If you own a condo or townhouse in BC, or you are thinking about buying one, the strata’s depreciation report is one of the most important documents to review.

A depreciation report looks at the building’s major shared components, estimates when they may need repair or replacement and projects the likely costs over the next 30 years. This can include the roof, windows, elevators, plumbing, heating and ventilation systems, parkade, exterior siding and other common property.

The report also provides different funding models to help the strata plan for these expenses.

It helps answer two important questions:

• What major work could be coming?

• Is the strata setting aside enough money to pay for it?

What Has Changed?

BC strata corporations with five or more strata lots must now obtain a depreciation report every five years. This includes bare land stratas, which may be responsible for shared roads, utilities and other infrastructure.

Previously, strata owners could vote to postpone the report. That option has been removed.

Strata corporations with four or fewer lots are not subject to this requirement.

Important Deadlines for Existing Stratas

A strata corporation without a depreciation report, or whose most recent report was completed before December 31, 2020, must obtain a new one by:

• July 1, 2026, in Metro Vancouver, the Fraser Valley and the Capital Regional District, excluding islands accessible only by boat or air

• July 1, 2027, in other areas of BC, including Bowen Island and the Southern Gulf Islands

New strata developments are also required to obtain their first report within a set period following their first annual general meeting.

For Buyers

It may identify expensive projects that could affect future strata fees or lead to a special levy. A building could appear affordable based on its current monthly fees, but those fees only tell part of the story.

For example, if the report anticipates a major roof replacement in three years and the contingency reserve fund has very little money, owners may have to increase their monthly contributions or approve a special levy.

The report should be reviewed together with:

• The strata’s financial statements

• The current contingency reserve fund balance

• AGM and council meeting minutes

• Any approved or proposed special levies

• Engineering reports and major repair proposals

• The Form B Information Certificate

A current report is helpful, but it does not guarantee there will be no unexpected expenses. Building conditions can change and construction costs may be higher than originally estimated.

What If a Strata Does Not Have a Current Report?

There is no automatic fine simply because a strata has missed the deadline. However, the absence of a required report should not be ignored.

It may suggest the strata has not properly assessed its long-term repair needs. This can create concerns for buyers, owners, lenders and insurers. An interested party may also apply for a court order requiring the strata corporation to comply.

If you are considering a property in a strata without a current depreciation report, further investigation is warranted. You should find out why it is missing, what major work has recently been completed and whether any significant projects are being discussed.

Better Information Does Not Necessarily Mean Higher Costs

Some owners may worry that a depreciation report will automatically lead to higher strata fees. The report itself does not set the budget or approve spending. Those decisions remain with the strata corporation and its owners.

What the report does is provide better information.

Ignoring a future repair does not make it less expensive. In many cases, planning early gives owners more time to build the contingency reserve fund and may reduce the need for a large special levy later.

My Advice for Strata Buyers

Do not rely only on the listing price and monthly strata fee when comparing condos or townhouses.

A well-managed strata with realistic fees, a healthy reserve fund and a clear maintenance plan may provide better long-term value than a building with unusually low fees and little money set aside.

Before writing an offer, or during your subject-removal period, make sure the strata documents are reviewed carefully. The goal is not to find a building with no future expenses. Every building requires maintenance. The goal is to understand what may be coming and how prepared the strata is to pay for it.

If you are considering buying or selling a condo or townhouse in Coquitlam or elsewhere in Greater Vancouver, I would be happy to help you understand the strata documents and identify the questions that should be asked before you make a decision.