A newly registered Ontario condominium has not yet done its first reserve fund study. Its budget calls for $540,000 in common expense contributions excluding the reserve fund, and the amount estimated under s. 93(6) as reasonably needed for major repair and replacement is $48,000. What is the minimum total reserve fund contribution for the year?
Correct Answer
D) $54,000
Section 93(5) of the Condominium Act, 1998 says that until the first reserve fund study is done and its plan implemented, reserve contributions must be the greater of the s. 93(6) amount and 10% of the budgeted common expense contributions excluding the reserve fund. Ten per cent of $540,000 is $54,000, which is greater than $48,000, so the minimum is $54,000.
Why This Is the Correct Answer
$540,000 x 10% = $54,000, which exceeds the $48,000 estimate, so $54,000 is the required minimum.
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