True Functions of a Reserve Fund Study
Remi Network has prepared an excellent article discussing the true functions of a reserve fund study and how the reserve fund study should be interpreted. In general there are 3 ways in which a study can be misinterpreted or misused.
1. The life expectancy of the components is a long-term estimate for the condo corporation to put aside money so that the future replacement is funded ahead of time.
2. It is not an annual 'to-do' list for capital replacement. Again, it is to ensure that funds are available when the time for replacement comes. The items should not be replacement until they fail or approach failure.
3. The estimated cost for replacement is not going to be 100% accurate. The estimate made today is based on circumstances that are known today and thus will be a rough estimate for something that needs replacement in 10 years.
That is why it is a good idea to update or evaluate your reserve fund study more frequently than the 3 to 5 year required updates.
See the detailed article by REMI Network at https://www.reminetwork.com/articles/right-approach-reserve-fund-studies/
