Thursday, November 3, 2016
IMPROVEMENT OR REPAIR, THAT IS THE QUESTION
I don't understand why my friend Gary Olman insists that replacing the Clubhouse air-conditioner is obviously a capital improvement (and thus a WPRF expense) and not a "repair" (which apparently according to our Triple-Net Lease, UCO must fund). He's very tough on Dave Israel on this issue, who Gary claims has effectively sold us down the river.
I'm not an attorney and I am not an expert on our Triple-Net Lease, but to me a capital improvement is when you add something new or intrinsically significantly better. If the Clubhouse DIDN'T HAVE air-conditioning and we added air-conditioning, that would be a capital improvement. If your condo's roof needed replacement after 18 years, and you replaced it with essentially the same kind of roof, that would not be a capital improvement.