Reserve Fund During Emergency

A corporation (that is not controlled by an interim board) may transfer funds in the reserve fund into the operating fund if certain conditions are met. These conditions are:

• An emergency is declared, which means:
  • An emergency declared under the Emergencies Act (Canada)
  • A state of emergency or state of local emergency declared under the Emergency Management Act
  • A state of public health emergency or local state of public health emergency declared under the Public Health Act
• The declaration of emergency, state of emergency, state of public health emergency remains in effect.
• The condominium corporation has received lower revenue from contributions compared to the revenue expected from contributions levied on owners because of the emergency.
• As a result of the lower revenue, a shortfall exists between received revenue and payable expenditures from the operating fund.
• The condominium corporation’s bylaws do not prohibit the use of the reserve fund in this way.

There is a maximum amount that the corporation can transfer from the reserve fund to operating fund. The amount must be whichever less of:

• The difference between the lower revenue received from contributions and the revenue expected from contributions levied on owners
• The actual shortfall between received revenue and payable expenditures from the operating fund or
• Any limit that may be in the corporation’s bylaws on using the reserve fund in this way

Before transferring funds, the board must take several required steps. The board must serve a notification to owners with:

• A statement of the board’s intention to transfer the reserve funds
• Notice of the date when the board intends to make a decision
• A description of any alternative considered to transferring the funds and the reason why the alternative was not adopted and
• A proposed revision to the reserve fund plan identifying the:
  • Amount of reserve fund being transferred to the operating fund and
  • A specific repayment plan that will be used to repay the amount transferred from the fund within 2 years of the date the declaration or state of emergency has ended

In addition, the board must pass a resolution with a 75% majority of directors eligible to vote that authorized the transfer to the operating fund and approved the proposed revision to the reserve fund.

Finally, the board must also serve notice to owners confirming that the changes to the reserve fund plan have been adopted and provide the revised reserve fund plan to owners.