Special Collaboration by François Chicoine, Real Estate Broker, Sutton Immobilia
All condo owners are aware of these terms, but few really know what they mean. The contingency fund or reserve fund is contributed to by all owners under the annual budget. The amount accumulated in the fund must be used solely for major repairs and replacement of parts in the common areas. Maintenance and special expenditures are excluded.
The administrators must deposit these contributions in a bank account separate from the operations account. The law provides that the contributions must equal at least 5% of the annual budget. In general that amount is insufficient, so we recommend 10% or even 15%. To assess the condition of the building, we suggest having a certified inspector inspect the common areas after the term of the developer’s warranty, or every five years.
Administrators may adjust the annual budget based on maintenance or replacements to be made and thus avoid special assessments. Please note that your contributions to the fund remain in the account when you sell your condo unit.
The special assessment is the bad news in condo life. Often this is the only way to finance a significant project or work resulting from a major unforeseen event. Administrators can request a special assessment at an annual meeting, or they may call a special meeting for this purpose.
Contrary to popular belief, no vote is taken. As with the annual budget, the administrators have the final say in applying a special assessment and setting the terms of payment. The role of co-owners is limited to the request for information and recommendations.
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