Introducing Mandatory Strata Property Depreciation Reports
Building Confidence in Your Buyers It debuted some forty years ago as an affordable path to home ownership. It heralded the benefits of a carefree, low maintenance lifestyle by compartmentalizing vertical airspace. It brought together groups of strangers, buying separate units with individual title while sharing costs on common property for others to maintain. It banished countless lawnmowers into landfills everywhere. Still, we know there would be a dark side to strata property ownership. The infamous leaky condo crisis of the nineties would bring financial hardship to thousands of owners. It would take the Barrett Commission, chaired by former premier Dave Barrett, a new Strata Property Act with mandatory documentation for buyers considering a strata purchase and many years to rebuild confidence in the strata property market as we know it today. In August alone, over 70 percent of sales in Vancouver were in multifamily units, the balance in detached homes.
That’s a market dominance that makes it all the more important for you as REALTORS® to stay on top of the information curve for your clients. New regulations introduced last December by the provincial government are aimed at giving an added layer of confidence to buyers considering a purchase in the strata market. It is now mandatory for all strata properties in B.C. greater than 4 units to have a common property depreciation report completed by December 13, 2013. These depreciation reports are to be used to establish long term planning for common property and assets to determine the following aspects of a strata property:
■The assets owned by the strata corporation
■The condition of those assets ■When assets need replacing ■How much money the strata corporation currently has (the contingency reserve)
■What the replacement cost is likely to be
■The payment plan (three cash flow models projecting 30 year replacement periods) The regulations also set out the necessary qualifications of persons providing the reports, a schedule of updates, disclosure of reports and financial planning to accomplish the necessary results.
A Strata may defer a depreciation report by passing a ¾ majority vote to that effect every 18 months. There are changes in store as well to the Form B, Information Certificate for specific disclosure of parking stall and storage locker designation and allocation effective January 1, 2014. The Executive Director of the Condominium Home Owners Association of B.C., Tony Gioventu, says it’s a positive development for the strata community. “These reports will change how people buy and sell a strata lot, and how people qualify for a mortgage. Buyers will now be able to ask for copies of the depreciation report so they know up front what they are buying into. Mortgage brokers will also want to assess risk when determining eligibility for financing.” This is the kind of good news your prospective buyers are eager to learn from you as their professional REALTOR®. Watch for educational events being held around town by various Divisions of the Real Estate Board of Greater Vancouver. And check out the latest updates on the CHOA website at www.choa.bc.ca as well as the Status of Changes to the Strata Property Act and Regulations here.