Definition
The reserve fund is a financial reserve built by the condo corporation to finance upcoming major work on common areas (roof, foundations, façade, elevator, mechanical system, parking).
Since Bill 16, Quebec corporations are required to have a reserve fund study conducted by a professional (engineer or building technologist), establishing a long-term financing plan over 25-30 years. The corporation must contribute annually according to this plan.
Funding levels: - **Well-funded** (>70% of recommended amount): healthy situation, low risk of special assessment. - **Partially funded** (30-70%): monitoring required, likely contribution increase. - **Underfunded** (<30%): alarm signal — high risk of an unforeseen short-term special assessment.
Mortgage impact: lenders increasingly request corporation financial statements for condos. An underfunded reserve fund or an ongoing special assessment can lead to loan refusal or restrictive conditions. When purchasing, the building inspector and notary must obtain the corporation's financial statements.