Understanding Capital Improvement Approval Requirements
What is a Capital Improvement?
A capital improvement is an upgrade or enhancement to a condominium corporation’s property that extends its lifespan, improves functionality, or increases value. Unlike routine repairs or replacements, capital improvements typically involve significant financial investment and board approval.
Approval Requirements for Capital Improvements
The Condominium Property Act (CPA) and Condominium Property Regulation set out specific requirements for approving capital improvements. These may include:
Board Resolution – The condominium board must approve significant capital improvements in accordance with the bylaws.
Funding Considerations – If the improvement requires funding beyond the annual budget or reserve fund, a special levy or loan may be needed.
Owner Approval – Certain major projects may require unit owner approval, especially if a special levy is introduced.
Compliance with Bylaws & Regulations – Any improvement must align with the corporation’s governing documents and applicable legislation.
A condominium corporation must ensure that any proposed capital improvement is properly funded and complies with the Condominium Property Act and its regulations.
Determining Compliance with CPA Requirements
When assessing whether a capital improvement project meets CPA requirements, condominium managers must consider:
1. Is the Improvement Necessary or Discretionary?
Necessary – Required to meet safety standards or maintain property functionality.
Discretionary – Enhances the property but is not essential for basic operations.
2. How Will the Improvement Be Funded?
Reserve Fund – Can only be used for major repairs and replacements, not discretionary improvements.
Operating Budget – If funds are available, the board may approve the expense.
Special Levy – Requires approval if additional funds are needed from unit owners.
Borrowing – Subject to CPA borrowing restrictions, board resolution, and possible owner approval.
3. Does the Project Require Owner Approval?
Some improvements may need approval through a vote at an Annual General Meeting (AGM) or Special General Meeting (SGM), as per the bylaws.
4. Are There Legal or Regulatory Considerations?
The improvement must comply with zoning laws, building codes, and CPA regulations.
If the improvement impacts unit owners, proper notice and disclosure may be required.
Developing an Approval Checklist for Capital Improvement Projects
Step 1: Define the Scope of the Project
What is the purpose of the improvement?
Will it enhance property value, safety, or functionality
Step 2: Determine Funding Sources
Is the project covered by the reserve fund, operating budget, or a special levy?
If borrowing is required, does it comply with CPA borrowing limits?
Step 3: Ensure Compliance with Regulations
Does the project comply with CPA, condominium bylaws, and local building codes?
Has the necessary owner approval been obtained (if applicable)?
Step 4: Obtain Necessary Approvals
Board resolution approving the project.
Special resolution for owner approval if required.
Review of financial impact and disclosure to unit owners.
Step 5: Monitor & Document the Project
Maintain a record of approvals, contracts, and financial transactions.
Ensure that expenditures align with the approved budget.
Conduct a post-project review to assess effectiveness and compliance.
