Deferred maintenance refers to the practice of postponing necessary repairs and maintenance activities on real estate properties. This neglect typically results from budget constraints or prioritization of financial resources toward other projects, and it consequently leads to physical depreciation.
An Inspection Addendum or Clause is an agreement within a real estate contract that allows a buyer to inspect the property before finalizing the sale, enabling negotiations or cancellation based on inspection results.
A maintenance reserve is a fund allocated by property owners or a property management entity specifically for maintaining and repairing a property. This financial reserve is crucial to ensure that a property remains functional, safe, and visually appealing over time.
Repairs refer to work performed to restore a property to its original condition without extending its useful life. This term is distinct from capital improvements, which add value or extend the life of the property. In the context of income property, repairs are considered an operating expense for accounting and tax purposes.
