Depreciation Reports: IMPORTANT NEW REQUIREMENTS FOR STRATAS

If you're planning to buy a strata property, it's important that you read strata council minutes, engineering reports and the strata depreciation report, where there is one in place.

What is a strata depreciation report?

It's a report that estimates the repair and replacement costs for major items in the strata corporation and the expected life of those items.

Thanks to the advocacy efforts of the Real Estate Board of Greater Vancouver, the BC Real Estate Association and many strata associations, the BC Real Estate Association and many strata associations, the BC government passed regulations to the Strata Property Act in late 2011, which made strata depreciation reports mandatory in some cases.

Depreciation reports required

Strata corporations with five or more units were required to complete a depreciation report by Dec 13, 2013 and must update their depreciation report every three years.

Depreciation reports not required

Strata corporations of four or fewer strata lots are not required to provide a depreciation report. What does a strata depreciation report include?

* An on-site inspection and inventory of the common property and building systems.

*A schedule of anticipated maintenance, repairs and replacement costs for common expenses projected over 30 years.

* A financial forecast that includes costs and cash-flow funding models for the contigency reserve fund.

How can a strata be exempt?

A strata corporation can exempt itself from the obligation to obtain a depreciation report by passing a resolution with a three-quarters majority vote at an annual general or special general meeting.

The strata corporation then has 18 months from their last exemption vote to either hold another vote or create a depreciation report.

Who prepares a depreciation report?

Someone who has the knowledge and expertise to understand the individual components, scope, and complexity of the strata's property. Often, professionals such as engineers, architects, or appraisers have this expertise. In all cases, the professionals should have errors and omissions insurance.

For more information contact Carmen Leal Real Estate at 604-218-4846 or email carmen@carmenleal.ca

YOURS,

Carmen Leal

Real Estate Services

604.218.4846