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Point / Counterpoint .

Should associations fully fund reserve accounts today for anticipated future capital expenditures?

Like all things in life, condominium operations encompass many shades of grey. The questions that readers send to New England Condominium often fall into that range, where a simple answer is not always a complete one. From time to time, this column will ask members of our Editorial Advisory Board to put forth the arguments on both, or multiple, sides of these issues.

This month, we asked two of our board members, who have decades of condominium experience, to explain why associations should fully fund reserve accounts for every anticipated capital expenditure, and why many associations take a less-aggressive funding approach to reserves — potentially leading to a “surprise” assessment down the road.

Ralph Noblin, PE

Noblin & Associates, LC, Consulting Engineers, Bridgewater, MA & Dover, NH

Yes, full funding is the way to go

Why would a condominium association plan to fail? The finances associated with condominium living are complex and extensive. Anyone who has owned a home for an extended period knows that certain areas require “upkeep.” For example, most townhouse condominium associations built in the 1980s have already undergone major replacement projects involving, to name a few, roofing, siding, decks, pavement, fencing, and retaining walls. Although the useful lives of these items are not entirely predictable, enough real world data exists that allows predictions to “begin the discussion.”

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