Depreciation reports are critical tools that help strata corporations in British Columbia navigate their responsibilities towards maintaining and repairing common property. The recent regulatory updates, particularly through OIC 204-2024, have significantly enhanced these requirements. Let’s delve into the purpose of depreciation reports and the updated regulations to gain a thorough understanding of their significance.
Purpose of Depreciation Reports
The primary purpose of a depreciation report is to provide strata corporations with a roadmap for managing their common property and assets effectively. Here are key aspects of depreciation reports:
1. Asset Inventory and Evaluation: Depreciation reports include a detailed inventory and evaluation of common property components, assets, and infrastructure. This assessment spans over a 30-year timeframe, projecting repair, and replacement costs.
2. Common Property Definition: Common property encompasses more than just buildings. It includes landscaping, roads, recreational amenities, utilities, and various other elements crucial to the strata community’s functionality and appeal.
3. Protection for Strata Lot Owners: Depreciation reports empower strata lot owners by providing insights into anticipated costs and maintenance needs. This knowledge helps protect their investments and prevents surprises from unexpected special levies.
4. Transparency and Information Sharing: Depreciation reports offer valuable information not only to strata members but also to prospective buyers, mortgage lenders, and insurance providers. They promote transparency, accountability, and informed decision-making within the strata community.
Updated Depreciation Report Regulations
The updated regulations, effective July 1, 2024, bring significant changes and requirements for depreciation reports:
1. Mandatory Depreciation Reports: Strata corporations with five or more lots must obtain depreciation reports on a five-year cycle, starting from July 1, 2024. Those with four or fewer lots remain exempt.
2. Prohibition on Deferral: Strata corporations can no longer defer obtaining depreciation reports through an annual ¾ vote, emphasizing the necessity of proactive financial planning.
3. Transition Period: Strata corporations without existing depreciation reports or with reports received before December 31, 2020, have a grace period to comply: – Until July 1, 2026, for areas like Metro Vancouver, Fraser Valley, and Capital Regional District. – Until July 1, 2027, for other areas in British Columbia.
4. Designated Professions: Effective July 1, 2025, depreciation reports must be obtained from six designated professions, ensuring expertise and professionalism in asset evaluation:
– Engineers
– Architects
– Applied Science Technologists
– Certified Appraisers
– Certified Reserve Planners
– Quantity Surveyors
5. New Strata Corporations: Strata corporations established after July 1, 2024, but before July 1, 2027, must obtain a depreciation report within two years of their first annual general meeting and every five years thereafter.
6. Owner Developer Funding: From July 1, 2027, owner developers must contribute towards the first depreciation report for new strata corporations with five or more lots, ensuring financial support for initial assessments.