Why Maintain The Condo Reserve Fund – Uses Include Future Expenses Or Current Deterioration

Condo boards typically view reserve funds as existing to pay for future expenses, but a better approach is to view the fund as addressing ongoing deterioration. Repairing deterioration on an ongoing basis eliminates the need to think about future expenses. Reserve fund expenditures are necessary to offset ongoing deterioration, which can cost up to 40% of a condo corporation's budget. When a reserve fund has enough money to replace each component of the building at the end of its useful life, it is described as fully funded. Condo owners may oppose a fully funded reserve fund because it increases monthly condo fees.