The purpose of a Depreciation Report is to ensure there are sufficient funds available to make major repairs to, or replace the common element components and assets of the Strata.
A CDW Engineering depreciation report complies with British Columbia regulation 43/2000,
made under the revised Strata Property amendment act, 2009.
Changes to the regulations came into effect on December 13, 2011. These changes now make
obtaining a depreciation report mandatory for Stratas, with the following exceptions:
- Strata corporations of 5 units or less are exempt from obtaining mandatory Depreciation Reports
- A Strata corporation may consider exempting itself by passing a 3⁄4 vote resolution
every 18 months
WHEN DOES A DEPRECIATION REPORT NEED TO BE DONE?
The first depreciation report must be done within 2 years (by December 2013),
as per Section 94.2(a) of the Strata Act.
Updates to the Depreciation Report are required every 3 years, as per Section 94.2(b)
of the Strata Act and Section 6.2(7)(a) of the regulation.
WHAT A DEPRECIATION REPORT MUST INCLUDE:
- A physical component inventory of the common property
- A summary of repairs or replacements necessary that usually occur less often than once a year
- A financial forecast for anticipated repairs, covering a 30-year period
- The name of the person who performed the work, including their qualifications, insurance coverage and relationship to the Strata
- The date of the report
- Other information deemed to be appropriate
COMPONENTS TYPICALLY INCLUDED IN A DEPRECIATION REPORT:
- Exterior – roof, roof decks, windows, skylights, cladding
- Major Common Systems – electrical, heating, air conditioning, plumbing, ventilation,
fire protection, and security systems
- Common Amenities and Facilities
- Parking Facilities and Roadways
- Utilities, including water and sewage conveyance components (contingencies)
- landscaping, including paths, sidewalks, fencing and irrigation
- Interior Finishes, including floor coverings and furnishings
- Green Building Components
- Balconies and Patios
THE FINANCIAL FORECAST MUST CONTAIN:
- The anticipated repair or replacement costs
- The report assumptions, including interest rates and inflation rates
- A description of how the contingency reserve fund is currently funded
- The current contingency reserve fund balance (less any approved expenditures
not yet paid for from the fund)
- At least 3 cash flow funding models for the contingency reserve fund over the next 30 years.
The cash flows may include any special levies or borrowing, as deemed necessary.
QUALIFICATIONS FOR THE PERSON PREPARING THE DEPRECIATION REPORT:
Unfortunately, the qualifications for the person preparing the report were not specified. As such, it will be up to Property Managers and Strata Councils to exercise due diligence when selecting a firm to prepare the Depreciation Report.
In other provinces, requirements for qualifications include:
- Members of the Appraisal Institute of Canada holding the designation of Accredited Appraiser Canadian Institute.
- Persons who hold a certificate of practice within the meaning of the Architects Act.
- Members of the Association of Certified Engineering Technicians and Technologists
who are registered as certified engineering technologists
- Members of the Real Estate Institute of Canada holding the designation of Certified Reserve Planner
- Persons who hold a certificate of authorization within the meaning
of the Professional Engineers Act
- Members of the Canadian Institute of Quantity Surveyors holding the designation
of professional quantity surveyor.
Further, there were no stipulations of persons who cannot prepare the Depreciation Report.
There could be a conflict of interest for certain parties to be directly involved with the preparation
of the report. Again, other provinces have some prescribed exclusions, including:
- A director, officer or property manager of the corporation
- Directly or indirectly, have an interest in
- A contract or transaction to which a director or officer of the corporation is a party in a capacity other than as a director or officer of the corporation, or
- A proposed contract or transaction to which a director or officer of the corporation will be
a party in a capacity other than as a director or officer of the corporation;
- Be the spouse, same-sex partner, son or daughter of a director or officer of the corporation,
or son or daughter of the spouse or same-sex partner of a director or officer of the corporation
- An owner
- A person who lives on the property managed by the corporation
REASONS TO CHOOSE CDW ENGINEERING:
- Consulting Engineers – CDW Engineering has the expertise that will provide the professional advice you can trust and depend on
- Experience – CDW Engineering has over 20 years experience helping Boards make informed
and correct decisions
- Specialization – CDW Engineering specializes in Building Condition Assessments and Depreciation Reports; no follow-up services are provided, thereby ensuring unbiased professional information with no conflict of interest
- Value – Prompt, professional service. Accurate and informative studies including easy to follow tables summarizing the findings of the report
To view a sample Deprecation Report for a Condominium high-rise tower, please click the following link CDW_Sample_DepreciationReport(Condominium)
To view a sample Deprecation Report for Condominium town homes, please click the following link CDW_Sample_DepreciationReport(Townhouse)