Depreciation reports (reserve fund studies) are an important and an essential planning tool to help strata and condominium corporations plan and budget for future capital expenses. The purpose of the report is not to evoke fear among owners of inevitable expenditures or out older buildings for being under maintained and needing repair; rather, the depreciation report is a tool to help plan for the future and to help ensure stratas and condos have adequate provisions for major repairs, replacements and improvements to their property.
Some strata and condo corporations have deferred having a depreciation report completed because of a deep fear of what could be uncovered in the body of the report. This fear is likely rooted in an inadequate contingency reserve fund and possibly deteriorating common property. Your home is likely one of the most valuable assets you possess; resisting planning for future repairs and expenditures will hinder your property, not protect its value. Taking a reactive approach will result in a knee-jerk reaction to unanticipated repairs or replacements of common property. This will not result in cost-savings for strata owners as repeated special levies (special assessments) are significantly more costly than deliberate and strategically scheduled expenses calculated over a set period of time.
The Condominium Home Owners’ Association of British Columbia (CHOA) recently responded to a strata owner who was concerned that their particular strata was at a standstill as to how to proceed moving forward without a depreciation report. Tony Gioventu, Executive Director of CHOA, addresses these concerns in his regular newspaper column, Condo Smarts. You can read the full Condo Smarts article here.