Is Your Community Association “Patching & Praying” or “Reserving for Repairs”?

Funding Reserves is Important Too!

Is “Patching and Praying” a substitute for the line item Reserve for Repairs in your community association’s budget?  Many community association budgets are being stretched thin due to lower revenues and rising owner delinquencies.  In order to combat this trend, Boards are either borrowing from their reserves to operate, not fully funding their reserves, or not making the necessary repairs and replacements that are deemed to be necessary by either state statute or by their documents.  Instead these associations are patching and praying that their common elements will hold up.  In the future, this type of operating philosophy may have dangerous consequences for the unit owners.  Let me explain.

The association documents and the state statutes require that associations and their Boards of Directors, in their fiduciary capacity, maintain the common elements and the assets of the association.  It is the Board’s duty and responsibility to protect those structures and to not do so may have further negative consequences for the unit owners.  To not maintain the structures of the association may cause further deterioration and require additional expenses due to this neglect.  Nowadays, we see more Boards of Directors ignoring these issues as a means to get through this difficult economic period of time. 

There are owners and members who run for their Board in their community association on a platform to keep assessments low and repairs and replacements to a minimum.  These individuals are not looking out for the association’s long term benefit, but rather they have personal, selfish short term reasons for this operating philosophy.  Under-funding reserves and not making the necessary and proper repairs will not maintain or increase the values of the units in your association.  If an association begins to “patch and pray”, it will be the owners who will eventually end up paying a lot more in terms of higher costing repairs, replacements and lower unit values. Do a service to your community and do not allow your association to “patch and pray”.

Tagged as: deferred maintenance, Maintenance, reserve for repairs, reserve funding