So the Depreciation Report is Done for a Strata Corporation, Then What?
As you might already know, strata Depreciation Reports are now legally mandatory in British Columbia, and strata properties with five or more than five units are required to complete a common property, limited common property and common assets Depreciation Report by December 14, 2013, or hold a 3/4 vote to waive the requirement.
So what does this legislation mean for strata owners and strata management companies?
Behind the Depreciation Report
In an ideal world, strata owners would have enough useful information about their property and be prepared for future common and limited common property and system deterioration through proactive planning instead of reactive response.
Reactive repairs generally cost two to five times more than corrections and repairs made in a planned and scheduled environment. Like Tony Gioventu from The Condominium Home Owner’s Association (CHOA) has stated, it’s either “pay now, or pay much more later on.”
Say good bye to Special Levies
The new strata depreciation reporting law is also intended to eliminate ongoing and future Special Levies which been known to create problems and stress for various unit owners that are “blindsided” by unexpected expenses. Owners can now plan for and anticipate maintenance and/or repairs accordingly.
The depreciation report or reserve fund study (what it's called in other jurisdictions), provides strata owners with information about the condition of the building they invested in and help them be proactive and plan for future.
In other words, the Depreciation Report is a powerful tool that helps strata councils in self-managed stratas, or strata agents come up with a comprehensive to-do list for long-term maintenance and repair of strata properties. Nobody wants a bad surprise!
The report also helps strata management companies determine the proper contributions needed for the CRF (Contingency Reserve Fund), which is supported by strata fees and used to maintain and renovate strata property.
Transparency for Prospective Buyers
It also helps prospective buyers make more informed decision before they invest their money in a strata property. It might have happened to you or somebody you know, that even before you start enjoying your life in your purchased unit, you get notified by your strata council or management company that something just came up or is broken and you need to pay this large amount of money as your share to fix the issue in the complex. We've been there and it was not fun at all!
What if we’re just not yet ready to commit?
A strata corporation can defer a depreciation report by passing a yearly resolution with a three-quarters majority vote. However, the resolution to exempt the strata from preparing a depreciation report has an 18-month time limit, so the resolution must be re-passed by three-quarters vote on a periodic basis in order to continue to defer the report.
Deferring the preparation of a depreciation report can also negatively affect the marketability of strata units as well as the ability of potential buyers to obtain mortgage funding or current owners to obtain refinancing.
A look into the dark side
While a Depreciation Report can be a powerful planning tool for any strata’s Owners Group, some owners consider it a waste of money and would rather avoid the expenses and recommendations for maintenance and repair associated with the report.
There are also challenges for strata management firms, who may struggle to find an accessible, user-friendly, secure and efficient way to create and follow the long term strata maintenance plan.
What if we had an easy solution?
You need to plan for the preventive and corrective maintenance with the help of prepared depreciation report; otherwise the report has no value by itself if it gets ignored, which of course doesn't do any good for strata corporations.
So how can the PowerStrata solution help?
PowerStrata software provides an easy and efficient way to create and maintain a detailed plan for all maintenance types based on the depreciation report. This powerful solution not only conforms to British Columbia regulations, but is also user-friendly and efficient, saving you time, frustration and money.
Whether you decide to do the depreciation report or defer it, you still need to have a thorough maintenance plan in place, and you need to be able to follow it closely.
Contact Us to Get Started
If you care about the quality of living in your strata corporation, or in case you are a strata management company and the quality of service to your strata corporation clients is important to you, contact us to see how we can help you achieve this goal efficiently.
We are hoping and trying hard to help BC become the best in strata/condominium management industry.
Our mission is to provide peace of mind to strata owners, council members, strata management companies, and other concerned groups.
So let’s start making a better community together.
Useful Resources Related to Depreciation Reports and Maintenance:
- The Office of Housing and Construction Standards - The Guide on Depreciation Reports
- Condominium Home Owners Association of BC (CHOA) - What a Strata Corporation Needs to Know about Depreciation Reports
- Building Asset Management Bulletins on CHOA's website - Produced in partnership with CHOA, RDH Building Engineering Ltd. and the Real Estate Foundation of BC: