The Quality Advantage
Our Depreciation Reports provide a comprehensive and professional financial plan that helps to safeguard the long-term financial health of Strata Corporations and maximizes the value of individual units.
Depreciation Reports
As per the BC Strata Property Act, all Strata Corporations with over five strata lots in British Columbia must have a Depreciation Report (also known as a Reserve Fund Study) completed every three years. This Report provides a comprehensive plan for the long-term maintenance and replacement of common property and assets, which helps to minimize costs and maximize unit value.
At our firm, we specialize in completing Depreciation Reports. Our highly qualified appraisers have significant experience in costing and access to up-to-date construction costs. We provide clear displays of common property maintenance and repair schedules, forecasting, and calculate corresponding reserve funding requirements with cash flow models.
Maximize Your Investment & Reduce Risks
Having a properly funded reserve fund is critical to ensuring that the condominium corporation has sufficient funds to maintain common property over the lifetime of the development, and to reduce the risk of special assessments being required. Our services help to maximize the investment that owners have in their condominium properties, while also providing potential buyers with important information on a strata’s physical and financial health prior to purchasing.
Depreciation Report FAQ
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Who is Required to Obtain a Deprecation Report?
Since December 2011, strata corporations with five or more strata lots are required to obtain a depreciation report. The requirement can be waived or deferred by passing an annual 3/4 vote.
What is the Purpose of a Depreciation Report?
A depreciation report provides the strata corporation with information pertaining to the common property and assets with projected maintenance, repair and replacement costs over a 30-year time horizon. This helps strata lot owners protect their property values and informs prospective purchasers about the condition of the common property and assets.
What is Involved in a Depreciation Report?
A depreciation report is a financial planning tool, and one that is well thought out and accurate is very useful for decision making. An on-site inspection of the relevant areas is completed, as well as a review of all strata records, building plans, engineer reports, warranties, maintenance logs, and registered documents. This information, in combination with the writer’s experience in costing and useful service life, is compiled into two part document: a physical component inventory with evaluation, and a financial forecast with reserve fund analysis. Together this document will guide the strata council in decisions surrounding strata fees, ongoing repairs, and capital replacements.
When is a Depreciation Report Required?
A depreciation report is required every three years for strata corporations with 5 or more strata lots. This requirement can be waived or deferred by a 3/4 vote annually.
Who can Prepare a Depreciation Report?
The BC Strata Property Act outlines the qualifications for report providers as those who:
- Understand the scope and complexity of the strata corporation’s common property and assets
- Who understand the individual components
- Understand the strata corporation’s bylaws and any agreements entered into with owners respecting common property and strata lots
- Prepare a depreciation report that complies with the regulations including a physical component inventory and evaluation and financial forecasting
The depreciation report must include the name of the person from whom the depreciation report was obtained and a description of:
- that person’s qualifications
- the error and omission insurance, if any, carried by that person
- the relationship between that person and the strata corporation
What are the Benefits?
Deprecation reports are a powerful tool in the hands of a strata council when prepared by a competent individual. They save money by identifying maintenance issues before they become more expensive. This maintains the property values of the strata lot owners through well maintained common areas.
Additionally, many insurers, lenders and prospective purchasers require a current deprecation report when making their decisions. This ensures that there are not unforeseen special assessments levied against the strata lot owners for deferred maintenance on common property, which decreases the value of the strata lot by the equivalent amount.
Contact us today to learn more about how we can help you with your appraisal needs.
Our highly qualified and experienced appraisers are committed to providing our clients with accurate and reliable appraisals and reports that reflect the current market conditions.