Sunday, June 07, 2009

No buildings will fall down
...why don't you walk away?

Well, readers, we had to walk away from the deal. Thursday's home inspection went incredibly well. At every turn, we were excited to hear that the inspector found only the most minor of issues. He suggested we replace the A/C unit within a few years, switch to a tankless water heater, keep an eye on the spot where the plastic-coated wiring ran just under the heating duct, caulk the kitchen countertop edge and replace the rear, basement window. The worst problem, he said, could be addressed within about 8 years without causing any real issues. I think it's fair to say that both Matt and I were already figuring out paint colours and where our furniture would go, despite our attempts to remain objective.

We got home to find a voicemail from the lawyer saying that, yes, there did seem to be a problem with the reserve fund. A review of the documentation on Friday resulted in our discovery that the reserve fund had been poorly managed since at least 2001, when the majority of the repairs and replacements to common elements were to have begun taking place. It seems that when the development was built in the early '70s, most common elements (windows, front steps, cedar shingles, roofing, walkways, roadways, parking lots, etc.) had life expectancies of about 30 years. During those 30 years, the reserve fund was continually being used to address issues such as landscaping. While the landscaping dollars were obviously being put to good use, the reserve fund was not being built in anticipation of the inevitable deterioration of the exterior structural elements of the property. So, it came to be that in 2003, the roofs of most, if not all, townhouses needed to be replaced and — while there was enough money to do that &mash; there wasn't enough money to be able to address all of the repairs which were already overdue.

So, according to the consultation which was completed in 2003, the reserve fund for the development will reach it's all-time low in 2016, when it's at a little over $4,000. It will not be fully replenished until 2035, when all the repairs (which were expected to have been completed for 2001) will finally be finished.

So, I'm glad that we were objective enough to be able to make that decision despite our excitement. I'm glad that we found a home inspector we know we can rely on. I'm glad that we've got a lawyer who keeps his eyes peeled, even under tight deadlines, for real problems with the properties we're thisclose to finalizing. I'm a little sad, 'though, that my new couch isn't going to be sitting on the East wall of that beautiful, hardwood floor on the main level.



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