Understanding Depreciation Reports
What Is a Depreciation Report, and Why Is It Important in North and West Vancouver?
A depreciation report is a detailed document that outlines the common property and assets of a strata corporation, along with the projected costs for maintenance, repairs, and replacements over the next 30 years.
For strata properties in North Vancouver and West Vancouver, where real estate prices are high and buildings range from new developments to aging mid-century complexes, a depreciation report is an essential tool for protecting long-term value. It helps owners plan for future expenses and reduces the risk of unexpected special levies.
This report is also a key resource for prospective buyers, mortgage lenders, and insurers assessing the financial stability of a strata property.
What is the difference between a depreciation report and an engineering report?
A depreciation report provides a long-range financial plan, forecasting 30 years of maintenance and repair costs. It's a comprehensive look at the strata’s future obligations.
An engineering report, on the other hand, typically focuses on specific structural or building envelope issues and offers recommendations for immediate repairs. It’s more diagnostic and project-based.
In West Vancouver or North Vancouver strata buildings—especially those built before 2000—both types of reports may be crucial in assessing risk and planning upgrades.
What should prospective buyers know about depreciation reports?
If you’re considering a condo or townhome in North or West Vancouver, reviewing the most recent depreciation report is a must. Key takeaways include:
- The current condition of the building and its common areas
- Anticipated upcoming major repairs (e.g., roof, windows, plumbing)
- The strength of the contingency reserve fund (CRF)
- Whether the strata is proactive with ongoing maintenance
This information can significantly impact your decision and financial planning.
How can a buyer review a copy of the depreciation report?
Buyers should receive a copy of the depreciation report as part of the "Form B: Information Certificate." This report should be carefully reviewed alongside the strata's financial records and meeting minutes.
Why is it important for buyers to review a depreciation report?
Reviewing the depreciation report helps buyers understand potential future costs, assess the likelihood of special levies, and evaluate how well the strata is managing long-term maintenance. It is a key document for determining the financial stability of a strata corporation.
Who is required to obtain a depreciation report?
Under B.C.'s Strata Property Act, all strata corporations with five or more lots must have a depreciation report every five years. Strata corporations with four or fewer lots are exempt. Previously, strata corporations could defer getting a depreciation report with a 3/4 vote, but this option has now been removed.
What are the new regulations for depreciation reports?
As of July 1, 2024, updated regulations apply:
- Strata corporations must have a depreciation report every five years.
- Strata corporations without a depreciation report (or with one dated before December 31, 2020) have deadlines to comply:
- By July 1, 2026, for strata corporations in Metro Vancouver, the Fraser Valley, or the Capital Regional District (excluding islands only accessible by boat or air).
- By July 1, 2027, for all other B.C. regions, including the Southern Gulf Islands and Bowen Island.
Who can prepare a depreciation report?
Effective July 1, 2025, depreciation reports must be prepared by one of six designated professionals:
- Professional engineers
- Architects
- Applied science technologists
- Accredited appraisers
- Certified reserve planners
- Quantity surveyors
Strata corporations in North and West Vancouver should work with professionals experienced with local building types, such as wood-frame walk-ups or mid-rise concrete towers.
What information must be included in a depreciation report?
A comprehensive depreciation report must contain:
- Physical component inventory and evaluation: A detailed list of common property, assets, and components the strata is responsible for maintaining, with estimated lifespans for each item.
- Financial forecasting: A 30-year projection of maintenance and repair costs, including at least three funding models for the strata's contingency reserve fund (CRF).
- Executive summary: An overview of key findings and recommendations.
- Additional required content may include air conditioning and ventilation details, if applicable.
How are depreciation reports accessed and retained?
The most recent depreciation report must be attached to the "Form B: Information Certificate" when provided to prospective buyers. Strata corporations must retain copies of all depreciation reports and related engineering, risk management, and maintenance reports as part of their official records.
Are there new requirements for funding depreciation reports?
Starting July 1, 2027, owner developers must contribute funding toward the first depreciation report for new strata corporations with five or more lots. This includes a minimum of $5,000 plus $200 per strata lot, up to a maximum of $30,000.
What should strata corporations do now to comply with these changes?
Strata corporations should:
- Plan to obtain a depreciation report before the applicable deadline.
- Identify a qualified professional from the designated list to prepare the report.
- Ensure all past reports are retained and accessible for owners and prospective buyers.
For more information about depreciation reports, contact our team.
Final Thoughts
Whether you’re a strata owner, council member, or prospective buyer in North or West Vancouver, understanding the role of depreciation reports is essential. These reports protect your investment and reduce long-term financial uncertainty.
Have questions about how a depreciation report could affect your next purchase? Get in touch—we’re happy to walk you through the process.