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Old 11-16-2011, 05:20 PM   #4
BMW_7
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King Luis, you are correct. I will echo someone else's comments from that article as I've done reserve fund studies before and agree with this statement:

"I think your missing the point of the reserve fund process a bit. I prepare reserve fund studies and have done so for several Toronto waterfront highrise condominiums. When they have a glass curtain wall system, the study takes into account the annual cost to replace individual panes of glass from about year 10 onward as they fail, which could be $20,000/yr initially in years 10 to 20 and increases to say $40,000/yr in years 21 to 40. Then in addition to this, it also includes a larger, more global restoration of the system in year 41. This is the project that is in the many-millions $. Then math is used to figure out what annual contribution is required every year to build up the reserve fund so that it can sustain these expenditures.
So to answer your question "How many of these properties will be able to absorb the cost with their reserve?": The ones that are handled by quality Property Management teams and who's reserve fund study is prepared by competent Professional Engineers that understand the future repair/replacement needs of buildings.
I agree with you that the lawsuit route is not something you want to rely on or have to do ever, but I assure you it will happen when it becomes clear that the management and Boards who should have been planning correctly as described above were asleep at the wheel. It doesn't pay to cheap out on Property Management or Professional Consultants. My several decades in the business has made clear to me that clients who cheap out on their consultants are the ones that will be the high risk of being negligent in their planning and as a consequence inadequate in their saving."
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