulting Inc. “are not hypothetical: In 2021, it was revealed in court filings that York Condominium Corporation No. 82 – a 50-year-old 321-unit building near Jane and Finch – faced an $11-million repair backlog that would require every apartment owner to chip in between $30,000 and $40,000 to cover the costs or risk having their apartment sold out from under them.Ms. Thompson laid out a number of her concerns in a recent paper that hits on everything from the impacts of rapid inflation on maintenance budgets designed for pre-pandemic repair cost estimates to governance issues baked into the existing condominium regulations.”Ontario legislation requires that condominium building managers must perform reserve fund studies that examine what the likely costs of potential repairs will be with a 30-year-time horizon. However, this is clearly insufficient and many proactive and experienced Condo Managers, such as Maple Ridge Community Management, opt for more detailed assessments within closer range of time for the buildings entrusted to their care.&nbsp;When purchasing a unit in a brand new building, think ahead and look over the quality of the building itself. Is it a modern glass and metal high-rise or is it an older building with traditional attributes?The Toronto’s glass condos were notoriously dubbed as “Throw-away buildings” back in 2011. Many of the glass condominium towers filling up the Toronto skyline will fail 15 to 25 years after they’re built, perhaps even earlier, and will need retrofits costing millions of dollars, say some industry experts.Buyers drawn to glass-walled condos because of the price and spectacular views may soon find themselves grappling with major problems including:&nbsp;·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Insulation failures.·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Water leaks.·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Skyrocketing energy and maintenance costs.·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Declining resale potential.Glass condominiums — known in the industry as window walls — have floor-to-ceiling glass, so essentially the window becomes the wall. Window walls generally span from the top of the concrete slab right to the bottom.No other city in North America is building as many condo towers as Toronto, where they have reshaped the skyline, overshadowed once-prominent buildings such as the Rogers Centre and, in many areas, blocked Lake Ontario from view. About 130 new towers are now under construction.The other major issue is that these glass towers aren’t energy-efficient. Glass walls have been popular among developers and consumers alike because they’re cheaper than more traditional materials and make a good first impression. But they aren’t energy-efficient and come with a hidden price that could soar down the road, engineers say.Floor-to-ceiling glass walls heat up and swell in the summer, freeze and contract in winter, and shift with the wind, engineers say. The insulating argon gas between the panes escapes, the seals are breached and the windows are rendered useless against the city’s weather. Eventually, the glass walls — the skin of these condo high rises — might have to be replaced entirely, with condo owners picking up their share of the multimillion-dollar costs.&nbsp;Toronto is also seeing the high cost of retrofitting a high-rise. At First Canadian Place, a retrofit will take three years and a whopping $130 million to complete.&nbsp;Halsall Associates reported that the cost of re-skinning a residential tower could be $5 million to $10 million, which does not include additional security costs or relocation costs for residents.&nbsp;Many condo owners have no idea about the expenses they’re in for and don’t ask the right questions.&nbsp;So if you want a unit in the building that is going to appreciate over the long term and that is going g to be comfortable and energy-efficient, you need to ask tougher questions and ensure your new abode isn’t going to create major financial issues down the road.&nbsp;Typically, in a traditional (brick or panel) condo building the purchaser doesn’t need to spend a lot of money for approximately first 20 years into the ownership. After the 20 year mark, some many building features will need replacement: the boilers, the caulking [around windows], the roofing, etc.&nbsp;<figure class="table" style="width:100%;"><table style="border-color:hsl(0, 0%, 100%);border-style:solid;"><tbody><tr><td style="border-color:hsl(0, 0%, 100%);border-style:solid;width:50%;"><figure class="image image_resized" style="width:94.11%;"><img src="https://files.rifo.co/CompanySite/23/23_图片 2.jpg"></figure></td><td style="border-color:hsl(0, 0%, 100%);border-style:solid;width:50%;">Definitely pay attention and inquire about the Condo Board. Do the members have proper financial or management skills to maintain basic budgeting, accounting and purchasing/procurement standards?Check online for customer reviews about the Condo Management Company. Are they experienced, do they manage more than one property?&nbsp;If you are considering buying an existing condo, don't just scan the "Strata" or rely on your lawyer to review it. Closely check the latest reserve study, budget and past AGM minutes for clues to problems. If you have concerns, ask for a reasonable explanation. &nbsp;</td></tr></tbody></table></figure>&nbsp;<figure class="table" style="width:100%;"><table style="border-color:hsl(0, 0%, 100%);border-style:solid;"><tbody><tr><td style="border-color:hsl(0, 0%, 100%);border-style:solid;width:50%;">Moreover, the rising interest rates mean higher mortgage fees. For those with variable mortgages, ask yourself would you be able to afford double or triple the contribution to reserve fund if needed in the long run.While the calls for the provincial governments to put stricter rules in place to force condo boards to raise the appropriate amount of money for future repairs is one of the answers to these condo issues, a lot of them have to do with the quality of the developments where the developers have no incentive to build with higher quality materials.&nbsp;Be diligent when buying to make sure reserve funds for the building are adequate. Usually you are better off in the long run buying a condo than renting an apartment. Condos are more suitable to many lifestyles than owning a house especially away in the suburbs and there are maintenance risks which come with home ownership too.&nbsp;</td><td style="border-color:hsl(0, 0%, 100%);border-style:solid;width:50%;"><figure class="image image_resized" style="width:78.44%;"><img src="https://files.rifo.co/CompanySite/23/23_图片 3.jpg"></figure></td></tr></tbody></table></figure>

Condominium Reserve Fund and What to Look at When Buying a Condo in Toronto

A condominium Reserve funds have two primary purposes: 
One is to cover unforeseen emergency expenses; the second purpose is to collect funds over time to pay for major expected repairs like elevators and roofs.
Most condo boards will choose to invest the reserve funds in conservative investments where there is very little chance of a loss.  Unfortunately returns will often be less than the rate of construction inflation. Economically it might make less sense to collect funds for an expenditure far in the future in times when inflation in Canada is going thought the roof. While the official inflation numbers are at 7.7 per cent in May, the highest since January 1983. BoC issued a warning that they expect inflation to officially be over 8% and stay there a few months. The grocery bills certainly went up by 20% at the least. So Reserve Funds may be losing spending power due to inflation. The Condo board might be further ahead to plan to borrow money when needed with a ten year repayment plan. The important thing for condo owners is that they understand and agree with their board's plan for dealing with these large expenditures.


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