In 2023, the Condo Authority of Ontario (CAO) surveyed condo corporations and owners to gain insights into the state of reserve funds in Ontario.

Here we share key findings every condo board should know about the CAOs’ reserve fund report preliminary findings released in September 2024.

Why the Survey was Conducted

The surveys were conducted following the Auditor General’s findings from the 2020 value-for-money audit on condominium oversight. The survey showed that the majority of condo corporation respondents lacked adequate reserve funds. This data raised concerns that condo boards were ill-prepared to cover the costs of future repairs and replacements.

In response to growing concerns about reserve fund underfunding, the reserve fund surveys were deployed to corporations and owners in the CAO’s data base.

Condo Corporation Findings

The CAOs’ reserve fund report gained the following insights from the 724 condo corporation respondents:

• Inflation Rates: Reserve fund studies completed between 2022 and 2023 showed an increase in forward-looking inflation rates applied to study projections compared to those in 2021.
• Reserve Fund Recommendations: 64% of respondents were advised to apply an increase of more than 3% to their reserve fund contributions.
• Following Expert Recommendations: At the time of the survey, 79% of respondents believed their budgeted contributions for their current fiscal year would meet or exceed the recommended reserve fund contributions required.
• Percentage of Total Budget: In 2023, two-thirds of respondents contributed over 30% of their total budget to the reserve fund.
• Contributions per Voting Unit: In 2023, 63% of respondents contributed over $2,000 per voting unit to the reserve fund.
• Funding Strategies: Respondents showed steep increases in common expense fees, as well as a rise in special assessments and loans as strategies to compensate for underfunded reserve funds.

The CAO suggests rising construction costs are likely the reason for increases in special assessments and loans.

Condo Owner Findings

Of the 5,986 respondents, the following differences were noted between non-director owners and current or former directors:

• Familiarity with Reserve Funds: Over 90% of non-directors were very, somewhat, or slightly familiar with reserve funds compared to 100% of current or former directors.
• Familiarity with Reserve Fund Notices: More than two-thirds of non-directors were very, somewhat, or slightly familiar with key reserve fund notices compared to over 90% of current or former directors.
• Familiarity with CAO Guide on Condo Reserve Funds: Less than 50% of nondirectors were very, somewhat, or slightly familiar with the CAO Guide on Condo Reserve Funds compared to 70% of current or former directors.

The report shows owners have a high level of awareness of reserve funds but lack awareness of the CAO’s resources on reserve funds. The CAO believes owners could benefit from greater support and awareness and plan to enhance existing materials. The authority will also introduce new resources to help increase awareness and provide further owner support.

Plans for a more thorough survey will collect in-depth insights to help increase training and resources for boards and their communities.

A property management company can inform reserve fund planning decisions based on projected construction costs and reserve fund study findings. The condo experts at CPO Management Inc, are a fully licensed, full-service property management company in Toronto and the GTA. We have the training, experience and required certifications to provide professional, effective condo management services and reserve fund oversight to your condo corporation. Reach out to us today to learn more about our condo services.