In Real Estate, a Contingency Fund is a reserve of funds put aside by the condo board to be used when unforeseen circumstances occur which cannot be covered by the monthly condo fees alone. The Contingency fund is funded from the monthly condo fees paid by the owners each month, of which a portion of the condo fees is set aside and placed in the contingency fund.
Unforeseen circumstances when this fund must be used include but are not limited to,
- Major building repairs
- Legallities resulting from owners or other outside parties against the building
- Cover rare instances where mutiple owners stop paying condo fees
- Major renovations of shared common areas