Property Management Licensing Practice Exam · Question
What is the primary purpose of a capital reserve fund in condominium or strata property management?
Capital reserve funds are specifically established to cover the costs of major repairs and replacement of common elements (e.g., roof, windows, mechanical syste
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Question: What is the primary purpose of a capital reserve fund in condominium or strata property management?
Answer options:
- To cover daily operational expenses such as utilities and cleaning
- To provide a contingency for unexpected minor repairs ✅ To finance major repairs and replacements of common elements over time
- To distribute surplus communal funds to unit owners
Correct answer: To finance major repairs and replacements of common elements over time
Explanation: Capital reserve funds are specifically established to cover the costs of major repairs and replacement of common elements (e.g., roof, windows, mechanical systems) that occur predictably over a longer term.
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