Capital Reserve Fund Exists To Minimize Special Assessments

Q: Due to mismanagement over the years, the monthly fee on a condo my sister purchased in 2005 increased from $350 to $436 to $644 per month following an assessment in January 2015. Is this allowed? The reserve fund was not kept up until recently. What is the required amount for a reserve fund?

A: Yes, the increases in condominium fees are legal. There is nothing in the Condominium Property Act that provides any direction with respect to the required size of a capital reserve fund. The amount in the reserve fund will vary from condominium building to condominium building. The amount is generally determined by an engineer who conducts a reserve fund study and provides that information to the board. In Alberta, you are required to conduct a reserve fund study every five years. The engineer would determine that in year one, for example, the condominium corporation should replace the shingles, and the amount to replace the shingles is X amount of dollars.