Why A Depreciation Report Is Crucial To Your PropertyBY Lindsay Stroud
A depreciation report to property management is like a report card to students. For the sake of your building’s maintenance and its residents, you’re looking to score an A+ from the qualified provider who completes your depreciation report.
Many strata corporations consider the beginning stages of maintenance to be when repairs (such as concrete restoration) are made to their building and its features or their parkade system. However, the upkeep and maintenance of a property actually begins well before this stage, with an initial depreciation report.
Today we’re going to be discussing the basics of a depreciation report, what sort of information might be included in one, why they prove vital to the protection and maintenance of homes and strata properties, and finally, what to look for in a consultant or provider.
What Is A Depreciation Report
In a nutshell, a depreciation report covers your butt. These sorts of reports outline both short and long-term maintenance tasks to be performed, helping you to prioritize repairs in the long run, maintain your building as it ages and minimize disruption to patrons and residents.
A depreciation report should generally be renewed every three years and helps strata owners assess potential major maintenance projects, such as concrete repair and/or concrete resurfacing, over a 30-year time span. As per the Strata Property Act of British Columbia, certain strata and property management companies must meet certain requirements. For example, strata corporations with five or more lots are required to complete depreciation reports.
Why A Depreciation Report Is Important
A depreciation report is important for a few reasons. First, it helps to assess the current state of the physical property, as well as the efficiency of any short and/or long-term plan for maintenance, repairs or upkeep. For property management companies and strata corporations, a depreciation report not only saves money, but it also saves from conducting future costly repairs as a result of deterioration and/or degradation to property features.
They also provide protection for all parties involved, including strata owners, current homeowners and potential buyers. A long-term maintenance plan as a result of a depreciation report, provides potential buyers with peace of mind when they are looking to purchase property. For example, information that certain major components will require repairs but having a plan in place to do so, such as concrete polishing and restoration of a parkade deck membrane, or the replacement of windows or roofs. This may also include the repair and/or replacement of elevators, in the event the potential buyer is considering the purchase of property in an apartment building or condominium complex.
Potential buyers should thoroughly review a strata’s depreciation reports, seek advice from their realtor or even legal counsel, prior to committing to the purchase of a property.
Without a depreciation report in place (or at the very least, a long-term strata fee schedule for maintenance and repairs), current owners may experience reduced maintenance rates. Meanwhile, new owners are subject to the responsibility of increased fees (sometimes unbeknownst to them) in order to cover the costs associated with the maintenance of other properties.
With this in mind, depreciation reports also provide potential buyers with the added benefit of cutting fee costs once they are moved in. By incorporating a long-term maintenance plan involving equally distributed strata fees throughout property owners, both new and current, this means a more balanced fee scale (and lower long-term costs for all tenants) when a new owner moves in.
What To Look For In A Depreciation Report Provider
Please note* The following section is mere guidance as to what to look for in a depreciation consultant and/or provider. Applied Coatings & Restoration Inc. will not be held responsible for any incident, mishap, or fraudulent activity resulting from an individual taking advice directly from this article. For a complete and detailed outline of the qualifications for depreciation report providers, please visit the Government of British Columbia’s webpage on strata depreciation report requirements.
While the Strata Property Act of British Columbia does not detail which professionals are certified to prepare depreciation reports, there are a few basic requirements an individual must have knowledge of prior to preparing your depreciation report. These can help you to perform research on and select a depreciation report provider.
A provider should demonstrate thorough knowledge and scope of your strata’s common property and common assets. Common property can be complex – it is crucial to your building or property’s long-term maintenance plan that you have a consultant who can thoroughly provide know-how on this component. Your consultant should also demonstrate a solid understanding of your strata’s bylaws and owner agreements to do with common property.
The report itself should include the name of the depreciation report provider, as well as their qualifications for drawing up the depreciation report, whether or not they carry insurance, as well as the relationship between the provider and the strata company.
Reputable companies offering depreciation reports throughout the lower mainland include RJC Engineers, which utilizes a strategic planning approach when it comes to depreciation reports. In addition, Morrison Hershfield Engineering brings a wealth of experience in residential construction and can assist in producing a depreciation report for your strata corporation.
The task of drawing up consistent depreciation reports throughout the lifespan of your building, is not only an essential duty as a strata corporation, but a legal requirement in some instances. Not only do depreciation reports yield short and long term maintenance plans for a property (and gauge the effectiveness of current plans in place) but they also build trust between strata corporations and potential buyers.
If your depreciation report is telling you it’s time for a new parkade, Applied Coatings and Restoration Inc. can help! For over 30 years we’ve been servicing strata corporations and their residents, for all their commercial concrete parkade needs – traffic deck membrane repair and replacement, waterproofing and concrete repair, you name it. Call or click for your custom ACR quote today!
About the author
Lindsay Stroud is a freelance content writer and ghostwriter from Vancouver, Canada. Her published works can be found on Jiyubox and Passion Passport, in addition to producing ghostwritten content for Owl Labs and Wonderment. She is currently accepting new clients. Find her online at lindsaystroud.com or connect with her on LinkedIn.