Renewing Your Depreciation Report
The BC Strata Property Act makes it mandatory for every strata corporation of 5 units or greater to have a depreciation report completed, unless successfully waived per the strata regulations. Many strata corporations look at these reports as necessary evils to comply with provincial law, rules and regulations.
There are many good reasons why depreciation reports, also known as reserve fund studies, should be completed. Not only should you have these reports done accurately, but you should renew them approximately every three years. Here are a few reasons why.
It should come as no surprise that strata properties change as the years go by. While your reserve fund study is designed to predict repair, upgrade and maintenance costs in the short and long term, unexpected events happen. Equipment and facilities break down due to environmental factors. Accidents happen, causing damage and replacement needs.
After three years, your last report is outdated. Keeping your reports current and accurate allows you to always reflect your corporation in its current state. This allows you to better stay on top of your short-term and long-term funding plans, as well as your contingency funds.
When you decide to sell your property, you will want an updated report to share with your buyer. The law currently requires you to share the most recent report. Handing your buyer a report that is more than three years old is a red flag that the information they are getting from you may not be quite accurate.
You are always best served to provide current information to potential buyers. Updated reports will reduce the chance of complications during a sale.
Prolonging Property Life
Since your study gives you a snapshot of your strata property at a specific point in time, you will want to keep your report updated for the best information. Using this information will allow you to update your maintenance plans. Using these plans will have the direct effect of prolonging the life of your property.
Ongoing upgrades and improvements are vital to the life of your strata corporation. These improvements can help you bring in new buyers. This will then have a positive impact your market value.
Varying Costs and Codes
Building codes are constantly changing, as are the costs of labor and supplies. After a few years, the costs you have estimated on your report have a good chance of no longer being current. Renewing your study can provide more accurate cost figures, enabling you to update all of your budget plans.
It seems clear that there are many reasons besides legal compliance to update your depreciation report every three years. This report is vital to your budgeting and funding practices over the life of your property. Can you think of any other good reasons to update your reports? Post a reply and let us know!