How are Prudent Condo Reserve Fund Amounts Determined?

If you live in a condo, you understand how important the condo reserve amount is. As a condo owner, you have to contribute to the reserve fund each year in order to make sure that the building is properly maintained. Most condo properties have a lot of common areas that have to be maintained. If you want to maintain the building properly, you have to make sure that there is enough money in the reserve. Determining a prudent amount for the condo reserve is not an easy task. Here are the basics of how a condo reserve amount is determined.

Condo Reserve Study

In order to accurately determine the amount of money that they need in the condo reserve, the condo association will hire an outside company to do a condo reserve study. Depending on where the condo is located, there will usually be a few different companies that can do this sort of work. They have engineers and architects on staff that can properly evaluate the building. They determine how much it will cost to repair or maintain the building throughout the year and then make a suggestion for the reserve amount. The most common repairs and maintenance costs that must be covered are:

  • Paint
  • Landscaping
  • Lighting
  • Carpet and flooring repair (for hallways)
  • Cleaning
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