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Repairs etc, not to be construed as Capital Improvements. Act, Section 28
I am going around in circles trying to understand this phrase. I know we have Mtnc in our Reserve Fund. We have improvements/ upgrades and some major road repairs in our RF Report, so are these not capital improvements because the are in our Fund Report. I cannot understand the following statement which seems to me contradictory. Can someone clarify this section. I cannot get my head wrapped around this for some reason.
“For the purpose of this Part Sec38 of the Act, a repair to or replacement of depreciating property that is carried out by the corporation is not to be construed as a capital improvement if that repair or improvement is a matter that was included in the current reserve fund report that was prepared and submitted to the corporation.
The repair or replacement is in the RF along with all the other capital assets. Then we are not to construe this as a cap improvement if it is in the fund. OM goodness I am so confused. LOL. Can someone help me out of the swamp?
Thanks
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1 Reply
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You can have capital improvements listed in the reserve fund study.
Not that I’m an expert, but that wording that you quoted creates clarity around how to administer work that is described in the reserve fund study. Because there are restrictions in legislation regarding capital improvements, so this wording is just saying not to apply capital improvement restrictions to any work that is listed in the reserve fund study. Hope that makes sense.
It’s a pretty well known ‘loophole’ that if the corporation wants to carry out capital improvements, for example replacing wood siding with hardie board siding, that the condo board should list this capital improvement in the reserve fund study. Because otherwise there are administrative hurdles in legislation that makes it really difficult for corporations to raise funds to carry out capital improvements.
