There is often a misconception that just because a community has been recently renovated the Percent Funded Calculation in our reserve study will be very high. There is due to a misunderstanding of what Percent Funded is. This article goes into a simple example of how a reserve account can have a low percent funded level even after a recent renovation. This is not an uncommon scenario that we encounter.
Underfunding a reserve account can be particularly troubling for a common interest community as the negative consequences (special assessments, high HOA Dues) can often be pushed out years or decades with only the very few suffer the consequences.
Deck / Lanai systems have a high failure rate and are much more costly to replace when not appropriately maintained over the life of the component. A common budgeting mistake is relying on Unit Owners to maintain the decks / lanai systems thinking it is saving the Association money. In the long run we have found this is not to be accurate for the vast majority of communities we encounter.
Installing fire sprinklers or earthquake retrofits into a building can significantly improve the safety of the building and potentially save lives - but the cost can be extremely high. Should these expenses be paid for from the reserve account?
Special assessments and loans do not typically address the real issue when they are implemented and secured. These are usually temporary band aid type fixes to a much larger issue - not adequately funding the reserve account.