Reserve funds and special assessments: how to judge a building's finances

Updated October 30, 2026 · 8 min read

Key takeaways

The reserve fund is the building's savings account for major repairs and replacements.
Ontario condos must have a reserve fund study done regularly, and plan contributions based on it.
What matters is whether the fund can cover the upcoming big-ticket items, not just how large the balance is.
When a fund falls short, owners pay through higher fees, special assessments, or both.

Every condo building ages. Roofs wear out, windows fail, elevators need modernising, and underground parking garages need waterproofing. These items cost hundreds of thousands, sometimes millions, of dollars. The reserve fund exists so the building can pay for them without surprising owners with a huge bill. When you buy a condo, you're buying into that fund, and into its shortfalls.

How reserve funds work in Ontario

Under the Condominium Act, 1998:

Every corporation must maintain a reserve fund for major repair and replacement of common elements and assets.
The corporation must have a reserve fund study done by a qualified professional. Studies are updated on a regular cycle, typically every three years, with full studies including a site inspection at set intervals.
Based on the study, the board adopts a funding plan setting out contributions for the coming years, and notifies owners.
Contributions to the reserve fund come out of owners' monthly fees.

Reading a reserve fund study

A reserve fund study looks out 30 years and lists each major component, its expected remaining life and its estimated replacement cost. It then projects whether planned contributions will keep the fund positive. Look for:

The big items coming up soon. Anything major due within the next five years matters most, because you'll likely own the unit when it happens.
The projected fund balance year by year. Does it ever approach zero? A plan that leaves the fund nearly empty right after a major project has little cushion for surprises.
The planned contribution increases. A study may assume contributions rise sharply. That means fee increases.
The date of the study. An older study may not reflect recent construction-cost inflation.

A big balance isn't automatically good. A building with $2 million saved but a $3 million window replacement due in two years may be in worse shape than one with $600,000 and no big projects for a decade. Context is everything.

What is a special assessment?

A special assessment is a one-time charge to owners on top of regular fees, usually because the corporation needs money it doesn't have. It might be due to an unexpected repair, a project that came in over budget, an insurance deductible, or simply years of under-saving. Assessments can be paid as a lump sum or in instalments, depending on what the board decides.

If you're buying a unit and a special assessment has already been levied, your agreement of purchase and sale should spell out who pays: seller, buyer, or a split. If the status certificate says the board is considering one, ask for as much detail as you can before you firm up.

Warning signs of under-funding

Fees that haven't risen in years while costs clearly have.
A reserve fund study that shows big contribution increases "next year" every year.
Visible deferred maintenance: water staining in the garage, worn hallways, windows fogging between panes, a dated elevator.
Board minutes discussing loans, deferrals or "options" for a major repair.
Past special assessments with no sign of the underlying issue being fixed.

Older London buildings: what to keep in mind

A good portion of London's condo stock, both apartment towers and townhouse complexes, dates from the 1970s and 1980s. Many are well run and have already replaced their original roofs, windows and mechanical systems. Others are approaching those replacements now. Neither age nor newness is good or bad on its own. What matters is where the building is in its replacement cycle and whether it has saved for it.

Newer buildings have their own consideration. Early reserve contributions are set when the building is first registered, and the first full studies can bring adjustments. New condos also have Tarion-administered warranty coverage on common elements for a limited time, which the board should be using to fix construction defects (see Tarion for the current rules).

Questions to ask

When was the last reserve fund study, and what are the biggest items in the next five years?
What's the funding plan for those items: reserves, fee increases, or assessment?
Have there been special assessments in the past ten years? What for?
How have fees changed over the last three to five years?
Is any major work planned or underway right now?

Your agent can often get the answers through the listing agent, and your lawyer will review the documents formally as part of the status certificate condition.