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The Costly Mistake of Deferred Maintenance

October 23, 2012 By

For a variety of reasons deferred maintenance is a reality in many Strata Corporations.

One of the main reasons is Owners not wanting to increase the budget and strata fees to allow for enough funds to properly maintain their Strata Corporation’s common property; roof, roadways, parkade, membranes, building envelope and other items.

With increased costs in items that council’s have very little control over such as utilities (gas and hydro) and insurance; which are often the largest line items on any budget, it appears that cuts are being made to line items denoted for repairs and maintenance. This results in roof maintenance not being performed every year, the building envelope not being inspected and maintained and a variety of other items.

When something such as a roof leak does occur, which could potentially damage an Owner’s unit and belongings and result in their unit not be habitable, Council’s are often stuck wondering how they are possible going to pay for the insurance deductible, which could be in the excess of $5,000 to $10,000 and then the actual roof repair itself. Additionally, insurance deductibles are often much higher in Strata Corporations that defer maintenance given the number of claims that arise. If Council’s do not have adequate funds in either the annual operating budget or the Contingency Reserve Fund (CRF) and Owners will not approve a special levy, repairs simply cannot occur, or resultant legal action is the costly outcome. Owners must also be aware that if a Special General Meeting (AGM) has to be called to raise funds through a special levy, that further damage may occur to common property from something such as a roof leak as proper notice must be given to all Owners for the meeting and all Owners must pay the special levy. This required delay under the provisions of the Strata Property Act may result in further damage in a climate such as ours.

Additionally, these large expenditures that result once an “emergency” happens could have easily been avoided with proper funding that would result in preventative, not reactive maintenance.

At an Annual General Meeting (AGM), I once had an Owner empathically inform me that $20,000 was far too high for the repairs and maintenance of his Strata Corporation that comprised of 180 units. Ironically, a number that Council felt was far too low, but knew that a further increase over the previous year would never be approved by the Owners. This Owner was informed that $20,000 divided by 180 Owners over a twelve month span resulted in only $9 per month or $111 per year. This Owner quickly concluded that this was not enough and understood that only the basic maintenance could be done for this amount and that no preventative maintenance could be undertaken given the funding limitations. These Owners who feel the budget and strata fees are too high are not surprisingly the ones who complain first that maintenance is not occurring.

It is essential that Council’s present a budget that includes preventative maintenance costs based on the advice from professionals such as Consultants and Engineers and that Owners approve these budget and strata fee increases to avoid throwing money at “emergencies” after the fact; far more money than they would have spent had preventive, not reactive maintenance been done.

In the case of the roof leak, minor less costly repairs could have been completed that avoided the leak and therefore the resultant large cost of the insurance claim, damage to common property and inconvenience to the affected Owners.

Filed Under: Property Management, Strata Corporations, Strata Management

New Owners and Bylaws

October 16, 2012 By

Every Strata Corporation has bylaws and rules and the bylaws and rules in every Strata Corporation are different as they are developed to meet the needs of the Owners in relation to the nature of the building(s).

These bylaws and rules set out the “rules” of each Strata Corporation and Owners must be aware and abide by them to be a positive member of their community. Given this it is essential that each potential Owner carefully review the bylaws and rules documents prior to purchasing as it may result in them owning a unit in a community that does not meet their needs. For example, many Strata Corporations have bylaws prohibiting pets and a potential Owner may have a cat or dog, others do not permit rentals and a potential Owner may be looking for an investment property. Bylaws contain a variety of items of which some include: whether BBQ’s are permitted, Visitor parking guidelines, move in/out procedures and noise times.

All bylaws are presented to the Owners at either the Annual General Meeting (AGM) or a Special General Meeting (SGM) and approved by a ¾ Vote; which means that ¾ of Owners (your potential neighbours) at the meeting (once quorum is established), want and approved these bylaws. In other words, these bylaws suit the needs and desires of the community and prior to purchasing it is essential that you determine whether they suit the needs and desires of your lifestyle.

