In British Columbia, under the Strata Property Act and its regulations, all strata corporations with five or more strata lots must obtain depreciation reports. This requirement aims to ensure that strata corporations can effectively plan for the maintenance, repair, and replacement of common property and assets over time.
Purpose of Depreciation Reports
Strata corporations are responsible for maintaining and repairing common property. This report provides vital information about the common property and assets, along with projected costs for maintenance, repair, and replacement over 30 years.
Common property isn’t just limited to buildings; it includes landscaping, roads, recreational amenities, and more. Even bare land strata corporations, responsible for infrastructure maintenance, need these reports.
Overview of Updated Regulations
Effective July 1, 2024, new regulations strengthen the requirements for strata depreciation reports. Key points include:
All strata corporations with five or more lots must obtain a depreciation report on a five-year cycle.
Strata corporations can no longer defer getting a depreciation report through an annual 3/4 vote.
Strata corporations without reports or with reports dated before December 31, 2020, have specific deadlines to obtain them.
Content Requirements
Depreciation reports must contain:
Physical Component Inventory and Evaluation: This includes a detailed inventory and evaluation of common property components, considering their service life of over 30 years.
Financial Forecasting Section: This helps plan for future maintenance costs, including projected expenses and funding models for the contingency reserve fund.
Qualifications for Report Providers
Starting July 1, 2025, only designated professionals—such as engineers, architects, and certified appraisers—can prepare depreciation reports. Providers must understand the complexity of the strata corporation, its bylaws, and have expertise in creating compliant reports.
Access and Retention of Reports
Depreciation reports must be attached to the “Form B: Information Certificate” and provided to buyers. Strata corporations must also retain all relevant reports and documents for reference.
Conclusion
Depreciation reports are crucial for strata corporations to ensure the long-term maintenance and financial sustainability of their properties. By adhering to updated regulations and obtaining comprehensive reports, both current and prospective owners can make informed decisions and protect their investments. For a more in-depth review, please reach out Jared Gibbons!
Written by Jared Gibbons – Top 1% Realtor in the Fraser Valley.
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