There are times when even prudence, foresight and good planning, cannot prevent significant and unforeseen challenges, and circumstances occur which are beyond a board's control. This article identifies some of these situations, and provides some general suggestions and considerations for boards confronted with these challenges.
Even with good contingency planning, boards may still encounter situations in which they incur a significant expense for which they had not budgeted. These circumstances fall into a variety of general categories, which can result from:
• Nature—such as heavier than anticipated snowfall, or damage caused by rain, windstorms, or pollution.
• Market forces—changes in the costs of goods and services, caused by economic forces, can have a significant impact on an association. Over the past several years, we have experienced this as it relates to insurance premiums. Similarly, spikes in oil prices can have a direct impact on an association's utility costs.
• Inadequate budgeting—as common elements age, they can require increasing, but unpredictable levels of maintenance or repair; this makes it difficult for boards to accurately forecast a budget for general repairs and maintenance. Another example would be a budget, which does not reflect a contractor's annual price increase already approved via a contract.