Aging Infrastructure in Condominium Complexes

The Surfside Condominium collapse continues to resonate through the industry sounding the alarm about the health of building’ s infrastructure. Many boards are still operating in the dark underfunding reserves in the hopes that we won’t have a failure. Other boards feel comfortable in having $100,000 plus in reserves that they can handle repairs. The reality is that when an association has foundation issues the initial costs will quickly eat up the current reserves and everything else will be funded with special assessments.  With older buildings in many cases the initial symptoms (cracks in the concrete for example) are only the beginning of a longer expensive repair project.

What can association do get ahead of these issues? Early detection and preventive maintenance come to mind. I recommend that all larger associations have a maintenance committee that visual inspect the property on a regular basis and have a maintenance plan. Today lenders and insurer’s are looking for condominium associations who have a maintenance plan and are following it. They will check the budget to see what is being spent and meeting minutes to see if the board is making decision regarding maintenance. They also want to see the reserve study and see if it is being followed. For associations that are deemed unfundable   https://www.paccrestreserves.com/what-is-the-fannie-mae-unavailable-condo-and-co-op-list/   this will have a significant impact on property values and the sell-ability of the units. Most mortgage companies look to be able to resell the loans they make. If they are unable to sell the loan then it become high risk and their are fewer buyers interested in it.

 In Washington State every 3rd year an association has to have an onsite inspection. CAI or Community Association Institute is now promoting  structural inspections to coincide with the standard reserve study inspection. While some owners may feel this is overkill, we know that buildings within 3 miles of a salt water environment (ie. Puget Sound) wear differently than further inland. Many of these buildings are over 30 years old and have never had a structural inspection since they were built.

Our recommendation for all condominium complexes is to have a maintenance committee and develop a plan to maintain the infrastructure. The plan should be updated on a yearly basis. Second step would be to review your reserve study and make sure the calendar of events matches the maintenance plan.