Keystone Blog

Depreciation Reports (aka Reserve Fund Studies) for all Strata Corporations in the Province are now mandatory. These regulation changes introduced by the BC Provincial Government in December 2011 will impact not only strata corporations but will also have a huge impact on the real estate industry as it will change the way these properties are bought and sold. I expect that there will be consideration given to them in the risk assessment of mortgage providers and therefore, in financing decisions but also in risk assessment by insurance providers.

In a News Release by the Condominium Home Owners’ Association of BC (CHOA), Tony Gioventu, Executive Director, says:

“These regulations will have a dynamic impact on B.C.’s strata community. The requirement for a depreciation report will considerably affect the way a strata corporation in B.C. plans for its future. Strata corporations will now need to be proactive with their financial forecasting and future repair and maintenance planning”.

Strata corporations will have until December 13, 2013 to obtain a depreciation report or hold a ¾ vote to exempt themselves. Strata corporations with less than five units are not required to prepare a depreciation report or hold a ¾ vote to exempt themselves.

Further, Form B now also adds that the most recent depreciation report, if any, must be provided to prospective purchases by March 01, 2012.

A Depreciation Report, also called a Reserve Fund Study, is a comprehensive study of the common physical components within a strata corporation, including an inventory and summary of all necessary renewals and maintenance for the next 30 years, plus a financial plan for the future. We all know that as buildings age there are cost incurred to maintain the common property and assets of the strata corporation. A depreciation report provides a strata corporation with the tools it needs to properly and accurately plan for the future.

Keystone Appraisals provides this service through our sister company, Vision Property Advisors Inc. Vision Property Advisors are fully accredited Certified Reserve Fund Planners (CRP), who have completed a comprehensive course of study on Depreciation Reports and Reserve Fund Planning through the Real Estate Institute of Canada. For more information check out Vision Property’s website or the link to Keystone’s Insurance page.

If you would like to know more about Depreciation Reports and impact to the real estate industry, please give us a call and we would be happy to discuss or arrange to speak at your company meetings. Besides strata corporations, organizations that may find the changes of interest to their industry include real estate companies, financial institutions, insurance companies, etc.

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