Condominium communities will often have many common area components to maintenance and replace which requires a long term budgeting plan to adequate prepare for these expenses and correspondingly set the current reserve allocation rate to a realistic level.
Home Owners Associations are often hesitant to obtain a reserve study but are often the group which benefits the most from a study as the infrequent but costly common area expenses such as asphalt roads, landscape refurbishment and retention ponds are often overlooked by Board members in their budgeting to the reserve account.
Virtually all Boards and Community Members should have the expectation that HOA dues will continue to rise on an ongoing basis. This is due to inflation factors which impact the cost of construction and materials every day.
Adequate funding for the replacement of asphalt roads can be significantly impacted by a poor installation. Instead of a typical overlay a poorly installed road my need full replacement which is much more costly.
Functional Obsolescence: the reduction in the usefulness or desirability of an object because of an outdated design feature, usually one that cannot be easily changed. The term is commonly used in real estate, but has a wide application.