Strata depreciation reports are mandatory
A strata depreciation report is an important document which provides valuable information to strata owners, buyers, mortgage providers and insurers.
A strata depreciation report includes:
- 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.
Depreciation reports required
Strata corporations with five or more units must now provide the most recent depreciation report as part of the new Information Certificate (Form B).
Depreciation reports not required
Strata corporations of four or fewer strata lots are not required to provide a depreciation report.
How can a strata be exempt?
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.
“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 3/4 vote did not pass in a given year,” says Wilson.
Who prepares a depreciation report?
Someone qualified such as an architect or engineer with errors and omission insurance.