The Board of Nottacare Condominium has just convened to discuss a painful but avoidable issue, a special assessment. The roof is five years overdue for replacement and many of the temporary patches have failed, drenching four different units repeatedly. Mary in 1A has made many desperate appeals that something be done and Bob in 4B peppers his demands with four letter Anglo-Saxonisms. The other two owners are talking to their lawyers. There is a smell of tar in the air. And as bad as it is for these residents, the cure will be painful for one and all.

Nottacare's situation is not unlike that at many HOAs across the country. Nottacare's failed roof is what accountants call "an unfunded liability". A liability is a debt or obligation, in this case, the obligation is to replace a roof. Unfunded means there is no money to fulfill that obligation. Do the math: UL + $0 = MSA. (Unfunded Liabilities + No Dough = More Special Assessments) Caramba!

Most HOA boards trip merrily along seemingly oblivious that all things wear out, ignoring the high costs of imminent repairs, failing to prepare for those events and clueless how to overcome being clueless. Denial is not a river in Africa. It's a deadly mindset that not only leads to erosion of HOA assets and home values but also creates a pervasive mistrust, hostility and resentment within the community. So at Nottacare Condos, some are wailing "Raindrops Are Falling on My Head" and all are steamed because here comes another unwelcome and unfair special assessment!

Okay, you get the picture and it ain't pretty. But the good news is that Nottacare is a mythical place and your HOA is real and the Board fully prepared to meet these challenges. What's that you say? You just had a special assessment or the Board's talking one up as we speak? Holy guacamole! Don't they know that special assessments are the product of poor planning? Don't they know they penalize innocent victims (the current owners) that are forced to pay for former owners who bailed out before the ax fell? Don't they know a properly funded reserve study could have avoided all of this and made them heroes instead of zeros?

A reserve study is a scientific approach to analyzing future repair and replacement needs and charting a maintenance and funding plan that the Board, the manager and members at large can follow with ease. It answers the bottom line question "How much is enough?" The funding plan shares costs fairly among all owners, not just the poor suckers who get stuck at special assessment time. And with money in the bank, the Board will never have the excuse of not doing things when they need doing. No more Raindrop Water Torture. The place will look so good, you'll never want to move!

Denial is a dangerous place to be. There is lots of turbulence waiting to munch the Board in denial. Before you round the bend and meet face to face with avoidable catastrophe, investigate the benefits of a reserve study.

For more information on Reserve Planning, subscribe to www.Regenesis.net.

Published: July 31, 2002

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Richard Thompson owns Regenesis, a management consulting company that specializes in condominium and homeowner associations. He is a nationally recognized expert on HOA management issues. Regenesis publishes The Regenesis Report, a monthly newsletter for HOA boards, developers and managers. To subscribe, go to Regenesis.net. He can be contacted by email at .