Condominium Fees and Reserve Funds

What are Condominium fees and why do they exist?

Condominium fees are the fees that Condominium owners pay to cover their share of the common expenses associated with running a Condominium and maintaining the common property elements. Common expenses could include insurance premiums, snow removal, gardening, repairs and maintenance to common property, property management fees, contributions to the reserve fund and more.

Condominium fees are often paid monthly, and can be divided into several funds. The fees are typically set based on an estimated annual operating cost for the entire Condominium.

What is a reserve fund and why does it exist?

A reserve fund is used to pay for the major repairs and replacement of common property, such as replacing the roof or painting the outside of the building. It is regulated that the monies from the reserve fund can only pay for major expenses and not for emergencies or unexpected expenses. A contingency fund should be set up for these purposes.

All owners must contribute appropriately to the reserve fund. Typically, a portion of each owner’s Condominium fees are directed into the reserve fund on a monthly basis, but some Corporations could choose to do it by special assessment on a quarterly or semi-annual basis. Condominium Corporations may not mortgage the common elements to raise money for major repairs and replacements; they are usually funded through reserve fund fees and special assessments only.

As of January 1, 2010, all Condominiums are required to have a reserve fund. However, the Act will allow Condominium Corporations existing before January 1, 2010, to have five years to build a reserve fund.

How much money should be in the reserve fund?

For small complexes with 10 units or less, the reserve fund must be equal to the annual budget. For large Condominium Corporations with 11 units or more, a reserve fund must maintain at least the minimum amount recommended by the reserve fund study for anticipated major repairs and replacements.

What is a reserve fund study?

A reserve fund study is an analysis of anticipated major repairs and replacements that the Condominium complex will need to undergo in the next 30 years, along with an estimated budget that indicates the needed contributions.

The qualified person who completes the reserve fund study must prepare a report on the common property. It should include:

information on what may need to be repaired or replaced within the next 30 years an assessment of the current condition of the common property estimates for costs of repair or replacement a  recommendation on the amount of money that should be in the reserve fund.

Why are reserve fund studies important?

Reserve fund studies are important in helping the owners determine how they must budget for upcoming major expenses. It’s a kind of a road map that details an estimate of the future major expenses needed to maintain the common property. Should the reserve fund not have enough money to cover a major repair or replacement, the Condominium owners may be asked to pay an additional fee to cover this cost through a special assessment – and it could be substantial.



GET YOUR CONDOMINIUM NOW!!
FOR INQUIRIES PLEASE CONTACT:
RAQUEL CINENSE
(0920) 6273091
(0915) 3636381
(02) 736-1731
FOR MORE PROPERTIES VISIT:

WWW.BAHAYSHOP.COM
WWW.CONDYSHOP.COM