Is Your Community’s Time Running Out?
The end of the year is fast approaching. Now is the time to get everything in order if your community is required to complete a Structural Integrity Reserve Study (SIRS). (Learn more about the requirements here).
Many communities are facing special assessments following the completion of their SIRS due to deferred maintenance. A special assessment is a one-time charge that condo owners must pay to cover unexpected expenses that are not covered by the regular condo fees. These expenses can arise from a variety of issues such as emergencies, repairs, renovations or litigation. The Board of Directors may issue a special assessment without the approval of individual owners.
Follow our steps to arm yourself with the knowledge to prepare for your SIRS.
Preparation and Expertise is Key
1. Get your community’s paperwork in order.
The SIRS should look at life expectancy, warranties and quality of work to ensure each building component will last the anticipated life expectancy. Getting all of your community’s paperwork in order helps the inspector have a better understanding of your community’s history. Start compiling building and engineering plans, copies of any work done on the property (past and present), copies of previous inspection reports, records of permits, and other infrastructure specific paperwork.
2. Evaluate the expertise of your inspector.
Your inspector should have a good understanding of both construction and engineering – including how water impacts a building. This expertise becomes essential to properly assess the condition of the building and the remaining life of its components. Otherwise, you run the risk of under or overvaluing the work that needs to be done, which can have long-lasting impacts on your association’s reserves.
Repair vs. Replacement Can Save Your Community Thousands of Dollars
Repair versus replacement can save your community thousands of dollars, depending on the state of your buildings. An inspector with a background in construction can more accurately diagnose your community and assess whether repair or replacement is needed. We recommend repairs whenever possible and opt for replacements when necessary to save your community both time and money.
Long-Term Impacts of Your SIRS
For communities questioning your SIRS report, your association can get a second opinion on a SIRS. However, please be aware that by getting a second opinion, that does not mean the reserve funding is going to change. There is a chance both reports will come to the same conclusion. If there is a difference in the reports, you will have to choose between the two opinions and follow it accordingly.
Your decisions today will impact your community’s future. Your association is required to budget accordingly for all structural items outlined in the SIRS in any budget adopted on or after December 31, 2024. The Board will not be allowed to decrease or waive reserve funding for these items. So an accurate SIRS assessment and budgeting plan is essential for the financial health of your community.
See how the funding plays out with these examples below:
• $1,000,000with a 15-year roof warranty = $66,500/year deposited in reserves
• $1,100,000with a 25-year roof warranty = $44,000/year deposited in reserves
• $300,000with a 5-year painting warranty = $60,000/year deposited in reserves
• $380,000with a 10-year waterproofing warranty = $38,000/year deposited in reserves
The goal here is to keep building issues small and invest logically to save more money in the long run.
December is coming up quickly! True Property Inspections has more than two decades of expertise in the condominium reconstruction business. If your community is in need of a SIRS, reach out to us for a free consultation.
