If you are buying a strata held property in BC then it is likely that you’ll be given a depreciation report to review. Strata depreciation reports are a relatively new requirement in BC with legislation requiring strata councils to provide them coming into effect in 2011. The requirement for these reports was introduced as a means to provide strata councils with a planning tool for large capital repairs while giving prospective home buyers an accurate snapshot of the condition of the property they are purchasing.
Strata councils with 5, or more, units are required to vote on getting a depreciation report every year but have the ability to opt out. This means that not all strata councils will be have a depreciation report, particularly the newer developments that are still under a new home warranty, and smaller developments with less than 20 units.
A strata depreciation report is typically an 80-100 document prepared by an engineering firm for the purpose of assessing the physical condition of the structures on the building and the associated components. The document is extensive, containing images of the components with written details including the age of each component, the condition, estimated useful life and replacement cost.
Provincial regulations require that a depreciation include an inventory and evaluation of a building’s common property elements including:
- exterior (such as roofs, roof decks, doors, windows and skylights),
- systems (such as electrical, heating, plumbing, fire protection and security); and
- common amenities (such as fitness room, pool, bike lockers etc) (Baragon, Ellen, Jan 8, 2021).
A strata depreciation report is an important tool in helping you assess the condition of the property you are buying. This is particularly important as prospective home buyers are rarely given access to mechanical rooms to assess the condition of the building elements that they will be soon be responsible to pay to repair.
Depreciation reports can be tricky to read as they are long, detailed and technical. Furthermore they tend to offer the owners several options to fund capital projects. The reports are often several years old and it can hard to tell what recommendations have been adopted by the strata council. This can be further complicated by a strata council, or property managers that are not immediately available to answer questions about the documents presented.
This is where it pays off to have a great realtor, such as myself. When you purchase a home, I review the depreciation report, the strata documents and the financial statements of the strata you are buying into. I explain the reports to you in a way that makes it simple and straightforward to understand. If there is something of concern in the documents such as an upcoming assessment or a major repairs on the horizon, then I bring this to your attention.
Thinking of buying or selling a strata held property in BC? Get in touch today and I’ll help you find a home that is in great repair.
For more information about Depreciation Reports in BC check out the link below:
Baragon, Ellen. Jan 8, 2021. Strata Depreciation Reports: What REALTORS® and Clients Need to Know. BCREA Practice Tips. Accessed on Feb 28, 2021. Accessed from: https://www.bcrea.bc.ca/uncategorized/strata-depreciation-reports-what-realtors-and-clients-need-to-know/