A tale of one condo
The 2011 Reserve Fund Study called for several garage repairs. The roof deck needed to be uncovered, repaired and a new membrane installed. The suspended slab needs repairs and garage also has delaminated concrete and cracks.
What happens when that work gets postponed and then is postponed once again?
So in eight years, a $1.2 million cost for garage work grew to $9.3 million.
Take a good look at Item 1.5.2. In 2011, it starts off costing $540,000. In 2016, it gets pushed out eight years and the estimated cost grows to $1.3 million. In 2019, Item 1.52 gets pushed out another 15 years and the price jumps up to $6.1 million.
A $600,000 roof deck project (Items 1.6.2 & 1.6.3) turned into a $2 million expense.
You’d never suspect that there was three professionals, including an accountant, on that condo Board.
Costs are measurable
Pushing the repairs out into the future gets expensive.
You don’t need more than primary school arithmetic to figure out what affect pushing major repairs out into the future has. Every year this condo’s Reserve’s are taking a bigger share of the condo’s revenues.
In 2012, 30% of the monthly common expense fees went into the Reserves. Seven years later, 43% of the monthly fees go into the Reserves. It will not be long before the Reserves will be needing 50% of the contributions.
By pushing the expensive repairs into into the future, the owners of this condo are paying for that decision. Every year the price goes up.
Mistakes that can’t be undone
The financial mistakes of the past cannot be undone. The best you can hope for is that an owner, or a group of owners, spends time reading the Reserve Fund Studies and understands what has happened. Then you hope that the owners start holding the directors responsible to implement major repairs, not push them out into the future.
If these lessons have been learnt great. If that is too much to expect, sell your unit and give this ticking time bomb to someone else.