So you’re Association faced with doing a renovation project – where do you start? The first place the Association should start with is the Declaration – the association attorney can help ensure that the Board is complying with the Declaration’s requirements.
1. Following procedures: the Association attorney can help ensure that the Board follows proper procedures. A Declaration will typically have requirements for meetings and voting that has to take place before the project work can begin, and the association’s attorney can guide the Board through the process of meeting those requirements.
2. Multiple bids: sometimes a Declaration will state that the Board is required to get multiple bids from contractors before selecting one vendor and beginning work. While it may not be required, we recommend that the Board gets multiple bids in order to compare them and decide which contractor will best fulfill the Association’s needs.
3. Vote of the owners: Will the project meet or exceed the thresholds stated in the Declaration that requires a vote of the owners? The thresholds will depend on each Association’s governing documents, but limits can be anywhere from $5,000.00 - $15,000.00 per unit. Generally speaking, it’s going to take a super-majority vote to opt not to do a renovation project, and it’s also going to take a super-majority vote to decide to do a renovation project.
4. Repairs vs. Capital Improvements: a repair is where the Association is replacing “with like kind material(s)”, while a capital improvement is adding something new – like a swimming pool. There is a potential gray area when a defective product is replaced with different and improved product (for example, defective siding replaced with better quality siding), so we recommend for these situations that the Board does follow the Declaration’s procedures.
5. Damage and Destruction: typically there is a provision in the Declaration titled “Damage and Destruction”; this section may apply due to the type of damage or deterioration that has occurred.
6. Separate Budget: does the Board need to pass a special assessment or another type of provision in order to fund the renovation project?
If your Association is facing a renovation project and you have any questions, please let us know. And, if you have any questions we can answer, please feel free to leave a comment or contact us directly. We look forward to continuing this conversation with you in our future posts!