Depreciation reports now required for most stratas

(January 28, 2014 , posted in Real Estate Resources)

Strata Properties VancouverStrata corporations with five or more units must now provide the most recent depreciation report as part of the new Information Certificate (Form B).

Strata corporations of four or fewer strata lots are not required to provide a depreciation report. A strata corporation can exempt itself from the obligation to obtain a depreciation report by passing a resolution with a 3/4 majority vote at an annual general or special general meeting.

The strata corporation then has 18 months from their last exemption vote to either hold another vote providing for a further exemption or obtain a depreciation report.

“This means a strata corporation not wanting a depreciation report will have to waive its requirement at each annual general meeting, according to Ed Wilson, a partner with Lawson Lundell law firm.

“In practice, this means that, if votes to exempt are being held annually at annual general meetings, there would still be about six months left to get a depreciation report done if the ¾ vote did not pass in a given year,” says Wilson.

The depreciation report must be:
  • prepared by someone qualified such as an architect or engineer with errors and omission insurance; and
  • updated every three years.
  • The depreciation report provides important information to owners, buyers, mortgage providers and insurers. The report must include:
  • an on site inspection and inventory of the common property and building systems;
  • a schedule of anticipated maintenance, repairs and replacement costs for common expenses projected over 30 years; and
  • a financial forecast which includes costs and cash-flow funding models for the contingency reserve fund.
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