Once these bylaws are approved, the elected strata council must enforce them, which can result in fines being levied, these fines can be as high as $200 for each infraction and levied every seven days for a continued infraction; a costly mistake for not reviewing the bylaws prior to purchasing.

Far too often, the refrain of “I didn’t know that bylaws existed” occurs, despite it typically being an item during subject removal when purchasing and also provided to each Owner in their welcome package. Additionally, Purchasers end up being frustrated with their new home. Given this, it is essential that each prospective Purchaser read, understand and seek clarification concerning the bylaws and rules that set forth the expectations present in their new community.

Filed Under: Strata Corporations

Strata Owner Maintenance Schedule

June 25, 2012 By

A regular schedule of maintenance can deter the most common and costly problems before they occur. Routinely checking these items only takes about a half hour and can save owners and their neighbours considerable personal and financial losses.

Section 1

Year Round Maintenance

  1. Ensure indoor and outdoor air vents (intake, exhaust and forced air) are not blocked by snow or debris.
  2. Check and clean range hood filters on a monthly basis.
  3. Test the ground fault circuit interrupter(s) monthly by pushing the test button, which should then cause the reset button to pop up.
  4. Regularly check the house for safety hazards such as a loose handrail, lifting or buckling carpet, etc.

Section 2

Fall Maintenance

  1. Have furnace or heating system serviced by a qualified service company every two years for a gas furnace, and every year for an oil furnace.
  2. Open furnace humidifier damper on unit’s with central air conditioning and clean humidifier.
  3. Lubricate circulating pump on hot water heating system.
  4. Bleed air from hot water radiators.
  5. Examine the forced air furnace fan belt for wear, looseness or noise; clean fan blades of any dirt build-up (after disconnecting the electricity to the motor first).
  6. Turn ON gas furnace pilot light.
  7. Check and clean or replace furnace air filters each month during the heating season. Ventilation system, such as heat recovery ventilator, filters should be checked every two months.
  8. Vacuum electric baseboard heaters to remove dust.
  9. Remove the grilles on forced air systems and vacuum inside the ducts.
  10. If the heat recovery ventilator has been shut off for the summer, clean the filters and the core, and pour water down the condensate drain to test it.
  11. Clean portable humidifier, if one is used.
  12. Replace screens from the inside of basement windows to allow air from the heating system to keep condensation off window glass.
  13. Ensure all doors to the outside shut tightly, and check other doors for ease of use. Renew door weather-stripping if required.
  14. If there is a door between your house and the garage, check the adjustment of the self-closing device to ensure it closes the door completely.
  15. Ensure windows and skylights close tightly.
  16. Cover outdoor air conditioning units.
  17. Check chimneys for obstructions such as nests.
  18. Drain and store outdoor hoses. Close valve to outdoor hose connection and drain the hose bib (exterior faucet), unless your hose has frost proof hose bibs.
  19. Store outdoor furniture.
  20. Ensure balcony or patio drain is clear and flows properly to prevent water accumulation.

Section 3

Winter Maintenance

  1. Check and clean or replace furnace air filters each month during the heating season. Ventilation system, such as heat recovery ventilator, filters should be checked every two months.
  2. After consulting your hot water tank owner’s manual, drain off a dishpan full of water from the clean-out valve at the bottom of your hot water tank to control sediment and maintain efficiency.
  3. Clean humidifier two or three times during the winter season.
  4. Vacuum bathroom grille.
  5. Vacuum fire and smoke detectors, as dust or spider webs can prevent them from functioning.
  6. Vacuum radiator grilles on back of refrigerator and freezers, and empty and clean drip trays.
  7. Check gauge on all fire extinguishers; recharge or replace if necessary.
  8. Check fire escape routes, door and window locks and hardware, and lighting around outside of house; ensure family has good security habits.
  9. Monitor your home for excessive moisture levels –for example, condensation on your windows, which can cause significant damage over time and pose serious health problems.
  10. Check all faucets for signs of dripping and change washers as needed. Faucets requiring frequent replacement of washers may be in need of repair.
  11. If you have a plumbing fixture that is not used frequently, such as a laundry tub or spare bathroom sink, tub or shower stall, run some water briefly to keep water in the trap.
  12. Clean drains in dishwasher, sinks, bathtubs and shower stalls.
  13. Test plumbing shut-off valves to ensure they are working and to prevent them from seizing.
  14. Ensure that hoses and connections to washing machines and dishwashers are connected properly and not in need of repair or replacement.
  15. Ensure that caulking around showers, bathtubs and toilets is in good repair, replace if necessary.
  16. Examine windows and doors for ice accumulation or cold air leaks. If found, make a note to repair or replace in the spring.
  17. Check electrical cords, plugs and outlets for all indoor and outdoor seasonal lights to ensure fire safety: if worn, or plugs or cords feel warm to the touch, replace immediately.

