Reserve Funds

June 12, 2023 Published by London and Area Chapter - By Vincent L. Londini

Are Appraisers Approved and Qualified to Provide Reserve Fund Studies?

From the CCI Review 2022/2023-4 May 2023 issue of the CCI London Chapter

Q: Who is authorized in Ontario to perform Reserve Fund Studies?

A: If you didn’t answer “Appraisers”, you missed the first entry on the list! Ontario Regulation 48/01 of the Condominium Act, 1998 S32.(1) includes this list of authorized providers,

“The following classes are prescribed as persons who may conduct a reserve fund study:

1. Members of the Appraisal Institute of Canada [AIC] holding the designation of Accredited Appraiser Canadian Institute [AACI].”

“Wait a second!?! I thought Reserve Fund Studies could only be completed by an engineer.“

Don’t fret, it’s a common misconception.

Members of the Appraisal Institute of Canada (AIC) are approved to conduct Reserve Fund Studies, as we saw above. But are they qualified? Many are.

The framers of these regulations recognized that Members of the AIC are highly trained to analyze buildings & land, apply well-defined analysis methods, and can develop the relevant experience. In other words, Appraisers have the training & the tools, and may have put in the time. Let’s see what that means.

Training

Appraisers are highly trained to analyze buildings & land. Members of the Appraisal Institute of Canada must complete post-graduate university coursework amounting to a Master’s degree, covering topics that include: property analysis, investment analysis, real estate economics, and property valuation. In addition, Appraisers must complete Continuing Education each year and may also pursue certification from construction cost database providers such as RSMeans. This training helps sharpen mental acuity to handle the details of a Reserve Fund Study.

Tools

Appraisers apply well-defined analysis methods. Their training equips Appraisers with extensively studied and widely practiced analytical tools known as The Comparative Approach, The Income Approach, and The Cost Approach. Because of their experience with both the Income and Cost Approaches, Appraisers can interpret and analyze the Condo Corporation’s financial information and estimate construction costs as they relate to the Reserve Fund Study.

Putting in the Time

Appraisers can develop lots of relevant experience. Aspiring Members of the Appraisal Institute of Canada (called Candidate Members) are required to apprentice with a full Member for several years. During the apprenticeship, each report a Candidate completes must be co-signed by their mentor who reviews the case logic, application of approaches, and conclusions – signing only when ready to put their professional qualification on the line. As a result, each Appraiser has learned on-the-job, drawing from the expertise of colleagues & mentors who’ve developed in-depth knowledge of the work. Appraisers who choose to focus on Reserve Fund Study will also draw from a storehouse of prior files, cases, reports, and gathered intelligence to ensure successful delivery of each Reserve Fund Study.

Turns out…it’s true. Appraisers are Approved & can be Qualified to assist Condominium Corporations with Insurance Valuations & Reserve Fund Studies.

Vincent L. Londini, B.A., B.Sc., MBA is a Candidate Member of the Appraisal Institute of Canada (AIC), a Professional Member of CCI and a Candidate Certified Reserve Planner of the Real Estate Institute of Canada (REIC). He is currently an associate fee appraiser with Otto & Company, London and has 14 years in management consulting industry in London.

Vince undertakes market & insurance valuations as well as Reserve Fund Studies, drawing on his MBA and business analysis experience while benefiting from ongoing property valuation coursework and professional appraisal mentorship. Vince brings considerable work experience across a variety of fields, having previously served in IT management consulting for 14 years and prior to that in the religious ministry for 16 years. His roles included consulting, process improvement, market research, business analysis key account management, team management, operations, and training & development.

He is a candidate member of the Appraisal Institute of Canada, progressing towards his professional appraisal designation [AACI], and working with a designated AIC cosignor as part of his professional development. Vince’s work portfolio addresses the full range of agricultural, commercial & industrial properties with an emphasis on condominiums.