IS A STRATA CORPORATION REQUIRED TO OBTAIN A DEPRECIATION REPORT?

British Columbia legislation requires all strata corporations to obtain Depreciation Reports by December 13, 2013, unless they are exempt from doing so for one of the following reasons:

1.The strata corporations have four or less strata lots. 2.The strata corporations that have successfully waived the need to obtain Reports for a one year period by way of resolutions passed by a ¾ vote of the owners at their Annual General Meetings.   If the same strata corporations fail to pass similar resolutions at the next or subsequent AGMs, they will be required to obtain Reports within 18 months of the previously passed waiver.  Thus, if the votes were being held at the “next” annual general meeting and the resolutions failed to pass, there would still be six months left to obtain the first Depreciation Report.

WHAT IS THE PURPOSE OF THE REPORT? The Reports are intended to assist strata corporations in developing a long term plan for the maintenance and replacement of common property, limited common property and common assets.   They also provide useful information for strata lot owners, prospective purchasers, mortgage providers and insurance companies.

WHAT MUST BE INCLUDED IN A REPORT? The Reports must include an inventory and an evaluation of building elements and applicable components as outlined in the Strata Property Regulations, Section 6.2.  The following is an example list (not a complete list) of  elements that are to be included in the Report: •The building structure; •The building exterior including roof, decks, doors and windows; •Building systems such as electrical, plumbing, heating, fire protection and security; •Common amenities and facilities.  (Examples: a pool, exercise room and guest house.) •Parking facilities and roadways; •Utilities, including water and sewage; •Landscaping, including paths, sidewalks, fencing and irrigation; •Interior finishes including floor covering and furnishings; •Green building components; and •Balconies and patios.

The Reports must also include: •Projections of the anticipated cost of maintenance, repairs and replacements of the elements during a 30year analysis period, including the assumptions used, interest rates and inflation rates; •Three cash flow funding models, which are to provide the owners with a reasonable understanding of what funding will be available to them at the end of the 30 year analysis period.  •Estimated annual contributions to the Contingency Reserve Funds (CRF).  •A summary of the repair and maintenance work to be done (other than on an annual basis) over the next 30 years. •The date of the report; •The qualifications of the author; •His or her relationship, if any, to the Strata Corporation; and •Confirmation of errors and omissions insurance coverage. •Any other appropriate information or analysis. The report must also identify those parts of the common property and limited common property, if any, that individual owners are responsible to repair and maintain.

VISUAL INSPECTIONS: The person preparing the Report must conduct an onsite visual inspection of the strata corporation’s building(s) and their many elements; review both the common and limited common property; as well as any part of the strata lots that the strata corporation, by bylaw, is responsible to repair and maintain.

WHAT CAN YOU DO TO ASSIST IN PREPARING THE REPORTS? •You can provide documentation regarding the number of units, the year the complex was built, the number of floors, doors, windows, elevators, etc.; •talk to other strata owners about what to do and not to do; •review best practices and materials information from the CHOA, CMHC and other website; •prepare a list of questions they want to ask the author of the Report; •provide documents regarding previous repairs, maintenance, inspections, agreements with owners regarding repair of strata lots; and •provide copies of the Strata Plan, Bylaws and current Financial Statements.

WHAT WILL IT COST YOU TO OBTAIN A DEPRECIATION REPORT?

The cost depends on the size of the strata corporation.  There are many variables to estimating the cost of repairing or replacing the building elements.  The initial Report usually costs more than the subsequent updates.