Depreciation Reports for Strata properties in BC
The BC Government has recently passed a regulation that stipulates that all strata properties with more than four units must prepare a common property depreciation report. These reports are due Dec. 13, 2013.
Why are these reports necessary?
The purpose of these reports is to provide estimates for repair and replacement costs for major items such as roofs. The report will also advise of the expected life of these items. The Strata can then take the findings in these reports to make plans to build up their contingency reserve fund.
What will the depreciation report contain?
1 A physical inventory of the common property, including the building systems;
2. Anticipated maintenance, repair and replacement costs for common expenses projected over 30 years;
3. A financial forecasting section that contains at least three cash flow funding models for the contingency reserve fund.
Who will prepare these reports?
The new regulation stipulates that the depreciation report should be prepared by a qualified individual such as an engineer or architect with proper liability and errors and omissions coverage.
The depreciation report will be a valuable tool for prospective buyers to review when doing their due diligence before buying a strata property. Depreciation reports may be requested by mortgage providers when determing the financial risk assessment of a property.
For additional information on depreciation reports please visit www.housing.gov.bc.ca/strata/regs