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Reserve Fund Contribution Levels (COF Condo Chat Question)
Question from S. MacGregor: Do Reserve Fund analyses speak to how to divide the contribution levels? Is it typically based on square footage, if not divided equally if the units are the same?
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2 Replies
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The RFS cash flow analysis seeks to determine the overall annual contributions to the Reserve Fund, and typically does not provide the exact individual unit contributions (although some providers will show the “average” unit contributions for information purposes). The individual unit contributions are determined (by the Board or Management) by applying the unit factors. The unit factors are provided on the Condominium Plan. Note: Typically, unit factor is proportional to the size square footage) of the owner’s condominium unit.
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Responsibility for condo contributions is based upon unit factors assigned by the developer when the condo plan is registered.
Unit factors are frequently based upon floor area. Still, other considerations may include potential sales price, location in the complex (higher floors are worth more in an apartment), availability to exclusive use common areas etc.
Today most developers have to be pretty open to the formulae used. However, it can be tough to find out about older complexes.
In my experience, ½ of the owners think their unit factors are too high, and half think others are too low. 😊
