When the roof is leaking or broken pipes are gushing water into condominiums, it might be too late to go through the lengthy tendering process to get a competitive price on repairs.
“When condo owners wait until there is an emergency they become victims of emergency repair construction costs,” said Tony Gioventu, executive director of the Condominium Home Owners Association of B.C.
A depreciation report is a tool to help strata councils mitigate unexpected repair costs and high special levies.
In December 2011, the province introduced legislation requiring strata corporations to obtain depreciation reports by Dec. 14, 2013, or hold a vote to waive that requirement.
Deryk Norton, a board member of the Vancouver Island Strata Owners Association, said having a depreciation report allows strata corporations to create better plans for long-term maintenance and repair work and set aside money for costs.
It might also help owners maintain property values, he added, because potential buyers might look for a depreciation report.
Norton said depreciation reports will show how much money a strata council has to set aside for major repair work, which may reduce the need for special levies.
“Big special levies are devastating to any community,” said Gioventu.
Gioventu said a number of the provincial association’s members completed depreciation reports and it’s been a useful exercise, adding that it was a “bit of a revelation” for some because they discovered that there isn’t enough money in the bank for future repairs.
Some strata corporations aren’t putting enough money into contingency funds to cover future repair costs, he said. Some councils put in between $15-25 from each strata unit, when about $40-75 per unit needs to be added. Money invested in contingency funds will benefit strata corporations because it gains compound interest over time and it’s not taxable, which could mean a big difference when repairs come due, he added.
The costs of depreciation reports for strata corporations can vary.
Costs depend on a number of factors such as how much detail and documentation strata councils can provide or if the tender company must gather those itself, if it has an inventory of all common property and building components that must be included, the number of bylaws and user agreements and more.
To help strata councils decide how to create their written request for proposals CHOA has examples of depreciation report proposals and a guide on its website, www.choa.bc.ca.
The Vancouver Island Strata Owners Association has resources for strata councils available on its website, www.visoa.bc.ca or people can contact the association’s helpline at 1-877-338-4762.
Strata councils that want advice on depreciation reports can attend the Vancouver Island Strata Owners Association’s seminar Sunday (Sept. 9) at the Beban Park social centre.
The seminar features a panel of speakers from various fields including engineering, legal, property appraisal and real estate.
Doors open at 12:15 p.m. and the seminar runs 1-4 p.m. People interested in attending must register before the end of the business day today (Sept. 6) by calling 1-877-338-4762 or e-mailing firstname.lastname@example.org. Admission is free for Island strata association members and $20 for non-members.