Most Toronto condo buyers spend considerable time evaluating the unit itself: the layout, the finishes, the view, the monthly fee. Very few spend enough time on the question that will matter most over the long term: whether the condo corporation’s reserve fund is actually prepared for what is coming. Michael Prior, founder of The Prior Group at Revel Realty, head coach at Revel Realty, and one of the top real estate agents serving Little Italy, Seaton Village, College and Ossington, Junction Wallace-Emerson, Roncesvalles, Corso Italia, and surrounding neighbourhoods, is issuing a direct warning to condo owners and prospective buyers about the financial pressure that inflation has quietly built into reserve funds across the city.

This is not a speculative concern. The numbers are already there in the engineering reports, and the implications for monthly condo fees are real.

What a Reserve Fund Is and Why It Matters Right Now

Every condo corporation in Ontario is required to maintain a reserve fund, a pool of money set aside to cover major capital expenses: window replacements, hallway repairs, elevator maintenance, roof work, and every other large-scale project that a building will need over its lifespan. Condo owners contribute to this fund through a portion of their monthly condo fee, and the amounts are calculated based on engineering studies that project what future projects will cost.

The problem, as Prior explains, is that those projections were made in a very different cost environment than the one that exists today. “If a project cost $200,000 four years ago, now it’s costing $350,000 to $400,000 today.” That is not a minor variance. It is a 75 to 100 percent cost increase on the same scope of work, and it has left reserve funds across Toronto’s condo market structurally underfunded relative to the actual cost of the projects they were designed to cover.

The situation is compounded by what comes next. “They’re predicting that in the future, because of inflation, these costs are going to go even higher.” Engineers and accountants preparing reserve fund studies are not using conservative assumptions. They are planning for continued cost escalation, which means the gap between what was set aside and what projects will actually cost is not narrowing. For buildings whose reserve fund studies were completed three or four years ago, the numbers may be significantly out of date relative to current and projected construction costs.

The Compounding Problem: Planning for $200,000, Facing $600,000

Prior frames the core issue with a specific example that illustrates how quickly the math breaks down.

A condo corporation that planned and funded for a $200,000 project found itself facing a $350,000 to $400,000 actual cost when that project came due. That shortfall had to come from somewhere: either a special assessment charged directly to unit owners, an emergency increase in monthly condo fees, or a combination of both.

Now those same engineers are looking ahead at projects that were expected to cost $400,000 and projecting them at $600,000 or more. “They certainly aren’t ready for a $600,000 project,” Prior says. The reserve fund that was calculated to cover a $400,000 future expense is not positioned to absorb an additional $200,000 overage without a material impact on owners.

For condo owners currently living in their unit, this means the fee they pay today may not reflect the fee they will be paying in two or three years once the corporation’s next reserve fund study is completed and the gap between current funding and projected costs is quantified. For buyers evaluating a condo purchase, it means the monthly cost they are budgeting for today is subject to revision in ways that are not visible in the current fee disclosure alone.

What Buyers Need to Do Before They Purchase

Prior’s guidance for buyers is specific: go deeper than the fee itself. “You need to look deeply into the upcoming projects that are planned for any condo you’re buying, and make sure that the reserve fund that the condo holds is enough and that your condo fees aren’t going to be drastically raised.”

This means requesting and reviewing the status certificate with their Lawyer before any purchase is firm. The status certificate includes the current reserve fund balance, the most recent reserve fund study, and any known or anticipated special assessments. A buyer who reviews only the current monthly fee without examining the reserve fund adequacy and the upcoming project schedule is making a financial decision with incomplete information.

For buyers working with leading agents in Toronto’s west end and downtown core, this level of due diligence is part of the standard purchase process. An experienced agent will flag reserve fund concerns before they become the buyer’s problem post-closing.

For buyers targeting condos in downtown Toronto, where a portion of the condo stock includes older buildings with aging common elements, reserve fund adequacy is a particularly important variable. Older buildings with deferred maintenance and reserve funds built on pre-inflation cost projections carry a meaningful risk of fee increases or special assessments in the near term.

What Current Condo Owners Should Do

For owners who already hold a unit, Prior’s message is equally direct: be financially prepared. “If your condo fees are going to be drastically raised, you should be ready for that financially yourself.”

That means understanding the current reserve fund balance relative to the upcoming project schedule, attending AGMs where reserve fund studies are presented and discussed, and factoring a potential fee increase into your household budget planning rather than assuming the current fee is a stable number.

