Spring 2012 - Issue 6

Strata Owners Learning More About Depreciation Reports


The new “depreciation report” regulation is intended to encourage better planning for major repairs to common property, improve disclosure of the condition of common property and reduce the number of financially devastating “surprises” for buyers of strata properties.    It also enables a strata corporation to waive the new requirement annually by passing a resolution supported by a ¾ vote of owners.    The strata corporation that does not waive the requirement will incur a significant cost in hiring a “qualified person” to complete a depreciation report every 3 years.    The limited number of qualified professionals will be challenged to serve up to 14,000 strata corporations by the December 2013 deadline for first reports.


Based on these implications, it seems likely that a high proportion of strata corporations will pass the required resolution to opt out of the new requirement.    A January survey of owners by one strata association found that 1/3 of respondents said they thought their strata corporation should pass such a resolution.


The strata corporation passing a resolution to opt out of the new requirement may place its owners at a significant disadvantage in selling their strata units.    A diligent buyer will be more inclined to buy a strata property where there is a depreciation report.    In the absence of a depreciation report, it seems likely that many buyers will not want to take a major risk in not knowing the state of planning for repairs to common property.    Furthermore, a mortgage company may decline to finance a purchase where it finds the value of the common property to be in doubt.    The inability to sell a strata unit can have serious financial implications for the owner.    For example, an elderly strata owner unable to sell his or her strata unit could end up in the untenable position of being unable to finance the cost of long term care while being unable to live independently in the strata unit.


In the past few months many strata owners have attended seminars and other information sessions provided by strata associations and professionals equipped to prepare depreciation reports.    Such seminars are scheduled to continue in the months ahead.    As more owners continue to learn more about the importance of depreciation reports it will be interesting to see what proportion of strata corporations actually waive or “opt out” of this new requirement. .


You can view the new Strata Property Regulation (section 6.2) at Click Here .


Tell us your perspective on depreciation reports by sending us an email under the “Contact Us” tab on this website.


Editor’s Note:We challenge you to use this website as a resource in contacting the Premier and other politicians with your strata legislation concerns and to contribute your ideas, suggestions and comments to our editors. You are encouraged to refer this website to other strata owners. Thank You, Deryk

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History

The British Columbia Strata Property Act (SPA) came into force on July 1, 2000.   Since then there has been massive growth in the number and diversity of strata properties.   Many problems have arisen in applying the Act to strata issues and in protecting the rights of strata owners.   Although the present BC government made a commitment in 2003 to review the SPA it has refused to undertake either a comprehensive review of strata legislation or consult publicly about the legislation that affects over 700,000 strata owners.   Instead it passed Bill 8 in 2009 to amend the SPA based on "private and confidential" discussions with real estate industry insiders while ignoring many pressing concerns of strata owners.   This website is provided as a resource for strata owners seeking a public review of BC legislation affecting the rights of strata owners.