November 2016
Nobody wants to live under a leaky roof
“He who fails to plan is planning to fail”
Sir Winston Churchill
Planning for the future is hard. There are always things that must first be dealt with today.
In condo buildings planning for the future is even harder. After paying for what needs to be done today, some feel that building up a surplus, such as a reserve fund, is taking money away from owners that could be better used by them.
The reserve fund pays for building infrastructure that requires future repair or replacement. That 20 year old roof, expected to last 30 years, may need to be replaced in five years at a cost of $1 million. Raising $1 million is difficult. When three or four projects of this magnitude need to be undertaken around the same time that $1.5 million reserve fund no longer seems adequate.
Then there are those windows to be replaced, cracks in the pavement that need to be repaired, and water leaks to be sealed. There are common areas to repaint, building equipment to repair and security cameras to replace.
The list never ends.
Your reserve fund is a compilation of estimated repair and replacement costs over the next 30 years. It estimates when specific work is likely to be necessary. The study is updated every three years.
Planning for the future is essential. The alternative, which few can afford, is to pay the exact amount required to undertake necessary repair and replacement when needed.
When funds are lacking, necessary repair and replacement is delayed or ignored. More problems and higher costs result. While this may be an acceptable option in a single family home short on funds, it is unacceptable for a condo community where each has agreed to contribute necessary funds to ensure sustainability.
A special assessment is one option condo corporations have when funds are in short supply. When assessed, it is an obligation that condo owners must pay when demanded. The special assessment is the result of a failure to adequately plan. As difficult as it may be for a board to acknowledge failure, or the failure of prior boards, by implementing a special assessment it is preferable to running out of cash or being forced to borrow money – which must then be repaid with interest.
For more information on water issues, see the Condo Archives – Condo Building Management, subheadings Water Issues and Infrastructure.
For assistance identifying vendors who can assist with water infiltration, Condo Resource Guide can help. Look under Energy Services and Roofing.
