What is a Depreciation Report?
Depreciation reports ensure that Condominium Strata Councils establish ongoing building maintenance and renewals, while providing the opportunity to financially plan for associated costs. It was legislated that Condo buildings needed to have Depreciation reports completed by December 2013, or to at least have hired a firm to complete the report.
What’s covered in a Depreciation Report?
- Physical inventory of building components – everything from parkade membranes, elevators, hot water tanks, pipes, hallway flooring, and more
- Age of the building system
- Projected life expectancy of each component
- When renewal or replacement should be planned
- Projected cost of renewals when the time comes
- How the Strata Council plans to cover the costs – including contributions to the contingency reserve fund or special assessments
Why is it important?
As with any home, lack of upkeep and preventative maintenance of your Condo building can lead to more serious problems over time. Depreciation reports can help provide early detection of localized issues so your Strata can properly address them before the issues become more serious and costly. The reports can help your Strata make informed choices, minimize risk, and save money over the long term.
How does it affect my purchase?
When considering a Condo purchase, ensure you receive the depreciation report and review it thoroughly. All Condos will require maintenance and renewals, but you want to make sure you have the full picture of what you are purchasing and what renewal costs to plan for.
Strata Corporations did have the ability to vote to not have the report completed, with a ¾ majority vote. If the Strata of your prospective building voted against completing the depreciation report, you should definitely ask why.
For further guidance on strata matters, contact Ole, David or Colin.