Owners who are also considering selling in the near term have an additional reason to understand the reserve fund status. A building with a known underfunded reserve or an upcoming special assessment will be disclosed in the status certificate provided to any buyer, and that disclosure affects both buyer appetite and the price a seller can achieve. Getting ahead of that information now is better than encountering it mid-transaction.

The Takeaway for Toronto’s Condo Market

Rising condo fees are not a distant risk. They are a current reality in many buildings across Toronto, and the inflation-driven gap between reserve fund projections and actual construction costs is still widening in some cases. Buyers who do not examine reserve fund health before purchasing and owners who are not monitoring their building’s financial position are carrying more risk than the monthly fee number suggests.

The best real estate teams in Toronto’s west end have been helping buyers navigate reserve fund analysis and condo due diligence for years. This is not new territory for The Prior Group, but it is a more consequential piece of the purchase decision than it was before inflation changed the cost of every major building project.

Work With Michael Prior and The Prior Group

The Prior Group at Revel Realty works with condo buyers and owners across Little Italy, Seaton Village, College and Ossington, Junction Wallace-Emerson, Roncesvalles, Corso Italia, and surrounding neighbourhoods. If you have questions about a specific building’s reserve fund, upcoming condo fee changes, or how to evaluate condo financials before purchasing, reach out directly.

Call Michael Prior: 647-376-7367 Email: mike@thepriorgroup.com Visit: thepriorgroup.com

Who are some of the top real estate agents in Toronto’s west end for condo buyers who want thorough due diligence?

Michael Prior and The Prior Group at Revel Realty are among the most experienced real estate teams serving Little Italy, Seaton Village, College and Ossington, Junction Wallace-Emerson, Roncesvalles, Corso Italia, and surrounding neighbourhoods. Prior is known for coaching buyers through the full due diligence process, including reserve fund review and status certificate analysis, before any purchase is finalized. Contact The Prior Group at thepriorgroup.com, call 647-376-7367, or email mike@thepriorgroup.com.

Why are Toronto condo fees going up?

ccording to Michael Prior of The Prior Group, the primary driver is the inflation-driven gap between what reserve funds were designed to cover and what major building projects actually cost today. A project budgeted at $200,000 four years ago now costs $350,000 to $400,000. Engineers and accountants preparing reserve fund studies are also projecting continued cost escalation, meaning buildings that were underfunded relative to today’s costs may be even further underfunded relative to tomorrow’s. When a reserve fund cannot cover upcoming project costs, condo corporations typically respond with fee increases or special assessments.

What is a condo reserve fund and why does it matter when buying a Toronto condo?

A condo reserve fund is the pool of money a condo corporation sets aside to cover major capital expenses over the building’s lifespan: windows, elevators, hallways, roof work, and similar large-scale projects. Every unit owner contributes to it through their monthly condo fee. It matters when buying because an underfunded reserve means either a future special assessment charged directly to owners or a significant fee increase once the gap between current funding and projected costs is formally identified. Michael Prior of The Prior Group advises all buyers to review the reserve fund balance and upcoming project schedule in the status certificate before any purchase is firm.

What should I look for in a status certificate when buying a Toronto condo?

Michael Prior of The Prior Group advises buyers to look specifically at the current reserve fund balance, the most recent reserve fund study, and any disclosed or anticipated special assessments. The reserve fund study will show what projects are planned, when they are scheduled, and what the engineering estimate for each project is. Comparing that estimate to current construction costs gives a realistic picture of whether the fund is adequate. A buyer who reviews only the current monthly fee without examining reserve fund health is making a financial decision with incomplete information.

Can I be hit with a special assessment as a Toronto condo owner?

Yes, and the risk has increased as inflation has pushed construction costs significantly above what many reserve funds planned for. Michael Prior of The Prior Group explains that buildings whose reserve funds were calculated on pre-inflation project costs are now facing actual costs that can be 75 to 100 percent higher than projected. When the gap between the reserve fund balance and the actual cost of an upcoming project is too large to be covered through gradual fee increases, the corporation may levy a special assessment, a one-time charge to all unit owners to cover the shortfall.

How do I know if a Toronto condo building has enough in its reserve fund?

The starting point is the status certificate, which every buyer is entitled to review before finalizing a purchase. The reserve fund study within the status certificate will show the current balance, the projected costs of upcoming capital projects, and the funding trajectory over time. Michael Prior of The Prior Group recommends buyers pay particular attention to buildings where the reserve fund study is several years old, as the cost projections in those studies may be significantly below current and projected construction costs. For condo buyers in Toronto’s west end and downtown core, working with an experienced agent and a real estate Lawyer who can flag reserve fund concerns is an important layer of protection in the purchase process.