Section 4

Spring Maintenance

  1. After consulting your hot water tank owner’s manual, carefully test the temperature and pressure relief valve to ensure it is not stuck. (Caution: This test may release hot water that can cause burns.)
  2. Check and clean or replace furnace air filters each month during the heating season. Ventilation system, for example heat recovery ventilator, filters should be checked every two months.
  3. Have fireplaces or woodstove and chimney cleaned and serviced as needed.
  4. Shut down and clean furnace humidifier, and close the furnace humidifier damper on units with central air conditioning.
  5. Check air conditioning system and have serviced every two or three years.
  6. Clean or replace air conditioning filter (if applicable).
  7. Check dehumidifier and clean if necessary.
  8. Turn OFF gas furnace and fireplace pilot lights where possible.
  9. Check smoke, carbon monoxide and security alarms and replace batteries.
  10. Clean windows, screens and hardware. Check screens first and repair or replace if needed.
  11. Open valve to outside hose connection after all danger of frost has passed.
  12. Check eaves troughs and downspouts for loose joints and secure attachments to your home, clear any obstructions, and ensure water flows away from your foundation.
  13. Ensure deck drain is cleared to prevent water accumulation.

Section 5

Summer Maintenance

  1. If you have a plumbing fixture that is not used frequently, such as a laundry tub or spare bathroom sink, tub or shower stall, run some water briefly to keep water in the trap.
  2. Deep clean carpets and rugs.
  3. Vacuum bathroom fan grille.
  4. Disconnect the duct connected to the dryer and vacuum lint from the duct, the areas surrounding your clothes dryer and dryer’s vent hood outside.
  5. Check security of all guardrails and handrails.
  6. Check smooth functioning of all windows and lubricate as required.
  7. Lubricate door hinges and tighten screws as needed.
  8. Lubricate garage door hardware and ensure it is operating properly.
  9. Lubricate automatic garage door opener motor, chain, etc. and ensure that the auto-reverse mechanism is properly adjusted.
  10. Inspect electrical service lines for secure attachment where they enter your house, and make sure there is no water leakage into the house along the electrical conduit.
  11. Check for and repair any holes in exterior cladding that could be an entry point for small pests, such as bats, squirrels.
  12. Sweep chimney connected to any wood burning appliance or fireplace, and inspect them for end-of-season problems.

Although this information reflects housing experts’ current knowledge, it is provided for general information purposes only. Any reliance or action taken based on the information; materials and techniques described are the responsibility of the user.

For more information on Strata Maintenance in the Greater Vancouver area, give Ascent Real Estate Management Corporation a call at 604-431-1800.


Filed Under: Strata Management

Role of a Strata Manager

June 18, 2012 By

Role of a Strata CouncilWhat is the role of a strata manager and council in the governing and day to day operations of a Strata Corporation is a question often asked by owners.

The Strata Corporation (the owners) elect a Strata Council to administer the day-to-day affairs of the Strata Corporation. This Strata Council is elected at every Annual General Meeting (AGM) and is often the last vote of the evening; the vote that many owners miss as they leave. In reality, this is perhaps the most important vote of the evening as these three to seven owners represent you as an owner and form your Strata Council.

The general role of a strata council is:

  • Act as the managing body for the Strata Corporation;
  • Make daily decisions that enable the Strata Corporation to operate smoothly; and
  • Operate within any restrictions created by the Strata Property Act, Regulations, bylaws, or a majority vote of the owners.

