Strata Management Licensing Practice Exam · Question
Why is a well-funded contingency reserve fund (CRF) or reserve fund crucial for a condominium corporation?
The contingency reserve fund is specifically designed to accumulate funds over time to pay for anticipated major repairs and replacements of common property tha
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Question: Why is a well-funded contingency reserve fund (CRF) or reserve fund crucial for a condominium corporation?
Answer options:
- To reduce individual owners' property tax obligations.
- To pay for routine monthly utility bills. ✅ To cover the cost of major repairs and replacements of common elements that occur less frequently than annually.
- To provide a bonus payout to the board of directors each year.
Correct answer: To cover the cost of major repairs and replacements of common elements that occur less frequently than annually.
Explanation: The contingency reserve fund is specifically designed to accumulate funds over time to pay for anticipated major repairs and replacements of common property that occur infrequently, preventing the need for large special assessments.
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