On April 22, 2024 the Minister of Housing released updates to the Strata Property Regulation regarding depreciation reports that will come into effect on July 1, 2024.
Under section 94 of the Strata Property Act, strata corporations with 5 or more strata lots are required to obtain a depreciation report estimating the repair and replacement of major items within the strata development and the expected life of those items. Strata corporations could waive the requirement for a depreciation report by a ¾ vote at an annual or special general meeting.
The recent updates, however, require a strata corporation to obtain a new depreciation report at least once every five years.
If a strata corporation established before July 1, 2024 does not have any depreciation reports, then:
(a) If located in the Capital Regional District, Fraser Valley Regional District, and Metro Vancouver Regional District, then the strata corporation must obtain a depreciation report by July 1, 2026;
(b) If located outside of the above regions, then the strata corporation must obtain a depreciation report by July 1, 2027.
For developers of strata developments, they will also face new requirements for any strata plans established on or after July 1, 2027.
On or after July 1, 2027, the owner-developer is required to assist in funding the strata corporation to obtain its first depreciation report by paying into the contingency reserve fund the lesser of either:
(a) $5,000 plus an additional $200 multiplied by the number of strata lots in the strata plan; and
(b) $30,000.
The owner-developer will be required to pay the amount no later than the first annual general meeting.
Finally, the updates clarify who is considered a qualified person to prepare a depreciation report. Strata corporations must hire a person who is knowledgeable and has expertise to understand the complexity of strata developers and is either a:
(a) professional engineer;
(b) architect;
(c) applied science technologist;
(d) person designated as an Accredited Appraiser by the Appraisal Institute Canada;
(e) certified reserve planner accredited by the Real Estate Institute of Canada; or
(f) person designated as a Professional Quantity Surveyor by the Canadian Institute of Quantity Surveyors.
If you are a strata corporation or developer and have more questions about the recent updates or how you can start planning for obtaining a depreciation report, please contact Caitlin Kessler at 250-869-1113 or [email protected].