The Strata Council expends money under the owner approved budget and very narrow expenditure provisions under the Strata Property Act.

A Strata Council can engage a Strata Manager to perform some functions of the Strata Council; however, the Strata Council is still ultimately responsible for ensuring that its obligations under the Strata Property Act are fulfilled.

Section 4 of the Strata Property Act sets out the responsibility of a Strata Council. Everything flows through the Strata Council at some point; the decision on whether further action is required is a vote of the Strata Council. The Strata Council with all its responsibility then turns to Strata Managers to help them discharge their duty to the Strata Corporation.

Strata Corporation functions through council

4 The powers and duties of the strata corporation must be exercised and performed by a council, unless this Act, the regulations or the bylaws provide otherwise.

People often believe that a Strata Manager makes the decision concerning the property on behalf of the owners; however, they fulfill direction provided by council. A Strata Manager is an agent.

The agency model more closely resembles what and how Strata Managers function. Strata Managers take direction from the Strata Council and do as requested as long as the requests do not contravene the Strata Property Act or the Strata Corporation’s bylaws. The ultimate responsibility for the oversight of the Strata Manager is the Strata Council. A Strata Council relies on Strata Manager’s input and advice.

For more information about Strata Council’s and Strata Management, contact Ascent Real Estate Management Corporation at 604-431-1800.

Filed Under: Strata Corporations

Summer reminders for strata corporation owners and residents

June 15, 2012 By

balconies in strata corporation managementWith summer approaching it is imperative that all owners and residents in a strata corporation are cognisant of the following:

  • Prior to using a BBQ, please review your strata corporation’s bylaws to determine if they are permitted. If you are allowed a BBQ, please ensure that it is pulled away from the building so that the building is not damaged by the heat. Also ensure that your BBQ and any food drippings do not damage the patio membrane. If the patio membrane is pierced, water can enter and rot may occur to the supporting wood structure, which is a costly common property repair. BBQ mats can be purchased at stores such as Home Depot. Please also be mindful that smoke from BBQ’s travels and enters in through neighbouring units.
  • Please remember that noise from music and voices, travel when windows are open during the warm weather. Please review your strata corporation bylaws to determine noise times.
  • When washing your balcony, please be careful and to not allow water to escape onto neighbouring balconies, patios or walkways. Please also ensure the same when watering your plants.
Filed Under: Strata Corporations

Depreciation Reports for Strata Properties in British Columbia

March 12, 2012 By

Similar to other Canadian provinces, depreciation reports are now mandatory in British Columbia unless a strata corporation exempts themselves by an annual ¾ vote.

Strata Corporations will have until December 13, 2013 to obtain a depreciation report or hold a ¾ vote to exempt. Strata Corporations will have 18 months from the time a ¾ vote expires to get a depreciation report.

Please refer to section 94 of the Strata Property Act:

Depreciation report

94      (1) In this section, “qualified person” has the meaning set out in the regulations.

(2) Subject to subsection (3), a strata corporation must obtain from a qualified person, on or before the following dates, a depreciation report estimating the repair and replacement cost for major items in the strata corporation and the expected life of those items:

(a) for the first time, the date that is 2 years after the coming into force of this section;

(b) if the strata corporation has, before or after the coming into force of this section, obtained a depreciation report that complies with the requirements of this section, the date that is the prescribed period after the date on which that report was obtained;

(c) if the strata corporation has, under subsection (3) (a), waived the requirement under this subsection to obtain a depreciation report, the date that is the prescribed period after the date on which the resolution waiving the requirement was passed.

(3) A strata corporation need not comply with the requirement under subsection (2) to obtain a depreciation report on or before a certain date if

(a) the strata corporation, by a resolution passed by a 3/4 vote at an annual or special general meeting within the prescribed period, waives that requirement, or

(b) the strata corporation is a member of a prescribed class of strata corporations.

(4) A depreciation report referred to in subsection (2) must contain the information set out in the regulations.

