All communities, big or small, are made of many of working parts. From the pavement on the ground to the roofs on the buildings, each common element connects directly to your overall property values and the monthly fees you pay as part of an association. The key to protecting your property values and keeping your monthly dues low is to care for the elements of your community to prevent them from deteriorating quickly. This practice of upkeeping your community’s common elements is known as preventive maintenance.
Each common element has its own individual life expectancy or estimated remaining useful life. Like the human body, as time passes, there needs to be upkeep to ensure that it reaches its full life expectancy.The same way we care for ourselves by eating healthy, exercising, and going to the doctor, we can practice preventive care within our communities.
What is Preventive Maintenance?
Preventive maintenance is maintenance carried out at predetermined intervals, intended to reduce the rate of deterioration of the common elements so they can reach their maximum remaining useful lives. This can mean different things, from sealcoating a parking area to prevent pavement damage before it happens or adding a protective coating to parking garages or balconies to avoid moisture infiltration.
Another important way to practice preventive maintenance is to conduct ongoing property inspections aimed towards identifying evidence of deterioration before it becomes severe. As communities age, most problems are the result of general wear-and-tear but can also result from specific factors like extreme weather conditions.
Practicing preventive maintenance will incur additional costs to the Association, but only in the short term. In the long term, it will save the Association time, stress, and ultimately money, as shown in the following example.
Say that the roofing within a community has a remaining useful life of 20 years, and a total replacement cost of $100,000. For the last 5 years, this community has been collecting $5,000 a year to be sufficiently funded to replace the roofs after the 20-year period is up.
This community, however, has not been worried about regular maintenance (i.e., never had the roof inspected nor conducted debris removal, gutter cleaning, etc.). The cost of this ongoing maintenance is not generally budgeted into a reserve study, so in this case, it is not covered in the $5,000 a year reserve funding.
After those 5 years, it turns out that due to lack of maintenance, the life expectancy has gone down to 10 remaining years when it should have lasted for 15 more years. Now, the annual funding would need to increase to make up for this reduction in life.
In this case, after 5 years, the association would have collected a total of $25,000 (5 years x $5,000). The association now needs to accumulate the remaining replacement cost of $75,000 in 10 years rather than 15, resulting in an annual increase from $5,000 a year to $7,500 a year – a 50% increase in contributions.
In addition to preventing spikes in contributions, preventive maintenance can also prevent costly special assessments down the line. Using the community in the previous example, say that instead of 10 more years, it is found that the roof is in such poor condition that it needs to be replaced immediately, otherwise it poses a safety risk to the residents.
Now the remaining cost of the replacement, $75,000, needs to be funded immediately. This would lead to the members of the association paying out of pocket to fund the replacement or taking out a loan that will accrue interest. Either way, it is not the ideal situation for this association. What could have been a regular maintenance cost budgeted into the monthly fees has now become a huge cost that members of the association now must pay out of pocket unexpectedly.
It should also be kept in mind that the common elements in your reserve study are not the only ones that require preventive maintenance. Make sure to account for all common elements or limited common elements within the community when budgeting for preventive maintenance, instead of ignoring those with longer expected remaining useful lives. As we have just seen, ignoring preventive maintenance can greatly accelerate the rate of deterioration.
When it comes time to update your reserve study, ask about including a preventive maintenance schedule. This will help maintain your property values by keeping your common elements in great condition and help minimize the potential for jumps in your reserve funding.