Reserve Funds
Under The Life Leases Act, a reserve fund is a fund used to pay for the repair or replacement of major items like a roof, heating and plumbing system, or parking facility. The landlord can decide how much money to have in the reserve fund. There is no minimum amount required.
Is every life lease complex required to have a reserve fund?
No. Only non-profit life lease complexes must have reserve funds. Before the landlord and a tenant enter into a life lease agreement, the landlord must tell the tenant how much is in the reserve fund. For a new life lease complex, the landlord must set up the reserve fund by the occupancy date of the complex.
At the annual meeting of the life lease complex, the landlord must tell the tenants how much is in the reserve fund. The landlord must also show how much was deposited into the fund and how they’ve spent any money taken out. The landlord gives this information to the tenants using a Reserve Fund Disclosure Form (Schedule K.1).
Can a landlord use a reserve fund for anything other than major repairs?
A landlord may use the reserve fund to cover any unexpected cost or shortfall in revenue for the complex. For example, if there are vacant units, the landlord may use money from the reserve fund to offset the loss of rent.
In rare cases, after a rent review, the Residential Tenancies Branch may order the landlord to use money from the reserve fund to operate the complex. The Branch may do this to reduce the amount of the tenants’ rent.
| PreviousNext |
