Strata Property Owners and Prospective Buyers – What You Need to Know About Depreciation Reports
If you are looking to buy a strata property in Victoria BC, or if you own and are considering selling your strata property, you should know about the recent regulations passed by the Provincial Government of BC regarding strata property depreciation reports.
As of December 13, 2013, all strata properties with more than 4 units must complete a common property depreciation report. This report should be prepared by a qualified professional (usually an architect or engineer) and must include the following:
- A physical inventory of the common property, including building systems;
- Projected maintenance, repair and replacement costs for common expenses over 30 years; and
- A financial plan including at least three cash flow funding models for the contingency reserve fund.
For both strata property owners and prospective buyers the depreciation report is beneficial because it confers a sense of stability for the future, an understanding that the inevitable costs of common property maintenance are being addressed rather than being ignored until some crisis that could prove costly, even dangerous.
If you are planning on selling your strata property it will be advantageous to have a depreciation report to show prospective buyers. The Strata Property Disclosure Statement even contains a specific inquiry about the depreciation report, so buyers will certainly be asking for it!
Whether you are buying or selling a strata property in Victoria BC, you should investigate the strata property depreciation report so that you understand how well the strata corporation you are involved with is addressing the long-term maintenance of the common property you are investing in. For more information, read the article by Brian Taylor; Depreciation Reports: Coming Soon to a Strata Near You
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