Should we Reserve Funds for X? National Reserve Study Standards
A component should be funded through the Reserve Fund if it meets the National Reserve Study Standard four-part test:
- Is a common area maintenance responsibility.
- Has a Useful Life Limit.
- Has a Predictable Remaining Useful Life.
- Is above a minimum threshold cost.
When there is a major component that we know will have some related expenditures but where predicting the size and timing of those expenditures are difficult, we often provide the association an “allowance”, meaning a sum of money every few years to handle estimated periodic expenses related to the component.
Is Tile Roof Replacement an Appropriate Reserve Component?
In prior years, we regularly handled tile roofs as a very extended life component with only the expectation to provide an “allowance” (as described above) for periodic local repair and replacement projects. Tile Roof lifespan varies on a number of factors, and we adjusted the alllowance-maintenance schedule based on our observations.
Yet at Association Reserves, our projections are strongly influenced by what we observe among our clients.
Recently we have noted that a significant number of clients with older tile roofs have experienced the need for total replacement of their underlayment due to age, dryness, brittleness, and lack of providing a waterproof membrane. This tile roof underlayment replacement project involves removing the tiles, removing and replacing the underlayment, and replacing the tiles (expect approximately a 5% breakage factor).
Looking more critically through our client base, we now believe an undeniable body of evidence directs us to conclude an underlayment replacement project is a responsible expectation for tile roof owners.
In California, we would expect a typical Useful Life in the 30-year range. While less costly than a total tile roof replacement project, underlayment replacement is rather costly. Underlayment replacement cost varies regionally.