September 21, 2021

Volume XI, Number 264

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September 20, 2021

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Condo Association Boards: Plan for the Future by Staying Ahead of Maintenance and Repairs

If you serve on the board of a condo association, you’ve likely seen instances of kicking the can down the road and deferring needed maintenance and repairs. Allocating and reserving funds for repairs can be a difficult, complicated process, and coming to a decision about these issues can easily lead to tensions between board members and neighbors.

Even so, it’s important to take steps now to ensure the adequate repair and maintenance of your building. Deferred repairs and insufficient reserves can lead to greater and more urgent expenses down the road—as well as jeopardize the safety of your residents and put you at risk of legal liability.

Maintain adequate reserves

One of the most important things you can do as a condo association is to ensure you have adequate reserves on hand for needed repairs. Inadequate reserves can easily lead to deferred repairs and leave you in the uncomfortable position of needing to collect large special assessments from residents on short notice.

The recent, unfortunate disaster in Surfside, Florida demonstrates some of the issues that can arise when a condo association lacks the reserves they need to make necessary repairs. Although the condo board at Champlain Towers South knew that repairs were needed, they had only $800,000 of the $15 million needed to cover repair costs available in reserve.

Because the association’s reserves were insufficient, board members were forced to propose hefty special assessments to cover the costs, leading to tensions between board members and residents and resulting in the deferral of necessary maintenance and repairs.

Making sure that you have sufficient reserve funds available for future repairs can help you avoid similar pitfalls and stay on top of building maintenance. Some states also have legal requirements that condo associations keep adequate reserves on hand.

Scheduling regular reserve assessments

One way you can help to ensure that your association has adequate reserves is to make regular assessments of the reserve funds needed for big-ticket items.

Depending on the state, these reserve assessments may even be legally required: condo associations in California, Colorado, Delaware, Hawaii, Nevada, Oregon, Utah, Virginia, and Washington State are required to conduct regular reserve studies.

Don’t defer on maintenance and repairs

It’s always tempting to put off paying for maintenance and repairs, especially when funding is tight, but taking a proactive approach to maintenance will save you money in the long run, help you to avoid liability concerns, and keep your residents satisfied and safe.

When regular maintenance and repairs aren’t scheduled, repair costs can quickly turn into replacement costs—and replacing a piece of equipment is almost always more costly than simply keeping it maintained.

In fact, the replacement of equipment or structural components in your condo will typically cost you several times the amount you would have paid in regular maintenance. Waiting to make repairs only when absolutely necessary also means that you’ll be forced to work on a shorter timeline when drastic issues do occur, meaning that you may have to spend additional money on overtime or expensive third-party contractors.

In order to avoid emergency maintenance fees, experts suggest that you should devote between two and six percent of your annual budget to preventative maintenance. Setting aside a budget for regular maintenance now will save you money and hassle in the future and help you avoid surprising repair costs.

Prioritize safety concerns

Deferring repairs can also endanger your residents and put you at risk of liability.

While liability for injury or damages suffered on unit property often falls on unit owners, condo associations are liable for injuries caused by “common elements,” including the building’s structural foundations, load-bearing walls, and any other property that is owned and shared by all unit owners. If a common element in your building poses a safety risk to residents or visitors, your association likely has a moral and legal obligation to make changes or repairs.

Condo associations also need to ensure that their buildings are compliant with federal, state, and local safety codes. In addition to endangering residents, unaddressed code violations can end up costing you in legal fees, and trying to address code violations and avoid fines at the last minute can lead to additional overtime costs.

To avoid potential fees and keep your residents safe, your association will want to act as quickly as possible to resolve any known code violations or safety concerns.

Plan for the future today

Condo associations that proactively plan for the future can save money, reduce the risk of potential liability, and increase their residents’ safety and satisfaction.

COPYRIGHT © 2021, STARK & STARKNational Law Review, Volume XI, Number 237
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About this Author

A. Christopher Florio, Stark, New Jersey, Loan Transactions Lawyer, Community Associations attorney
Shareholder

A. Christopher Florio is a Shareholder and Chair of the Community Associations Group. Mr. Florio has substantial experience in the negotiation of loan transactions, collections, workouts, and real estate law, including foreclosures.

Mr. Florio has served as a member of the New Jersey Assembly Task Force, commissioned to study community associations in New Jersey. He was appointed to the position by General Assembly Speaker Chuck Haytaian and again by General Assembly Speaker Jack Collins. Additionally, he currently serves on the Legislative...

609-895-7335
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