A Depreciation Report lets condo owners know what the state of their building and surrounding property is and what maintenance will be required over the coming 30 year period. This can include the condition of landscaping, roads, gyms, pools and other items. These reports are usually done by an external company (often an engineering firm) on behalf of the Strata Council.
Strata’s in BC are required to commission a Depreciation Report after their second Annual General Meeting and every 3 years afterwards for their condominium complex. This is not an absolute, strata’s can vote to delay a depreciation report if ¾ of the owners agree not to enter into a new Depreciation Report.
As a prospective buyer of a condo or townhouse, you will want to review the relevant Depreciation Report so that you get an understanding of what repairs/maintenance may be coming up in the near future. Repairs and maintenance can either be funded by the strata out of existing accounts, know as Contingency Funds (built up through your regular monthly strata fees) or you may be required to pay a Special Assessment because the existing accounts of the strata will not cover the expected cost. As a buyer, you should be figuring into your purchase calculations any special assessments that may be predicted in the next few years.
Depreciation reports must also include a financial forecasting section to help owners plan the repair and maintenance of the building and surrounding grounds.
Normally you would also see an accounting of the predicted maintenance and repair costs that are upcoming and at least 3 funding models on how to fund the expected maintenance and repairs over the coming 30 years.
As a prospective owner you need to know which of the funding models the strata has adopted so that you will have an understanding of your costs both on a monthly and long term basis. This information can be obtained from the minutes of the Strata Council Meetings and General Meetings.
Your Realtor is your best friend in obtaining both the Depreciation Report and the Strat Meeting Minutes and records of the Annual General Meetings. Your Home Inspector is normally happy to help you read this information and understand the important points.
