A Depreciation Report has become mandatory for most Stratas in British Columbia as of December 13, 2011, with the exception of Stratas passing a 3/4 vote exemption resolution.
A Depreciation Report (DR) (also known as a Contingency Reserve Fund Study in the rest of Canada) is a long-term financial planning tool that consists of identifying the current financial status of a Strata’s reserve fund. It provides a realistic assessment of the funds required for the purposes of undertaking major repairs to or replacement of the various common building components. The amounts to be contributed to the Fund are calculated on the basis of life expectancy for components with life cycles in excess of one year and expected repair and replacement costs.
It is essential that Depreciation Reports are undertaken by qualified technical professionals with extensive experience in carrying out building condition assessments and making recommendations on estimated service lives and projected replacement costs.
Our Depreciation Report services typically include a combination of:
- Review of the as-built architectural, mechanical, electrical and plumbing plans for the property that are in the possession of the Strata Corporation.
- Review of the estimated year-end reserve fund balance, the most recent financial statements of the Strata Corporation, and a summary of the past renewal of the major building components.
- Perform a cursory visual review of the following building components at sample locations (Exterior walls, Windows and doors, Balconies or roof decks, Roofs, Recreational facilities, Common amenities and facilities, Electrical system, Mechanical Systems, Heating System, Plumbing System, and Elevator System) to evaluate their expected remaining service lives.
- Prepare an inventory of the major components, which is a list of items to be included in the reserve fund. We will estimate the life expectancy of each item. This information will be summarized in a Replacement Cost Summary Table.
- Prepare a three (3) Thirty-Year (30) Cash Flow scenarios, for discussion with the Strata Council, for varying contribution rates.
- Meet with the Strata Council to discuss and finalize cash flow scenarios then provide the Strata with professionally stamped and sealed DR report.