Question 1

What is a Reserve Study?

Accepted Answer

A qualified professional, such as a licensed Professional Engineer or other individual with appropriate expertise, must complete the study. The individual should have experience in building systems, construction costs, and financial planning.

A Reserve Fund Study is a professional assessment that evaluates the condition of a condominium’s common property components and provides a long-term financial plan for major repairs and replacements.

Question 2

Who can complete a Reserve Fund Study?

Accepted Answer

A qualified professional, such as a licensed Professional Engineer or other individual with appropriate expertise, must complete the study. The individual should have experience in building systems, construction costs, and financial planning.

Question 3

How often must a Reserve Fund Study be completed?

Accepted Answer

In Alberta, a Reserve Fund Study must be conducted at least once every five years.

Question 4

What happens if we don’t complete a Reserve Fund Study?

Accepted Answer

Failure to comply may result in legal or financial consequences, including potential disputes with owners or auditors, or issues during resale transactions.

Question 5

What is the difference between the Study, Report, and Plan?

Accepted Answer

Study: The technical assessment of common property.
Report: The written findings of the study.
Plan: A board-approved strategy for how contributions will be made to the reserve fund based on the study.

Question 6

What happens during the site inspection?

Accepted Answer

A qualified professional will visually inspect all common property components (e.g., roof, siding, mechanical systems) to assess their condition and remaining useful life. This is typically non-invasive.

Question 7

How long is the process (start to finish)?

Accepted Answer

The typical turnaround time is approximately 5 weeks following the completion of the site inspection, contingent upon receipt of the completed information form/payment from the association. For expedited service options, please contact our office directly.

Question 8

Will we receive different funding scenarios (e.g., conservative vs. accelerated)?

Accepted Answer

Yes, comprehensive studies include multiple funding scenarios, allowing boards to choose a contribution strategy that best suits their community’s financial comfort and long-term needs.

Question 9

How much does a Reserve Study cost?

Accepted Answer

Depends on several key factors, such as level of service required—whether it’s a full study, an update with inspection, or a desktop review—as well as the complexity of the property itself. The size of the property, including the number of units, buildings, and amenities play a significant role in estimating effort and time. Also, the location of the property impacts travel and inspection logistics, particularly for site-based studies. Seasonal demand, such as peak or off-season scheduling, may also affect pricing and availability. Lastly, the desired turnaround time can influence cost, especially for expedited requests.

Question 10

What is Percent Funded?

Accepted Answer

It is a key indicator of a property's financial preparedness for future capital expenditures. It represents the ratio of the actual reserve fund balance to the fully funded balance—the ideal amount that should be saved at a given point in time, based on the age and expected replacement cost of components. The formula used is:

Percent Funded = (Actual Reserve Balance ÷ Fully Funded Balance) × 100

A Percent Funded level of 70%–100% is generally considered healthy, indicating that the reserve fund is on track. Below 70% may signal potential shortfalls, while over 100% could suggest surplus funding. This metric helps boards and property managers evaluate the adequacy of current savings and make informed financial planning decisions.

Question 11

What is Fully Funded Balance?

Accepted Answer

The Fully Funded Balance (FFB) is the ideal amount that should be in a reserve fund at a given point in time to ensure the property is financially prepared for future major repairs and replacements. It is based on the principle of proportional funding, where each reserve component accrues its share of funding over time based on its useful life and replacement cost.

FFB = (Age of Component ÷ Useful Life of Component) × Replacement Cost

This calculation is performed for each component in the reserve inventory, and the totals are summed to determine the property's overall Fully Funded Balance.

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