STRATA owners will soon have more certainty and consistency around the repair and maintenance of common property with new regulations to close a loophole that allowed strata corporations to indefinitely defer depreciation reports.
“No one wants to be surprised by a sudden special levy to cover repairs that should have been planned for,” said Ravi Kahlon, Minister of Housing, on Monday. “These regulations will help protect strata owners by ensuring depreciation reports are obtained regularly, providing them with the information and predictability they need to plan for future costs.”
Depreciation reports help estimate the long-term repair and replacement costs of a strata corporation’s shared property and assets, giving strata owners the ability to contribute to contingency reserve funds as required. Obtaining these reports could previously be deferred repeatedly as long as three-quarters of a strata corporation’s owners voted annually in favour of a deferral.
Updated regulations that take effect July 1, 2024, will close this loophole and require existing strata corporations with five or more strata lots to obtain depreciation reports on a five-year cycle, instead of a three-year cycle. This change aligns B.C. with other jurisdictions, including Alberta and Ontario.
Effective July 1, 2025, all strata corporations must also obtain their depreciation reports from a list of qualified professions, including engineers, certified reserve planners, architects, appraisers, applied science technologists and quantity surveyors.
To support new strata corporations with five or more strata lots, effective July 1, 2027, owner-developers will be required to contribute funds toward the cost of obtaining a first depreciation report: a minimum of $5,000, plus $200 per strata lot, up to a maximum of $30,000.
Strata corporations with four or fewer lots will continue to be exempt from being required to obtain depreciation reports.
These regulations were developed in consultation with strata stakeholders, homeowner associations, strata lawyers and insurance representatives. They follow amendments to the Strata Property Act passed in August 2020 to mitigate the costs of strata insurance. Those changes included updating depreciation report regulations and closing the annual three-quarter vote loophole.
Tony Gioventu, executive director, Condominium Home Owners Association of BC, said: “The regulatory changes to depreciation reports are a welcome transition for strata corporations and consumers. They provide a level playing field, a transition period for implementation and a longer duration for financial planning, as well as a deposit from developers for future strata corporations to launch their reports, and defined professions to serve the industry.”
Aaron Sutherland, Vice President, Insurance Bureau of Canada, said: “The Province continues to take important steps to help strata corporations and unit owners better manage their properties, and to maintain the stability that exists in British Columbia’s strata insurance marketplace. Adding rigour to depreciation report requirements will help provide stratas with a clear road map for any repairs and replacements, creating safer buildings and fewer surprises for unit owners that can result in expensive claims.”
Quick Facts:
* Strata corporations formed between July 1, 2024, and June 30, 2027, must obtain depreciation reports within two years of the first annual general meeting and every five years thereafter.
* Strata corporations formed on or after July 1, 2027, must obtain depreciation reports within 18 months of the first annual general meeting and every five years thereafter.
* Strata corporations without depreciation reports or depreciation reports received prior to December 31, 2020, will have time to obtain them:
– Until July 1, 2026, if located in Metro Vancouver, Fraser Valley areas or the Capital Regional District (excluding the Gulf Islands and all other islands).
– Until July 1, 2027, if located in other areas of the province.
Learn More:
For more information about updated depreciation report regulations, visit: https://www2.gov.bc.ca/gov/
For more information about other changes to strata legislation, visit: https://www2.gov.bc.ca/gov/
