The answer to this question is not a simple yes or no. Every year associations should review their reserve study and evaluate all components with a zero remaining life. But it may not be necessary to replace all of them right away. An important question to ask if you are not going to replace the component is: If we delay replacing this component could it cause additional costs to the association. An example would be painting a metal fence. If an association defers painting a metal fence it could cause the fence to rust which might result in them having to replace the fence which is much more expensive than just painting it. On the other hand, an association may have older furniture in their clubhouse that has a 0 remaining life in their reserve study. The association may decide that the clubhouse doesn’t get much use so they are going to defer replacing it until next year. In this case, there is no risk of additional cost to the association.
Let’s look at the example of a water heater with a zero remaining life in a reserve study. Many associations use the if it isn’t broke don’t fix it approach with this component and wait until it breaks to replace. They should keep in mind that if the water heater breaks how long can the building go without hot water. Is it possible that local vendors don’t have the specific water heater readily available and must special order it? Associations could incur additional costs for rush delivery or installations.
All homeowner associations have different standards of what their common area components should look like. The important thing to remember is to update your reserve study annually and to review all components remaining lives. This gives you a good list of what components need to be replaced or repaired right away and which components will need attentions soon.