Though new legislation requiring B.C. strata corporations to establish a fund for maintenance and repairs doesn’t come into effect until December 2013, a local property appraiser has issued a strong recommendation to take action sooner rather than later.
“We’re now into the last quarter of the year, which is when many strata councils hold their AGM,” says Dan Wilson, owner of Jackson & Associates Real Estate Appraisers and Consultants. “A lot of them have this uncertainty hanging over them, but it’s truly in their best interest to beat the rush and commission their depreciation report as soon as possible.”
A depreciation report is a document that evaluates the anticipated costs to renew or replace common strata property, such as fencing, balcony railings and other fixtures. Amendments made last year to the B.C. Strata Property Act require strata corporations to have a depreciation report in place and to maintain a reserve fund to cover anticipated expenses.
“Even though stratas aren’t required to commission their report until next year, the market is going to sort out who has them and who doesn’t,” warns Wilson. “Stratas that don’t have reports in place will represent a higher risk to buyers, lenders and investors, who will tend to navigate away from that uncertainty and put their money in properties that have a clear plan in place.”
Of the strata corporations his firm has already assessed, Wilson says most were significantly underfunding their reserve funds, putting individual owners at risk of escalating strata fees due to unanticipated expenses.
Though the cost of commissioning a depreciation report is not insignificant, there’s no telling whether that cost will increase as the December 2013 compliance deadline approaches. Since it’s a cost that will have to be borne eventually anyway, says Wilson, there are few good reasons to put it off.
“It’s better to know than to not know. As with any type of housing, you can budget for repairs and replacement of key items or you can bite the bullet when it all falls apart. You end up paying for it either way, but planning ahead makes it a lot less stressful, and a lot easier on strata owners.”
Wilson, who’s one of the Comox Valley’s only Certified Reserve Planners, performs depreciation reports (sometimes called “reserve fund studies”) through his other company, Vision Property Advisors.
For a consultation and estimate, he can be reached at 250-338-7323 or online at www.comoxvalleyappraisers.com.
— Jackson & Associates Real Estate Appraisers and Consultants