A depreciation report or reserve fund study is an incredible tool to help your strata or condominium corporation plan and prepare for the future. Most importantly, these reports help ensure there is enough funding set aside to maintain, repair, or replace any of the common components of a property. Without a report in place, you cannot effectively plan for your corporation's financial requirements, leaving owners vulnerable to paying for costly repairs out of pocket. An up-to-date report offers many advantages:
Asset Protection — You ensure adequate capital to maintain common property and reduce or eliminate the need for special assessments (cash calls) on owners.
Lower Operating Costs — Replacing or servicing components at the recommended time keeps costs low by preventing emergency repairs when a component fails, or having to replace a unit that failed due to poor maintenance.
Regulations — All stratas in British Columbia are required by law to get a new 30-year report every 3 years (unless voted to delay), and all condominium corporations in Alberta are required to obtain a new study every 5 years, without the option to delay.
Beyond protecting owners' wallets, creating a maintenance plan and schedule that ensures adequate funding keeps property value higher — not just because of a well-maintained building, but because of the added security of a property that is healthy both physically and financially. New buyers in BC always have the option of requesting a depreciation report during the buying process, which should incentivise stratas not only to have a report, but to keep it up to date and follow best practices.