In December 2011 the Strata Property Amendment Act brought changes to the Strata Property Act requiring all strata corporations in B.C. to obtain a depreciation report within 2 years after the act came into force.
Although a depreciation report is costly to the strata corporation, it is a vital tool for the strata councils to plan ahead for future repairs, maintenance and replacement of the common property. A depreciation report provides detailed projections of costs, which allows the strata council to plan ahead and consider how future costs will be paid, whether through increasing strata fees or by special assessment.
It is possible for a strata corporation to “opt out” of obtaining a depreciation report for 18 months, although it must be by a ¾ majority resolution no later than December 13, 2013. After the 18 month opting out period, the strata corporation must then obtain a depreciation report.
The depreciation report is usually prepared by a professional engineer, surveyors or architect, and can be done by an appraiser or other real estate professional. The report will set out the lifespan of the building, in particular the lifespan of the structure, exterior such as roof and decks, electrical, heating and plumbing and the anticipated costs over the next 30 years. The report will calculate the projected costs and provide different scenarios for budgeting for those costs.
The following is an excerpt of the Strata Property Act
94 (1) In this section, "qualified person" has the meaning set out in the regulations.
(2) Subject to subsection (3), a strata corporation must obtain from a qualified person, on or before the following dates, a depreciation report estimating the repair and replacement cost for major items in the strata corporation and the expected life of those items:
- (a) for the first time, the date that is 2 years after the coming into force of this section;
- (b) if the strata corporation has, before or after the coming into force of this section, obtained a depreciation report that complies with the requirements of this section, the date that is the prescribed period after the date on which that report was obtained;
- (c) if the strata corporation has, under subsection (3) (a), waived the requirement under this subsection to obtain a depreciation report, the date that is the prescribed period after the date on which the resolution waiving the requirement was passed.
(3) A strata corporation need not comply with the requirement under subsection (2) to obtain a depreciation report on or before a certain date if
- (a) the strata corporation, by a resolution passed by a 3/4 vote at an annual or special general meeting within the prescribed period, waives that requirement, or
- (b) the strata corporation is a member of a prescribed class of strata corporations.
(4) A depreciation report referred to in subsection (2) must contain the information set out in the regulations.