Reserve Funds

September 10, 2025 Published by Toronto and Area Chapter - By Sophia Rojenko, Stewart Handrahan

With Great Leased Space Comes Great Responsibility

From the Summer 2025 issue of CCI Toronto Condovoice Magazine.

Site Description

The site consists of a 35-storey tower, with over 500 units built around 1990. There is a multi-level parking garage under the building, as well as an above grade portion which has an amenity terrace as a roof.

The building is atypical in that it does not have any balconies, and the parking garage is owned by a freehold parking entity.

The corporation leases the roof space – an amenity terrace – above the parking garage. The terrace is built up over the garage roof slab and includes concrete paver finishes, planters, pergolas, and furniture.

Reserve Fund Assumptions

The previous reserve fund study (by others) did not include any expenditures related to the amenity terrace, nor did it indicate that the reserve fund planner assumed that the corporation had any obligations for maintenance of the terrace and waterproofing membrane above the roof slab.

The Reality

When the authors first became involved in the reserve fund study, the lease agreement was reviewed, along with the declaration and reciprocal agreement, to understand responsibilities for repairs and maintenance. According to the lease agreement, the “lessee” (i.e. the condo corporation) is responsible for repairs and maintenance of the parking garage roof slab, including the waterproofing membrane.

At the time of the reserve fund study site visit, access to the parking garage level directly under the terrace was arranged and the slab soffit was reviewed for signs of leakage. Several leaks were found. The waterproofing membrane was believed to be original based on the general condition of the finishes above. Repair strategies were considered but the decision to budget full replacement of the membrane within the near term was made given the current level of leakage, age of the system, and the condo’s desire to renew the terrace finishes. As a result, a $3 million project was added to the reserve fund plan, that was not considered by the previous study.

Lessons Learned for Reserve Fund Planners

• Core documents such as the declaration, reciprocal agreements, and other relevant documents should always be reviewed by the reserve fund planner when preparing a reserve fund study. In many cases, properties are managed based on the status quo, due to misunderstandings of the original agreements, or worse, word-of-mouth exchanges that have slowly-but-surely evolved with the passing of time. Reviewing the documents ahead of the site visit helps keep things streamlined.
• When a corporation’s property - or, as in this case, leased space- is located adjacent to a separate entity, it is important to clearly understand boundaries. According to the lease agreement in this instance, the corporation is responsible from the top side of the concrete garage roof slab, including the waterproofing membrane, overburden, and surface finishes. However, in other cases a corporation may only be responsible for the surface finishes. If the agreement is unclear or ambiguous, you should recommend that the corporation seek input from legal counsel.
• Although the parking garage under the terrace belongs to a separate entity, the only way to assess the condition of the roof membrane is from the underside. In this case, access to another party’s space will need to be arranged.

Takeaways for Board of Directors and Property Managers

• It is important to provide your reserve fund study planner with relevant agreements that the corporation is a party to.
• Ensure that your reserve fund study planner is granted access to all necessary areas during their site visit, even those belonging to a separate party, if that access is required to assess components for which your corporation is responsible. If access involves another party, it’s important to arrange this in advance to provide adequate notice.
• Terms and conditions of agreements can vary significantly. Where an agreement may have an impact on reserve fund contributions, the agreement must be carefully interpreted and where anything remains ambiguous, seek help from the appropriate professionals.

Sophia Rojenko Synergy Partners
Stewart Handrahan Synergy Partners