Fledgling condo boards can become more proactive by understanding when mandatory performance audits and reserve fund studies are due. Here we clarify the difference between the two, at what stages they are required, how to prepare for them, and the importance of annual building envelope inspections.
Performance Audits
Performance Audit reports ensure warranty claims are supported under the Ontario New Warranties Plan Act. Under Section 44 of the Condominium Act, condo corporations must conduct Performance Audits on the first, second, and seventh anniversaries of the condo registration date. The first audit is scheduled six to ten months from the first anniversary to inspect the common elements for any deficiencies, substandard workmanship, and design deviations.
The audit report is filed with the condo corporation for submission to Tarion and includes a performance audit tracking summary (PATS). The PATS lists the repairs or improvements the builder must complete based on an 18-month repair schedule.
Auditor requirements:
- Certificate of authorization under the Professional Engineers Act or
- Certificate of practice under the Architects Act
How to prepare for performance audits
Follow these steps to prepare for your performance audit:
- Book an auditor: To ensure you file the report before month 11 expires, start your search early using the Accredited Appraisers or Certified Engineering Technologists of Ontario websites.
- Required records:
- Corporation declarations, bylaws, and minutes
- Mechanical and common element maintenance logs
- Site preparation: Ensure the auditor can access all common elements and facilities.
- Deficiency list: Prepare a list of known deficiencies to share with the auditor.
- PATS update: For years 2 and 7, ensure the PATS tracking summary is updated on Tarion MyHome.
Reserve Fund Studies
According to the Condominium Act, all condos require a “reserve fund” for major repairs and replacements. Reserve fund studies are a comprehensive engineering and financial analysis with a minimum 30-year timeline that ensures the fund covers predicted costs based on the following schedule:
- Year 1: A “Class 1”baseline study includes a physical site inspection of common elements, condition assessment, replacement costs, and review of historical maintenance records, financial records, and construction documents.
- Every 3 years: The study is updated every three years, alternating between Class 2 physical site inspection updates and Class 3 updated records and financial reviews.
The condo board has 120 days to review the study, propose a funding plan, and send notice of the proposal to unit residents within 15 days of completion.
Eligible auditors:
- Accredited Appraisers
- Architects and Architectural Technologists
- Certified Engineering Technologists of Ontario and Professional Engineers
- Holders of a CRP designation
- Quantity Surveyors
- Graduates of Ryerson University with a Bachelor of Technology (Architectural Science) (Building Science or Architecture option)
How to prepare for reserve fund studies
Reserve fund study preparation is similar to performance audits with the following differences:
- Class type: Check your records to confirm the study class type due.
- Required records:
- Governing documents, declarations, and bylaws
- Past reserve fund studies and audit reports
- Historical maintenance, repairs, and costs
- Current financial statements
- Reserve fund balance
- Mechanical, architectural, and as-built building drawings
- A list of recent/upcoming upgrades
- Known, issues
- Deferred scheduled repairs or maintenance
The importance of annual inspections
Aging condos share common vulnerabilities that require increasingly larger budgets to cover maintenance and restoration projects. Annual assessments by a building restoration expert allow condo boards to leverage predictive maintenance plans for effective reserve fund management, localized asset assessments to confirm project timing, and maintain comprehensive asset reporting for performance audits and reserve fund studies.
At Welldone Inc. we offer assessment and restoration plans for high-rise and low-rise condominium buildings to prolong the life of key building envelope components. Speak to our team today to learn how we can help you take a proactive approach to building maintenance.