A strata depreciation report is a key document for any strata corporation. It provides valuable information about the common property and assets in the strata, and helps owners to plan and pay for their upkeep and replacement. In this blog post, we’ll discuss practical tips for getting the most out of your strata depreciation report.
What is a Strata Depreciation Report?
A depreciation report is a document prepared by an expert that outlines the repair, replacement and renewal costs of common property and assets in a strata corporation. The report is based on an examination of the property, as well as information provided by the strata corporation.
Why is a Strata Depreciation Report Important?
A strata depreciation report is important because it helps strata lot owners to protect their homes and investments. The report provides valuable information to prospective purchasers, and helps the strata corporation to plan and pay for the upkeep of common property and assets.
Without a depreciation report, stratas would have no idea how much money they need to set aside each year to fund future repairs and replacements. As a result, many stratas would find themselves unable to pay for major repairs when they become necessary, which could lead to significant financial problems down the road.
How a Strata Depreciation Report is Prepared?
The quality of a depreciation report relies on the expertise of the person or company preparing the report and the information provided by the strata corporation. The person or company preparing the report will first inspect the common property and assets in question. They will then use this information to estimate how much it would cost to repair or replace each item if it was damaged beyond repair or reached the end of its useful life.
Once this information has been gathered, it is compiled into a report which is then presented to the strata council. The strata council will use this information to develop a long-term financial plan to fund major repairs and replacements when they become necessary.
What are the Strata Depreciation Report Requirements?
Under the Strata Property Act and regulations in British Columbia, strata corporations with five or more lots must obtain depreciation reports. This includes bare land subdivision as well other kinds of property governed by this act. Every three years they will be required to update their last report. Strata corporations may waive the requirement to obtain a depreciation report, or defer a renewal, by passing an annual 3/4 vote. The strata corporation has six months to obtain a strata depreciation report if an annual 3/4 vote to waive the requirement is not passed.
As per Strata Property Regulation 6.2, a depreciation report must have certain content, including Physical Component Inventory and Evaluation, a Financial Forecasting section and depreciation reports must also include a summary of the repair and maintenance work for common expenses that occur less often than once year (i.e. contingency reserve fund expenses), the date of the report as well as any other appropriate information or analysis that the strata corporation or the person providing the depreciation report considers appropriate.
How to Get the Most Out of Your Strata Depreciation Report.
The Strata Property Act and regulations do not designate which professions can prepare depreciation reports. Stratas can obtain depreciation reports from a variety of professionals. There are a few things you can do to make sure you’re getting the most out of your depreciation report:
- Make sure you hire a reputable expert to prepare the report. The quality of the depreciation report relies on the expertise of the person or company preparing the report.
- Make sure you provide accurate information to the person preparing the report. The depreciation report is only as accurate as the information provided by the strata corporation.
- Review the depreciation report carefully and make sure you understand it before making any decisions about repairs, replacements or renewals.
- Use the depreciation report as a starting point for planning and budgeting for future repairs, replacements or renewals.
- Keep in mind that the strata depreciation report is a snapshot in time, and things may have changed since it was prepared. Be sure to keep it up to date so that it accurately reflects the current state of affairs.
A strata depreciation report is an important tool for any strata corporation. It helps owners to protect their homes and investments, provides valuable information to prospective purchasers, and helps the strata corporation to plan and pay for future repairs, replacements and renewals. By following these practical tips, you can make sure you’re getting the most out of your depreciation report.
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