By Sharon L. Gomez CMCA, AMS Foster Premier, Inc.
Knowing your Property and your Vendors Allocating your Funds - Re – IIn addit oition to having a reserve study inin handand,, viisuasual iinspections of your property allso help to de
t l understanding the components of the d termiine areas
in need of maintenance sooner rather than later. Avid chess players may anticipate all the moves before they occur, and boards and managers can prepare for disasters by understanding the
of the important players players
they are protecting. But what happens when the unexpected occurs? You may have noticed additional work orders for various repairs of common elements. This may signal the need to push up the scheduling for replacement which would eat into your reserve savings and possibly even into the operatingbudget. In some chess tournaments, a player’s turn may be timed. The players must be ready to make quick and accurate decisions under the watchful eye of cameras and onlookers. The key to chess is to outsmart the other guy and the key to planning for future expenditures is to review your strategy by starting early. Contacting trusted vendors should be utilized to help the board minimize future losses. Making sure all building components are properly maintained and serviced at appropriate times may increase the life expectancy of those items. Community members rely heavily on the board to make important and informed decisions to protect their “castles.” Preparing a maintenance plan
plan in advance of unexpected replacements may the life of the common element comp nent asso iatio mo
ass ciat onm re tiime t to sav ve for the ese projjects.
unexpected replacements may extend po
ts and gi t
g ve the | operat n per tiing e p n expenses designate and av ioid dippiing iint does not mean the to reserves th
Rememberiing t b esignat d fofor reg lla
to use egu ar maiint
se onlly tenanc
n e hat are set asidide for capit lal
improvements is most important. It was recently affirmed that the Internal Revenue Service (“IRS”) does not consider painting a reserve expense (Revenue Ruling #75-370). This does
the association cannot allocate allocate a line line item
and continuously fund that line item yearly through their operating budget. Reach out to the association’s auditor or accountant and review governing documents to determine the best way to carry funds from one year to the next, and do so up until the year the expense occurs. Obtaining a proposal or reviewing past expenditures will give the board an idea of what painting costs will be. Your reserve study can also list painting and its expenditures as a non-capital reserve item. Planning to budget appropriately each year for painting (and other large expenditures which don’t occur yearly) by dividing the proposed cost by the number of years anticipated until the project is due and then allocating those funds on a yearly basis for the project, can prevent having to special assess residents. By allocating enough funds for specific projects, the association can avoid a potential “blunder” and cease worrying about the unexpected
“checkmate.”
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