Ontario
Class 1 vs Class 2 vs Class 3 reserve fund studies
Ontario condo corporations need a reserve fund study every three years. A Class 1 is the comprehensive first study, a Class 3 is an update without a site inspection, and a Class 2 is an update with one. The order is Class 1, then Class 3, then Class 2, alternating every three years after that.
The three classes side by side
| Class | When it is due | Site visit | What it involves |
|---|---|---|---|
| Class 1Comprehensive study | Within the first year after registration | Yes | Full site inspection of all common elements, records review, and interviews with directors, management and staff. Sets the 30-year funding baseline. |
| Class 3Updated study, no site inspection | Within 3 years of the Class 1 | No | Updates the financial projection and component data from the corporation’s records. Keeps the funding model current. |
| Class 2Updated study with site inspection | 3 years after the Class 3 | Yes | The provider returns to the property for a visual inspection before updating the financial model. |
After the first Class 2, the updates keep alternating: Class 3, Class 2, Class 3, every three years. Every class must include a financial projection of at least 30 years, and every component with a replacement cost over $500 that needs major repair or replacement within that period.
What the board does after every study
- Within 120 days of receiving the study: propose a funding plan.
- Within 15 days of proposing it: send a Notice of Future Funding to all owners, disclosing any difference from the study's recommendations.
- Within 30 days of sending the notice: implement the plan.
- Give the study and plan to the corporation's auditor.
The cost of the study may be charged to the reserve fund under section 94(7) of the Act.
Common questions
What is the difference between a Class 1, Class 2 and Class 3 reserve fund study?
A Class 1 is the comprehensive first study, with a full site inspection, records review and interviews. A Class 2 is an update with a site inspection. A Class 3 is an update without a site inspection, based on the corporation’s records. All three must project at least 30 years.
In what order are the study classes done in Ontario?
Class 1 within the first year after the declaration and description are registered, then a Class 3 within three years of the Class 1, then a Class 2 three years after that. Class 2 and Class 3 studies then alternate every three years.
How often is a reserve fund study required in Ontario?
Every three years, under the Condominium Act, 1998 and O. Reg. 48/01. Because the updates alternate, the building is inspected on site at least every six years. The study cannot be waived or deferred.
Can a Class 3 study be done instead of a Class 2?
No. The classes follow a set sequence, and a Class 2 with a site inspection is required at its turn. Doing the wrong class means the corporation has not met its study requirement.
What must the board do after any class of study?
Within 120 days of receiving the study, propose a funding plan; within 15 days of proposing it, send a Notice of Future Funding to all owners; and within 30 days of sending the notice, implement the plan.
Sources: CMRAO, Introduction to Reserve Funds; O. Reg. 48/01. More on Ontario's requirements and our Toronto and GTA studies.
Which class is your corporation due for?
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