Real Estate Council of Alberta Fundamentals Practice Exam

How often must a reserve fund study be completed for a new condominium?

1. Every year

2. Within 1 year

3. Within 2 years

4. Within 5 years

The correct answer is: Within 2 years

The requirement for completing a reserve fund study for a new condominium is established to ensure that property owners have a clear understanding of the long-term maintenance and repair needs of the condominium, along with the associated costs. A reserve fund study provides critical information that helps in planning for financial contributions to the reserve fund, which is essential for the proper upkeep of the property over time. For new condominiums, the law mandates that a reserve fund study must be conducted within two years of the project's registration. This timeline allows for an initial assessment of the property's condition and helps identify the estimated future repair and replacement costs along with the required reserve fund levels to meet those costs. This ensures that the condominium corporation is well-prepared to manage its financial responsibilities right from the start, as the condition of the building and its common areas can change considerably in the first few years after construction. Completing the study within this specified timeframe facilitates informed decision-making for the management of condominium finances and enhances accountability to the unit owners. This structured approach to financial management is critical for the sustainability of the condominium over the long term.