A 15-year-old condominium complex with 80 units is undergoing an updated Reserve Fund Study. The study projects that in the next 20 years, major repairs and replacements totaling $3,200,000 will be required. The current reserve fund balance is $800,000. If contributions are to be spread evenly over the 20-year period, what is the annual average contribution required from each unit, assuming equal unit factors?

Question: A 15-year-old condominium complex with 80 units is undergoing an updated Reserve Fund Study. The study projects that in the next 20 years, major repairs and replacements totaling $3,200,000 will be required. The current reserve fund balance is $800,000. If contributions are to be spread evenly over the 20-year period, what is the annual average contribution required from each unit, assuming equal unit factors?

Answer options:

• $1,500
• $2,000 ✅ $2,500
• $3,000

Correct answer: $2,500

Explanation: The total unfunded amount needing to be covered is $3,200,000 - $800,000 = $2,400,000. Over 20 years, the annual required contribution is $2,400,000 / 20 = $120,000 per year. Divided among 80 units, this is $120,000 / 80 = $1,500 per unit per year. The initial options were incorrect, so recalculating based on the projected needs. This highlights a critical calculation for reserve fund adequacy.