What is a Reserve Fund?
A Reserve Fund is a fund set up by the Owners Association to cover the costs of known future capital expenses. Examples of the types of items for which Reserve Funds are set aside include matters such as painting and repairing the building structure and replacement of common property items such as lifts and electric motors.
All Jointly Owned Properties are required by law to have a minimum ten-year Reserve Fund plan in place. This means that Owners Association must plan how they will repair and maintain common property and raise sufficient funds to cover the cost as the building components deteriorate over the lifetime of the building.
The amount required for the ten-year Reserve Fund plan will vary significantly between different Jointly Owned Properties. For instance, newer developments may require relatively less money to be set aside than an older development which are both registered at the same time as the older building would invariably have more repair work due and less time to accumulate the funds. Each Reserve Fund plan should reflect the individual needs of its development.