Capital Improvement Projects
Before proceeding with a capital improvement project, an association must first perform a careful review of the governing documents to ensure that the proposed project is considered a capital improvement. Once it is established that an association requires a capital improvement, the association must assess its financial position and determine whether a loan is necessary. Financial lenders often collaborate with legal counsel to ensure that loan is financially and legally appropriate.
After ensuring that there is a capital improvement project and the funding necessary for the project, associations must review the governing documents to determine what, if any, owner approval is necessary to proceed. Often times, associations rely upon legal counsel to draft the appropriate ballots and proxies to obtain owner approval.
Finally, the association has both unit owner and lender approval to proceed with the capital improvement project. Since capital improvement projects are often complex, associations will hire an engineer to oversee the project and contractors to perform the work. In order to hire these professionals, lengthy contracts are often proposed by the engineer and contractors and, typically, reviewed by legal counsel to confirm that the association is properly protected should an issue arise.
By following the governing document’s requirements with respect to capital improvement projects, ensuring that unit owner approval is properly obtained, and the association is properly protected, the association ensures that the obstacles that arise are significantly diminished.