Contingency Reserve Fund
The purpose of the contingency reserve fund is often misunderstood. Even when it is understood, the conditions under which expenses may be made from the fund is often misinterpreted. This questionnaire is meant to provide a clear answer about whether an expenditure is permitted to be made from the contingency reserve fund.
Important: This form is provided for convenience only and must not be used for legal purposes. If you have any questions, please contact your agent, or seek legal advice.
Purpose of the Contingency Reserve Fund
Occasionally we hear people speaking about the contingency reserve fund (the “CRF”) as being for savings for large capital repairs. While it is true that large capital repairs are the most significant expenses that contribute to the prudency to save, the purpose of the fund is broader than that. In general terms, the contingency reserve fund is meant for common expenses that do not usually occur or usually occurs less often than once per year. In other words, the frequency of the common expense is the main deciding factor of whether the expense is meant to be paid from the CRF or the operating fund.
Answer the following questions to help understand if an expense that has just accrued is permitted to be paid from the contingency reserve fund. Alternatively, use this tool to understand what type of approval is necessary to proceed with a proposed expenditure.