In a recent blog post, personal finance diva Gail Vaz-Oxlade reminds homeowners of the need to budget for home maintenance items and be ready for big costs that can arise. Good advice.
Condominium corporations typically prepare their annual budgets with reference to the reserve fund study ("RFS") mandated by section 94 of the Condominium Act. The RFS helps ensure adequate funding for the major repair and replacement of common elements. The Act requires that the RFS contain both a physical analysis of building components (including a component inventory with estimated remaining lifespan for each item) and a financial analysis as to the various costs of each item and a plan for the future funding of the reserve.
The reserve fund study does not, however, provide much guidance about routine maintenance, which leaves condo boards to make their own judgement calls and to pay the cost for such work out of the operating account. As a result, it becomes easy to justify putting off expenditures for routine maintenance when times are tough or the budget is tight.
While deferring simple maintenance might seem like a good short-term solution, that approach may be more costly in the long run.
While her comments were probably directed to owners of freehold houses, Gail says the following which is directly applicable to condo complexes of any description:
"You can skimp on your home maintenance, ignoring the cracking foundation, the rotting deck or the fence that’s falling down only so long. When it finally MUST be done, no doubt it’ll cost three to five times as much as it would have if you’d simply maintained it."
With the good weather soon upon us, condo boards and their managers should inspect their common elements from top to bottom and work with their engineers and contractors to identify components that require preventative work this season.