Depreciation reports must include an onsite visual inspection and are to be updated every three years and must estimate the repair and replacement costs for major items in the strata corporation and the expected life of those items. In other words, a long range financial planning tool that identifies the current status of the capital reserves, integrates operational schedules for property maintenance and planning and provides a funding plan. Therefore, the report should include the following:

  • An inventory of your assets;
  • The evaluation of the assets;
  • Replacement timeline;
  • The current status of the Contingency Reserve Fund;
  • Cost of future replacement and;
  • Funding models; three cash flow models projecting 30 year replacement periods.

Strata Corporation’s are encouraged to obtain a report performed by a qualified individual with proper liability and errors and omissions insurance coverage rather than opting out as planning is required for each Strata Corporation to protect the common assets. Maintenance is the best way to maintain the building systems and reduce costs. Long term planning and maintenance will prolong the life cycle of the building systems, allow Strata Corporation’s to plan renewals without emergencies and reduce premature failures of systems and costly resultant damage.

Permitting Strata Corporation’s to opt out of a depreciation report with a ¾ vote will not ensure that those strata corporation’s who currently do not perform long term planning and maintenance will do so; this will widen the dividing line between maintained and neglected Strata Corporations.

Furthermore, Strata Corporation owners need to keep in mind that this report will be used by mortgage providers and mortgage insurers and therefore buyers. It may be detrimental to a Strata Corporation not to obtain a report as it may affect the ability of potential buyers to obtain mortgage funding or current owners to obtain refinancing

The new regulation is available from the Province of British Columbia – Office of Housing and Construction Standards. Additional information is available at the Strata.

Property Accountability Regulations | Strata Property Act; updated strata property guides are expected in February 2012.

For help with strata property depreciation reports, contact Ascent Real Estate in Burnaby at 604-431-1800 for professional advice.

Filed Under: Property Management

Why you need a depreciation report for your strata property

March 9, 2012 By

With more awareness occurring about the amendments to the British Columbia Strata Property Act concerning depreciation reports, a common question most Owners and Council Members are asking themselves is:

“Should we proceed with a ¾ Vote and exempt from obtaining a depreciation report for our strata property?”

Owners in a Strata Corporation need to look beyond the cost of obtaining such a report and focus on the fact that these reports will be essential and beneficial tool not only for future planning, but for future buyers and financial institutions to consider the risks when purchasing a unit.

Living in a Strata Corporation where all Owners can not only afford their mortgage payments, strata fees, but potential special levies in relation to capital expenditures that are not covered by monthly strata fees and Contingency Reserve Fund contributions will ultimately benefit all those who are members of the Strata Corporation by ensuring property maintenance and renewal occurs.

Without such a report, it will difficult for Owners to sell their units as the cost of future capital expenditures will be unknown.  It will also be difficult for future buyers to assess the actual value of the property.

Contact Ascent Real Estate for help with your property maintenance in Greater Vancouver

Ascent Real Estate has been helping strata corporations with professional, responsive and legally sound strata management services in Burnaby and Greater Vancouver for more than 33 years. Contact Ascent Real Estate at 604-431-1800 for more information.

Filed Under: Property Management

Strata Corporation and Owner Insurance

November 23, 2011 By

Many strata lot owners believe that the Strata Corporation’s insurance policy covers all their risks or alternatively are not aware that they need personal insurance coverage.  Under Section 149(1) of the Strata Property Act, a Strata Corporation is only obliged to insure the fixed structure, permanently installed original fittings and fixtures, mechanical equipment and machinery, fire suppression systems and common assets of the Strata Corporation.  This is the insurance that a strata lot owner pays as part of their strata fees noted in the Strata Corporation’s annual operating budget.

Property insurance required for Strata Corporation
149  (1) The strata corporation must obtain and maintain property insurance on
(a) common property,
(b) common assets,
(c) buildings shown on the strata plan, and
(d) fixtures built or installed on a strata lot, if the fixtures are built or a installed by the owner developer as part of the original construction on the strata lot.
(2) For the purposes of subsection (1) (d) and section 152 (b), “fixtures” has the meaning set out in the regulations.
(3) Subsection (1) (d) does not apply to a bare land strata plan.
(4) The property insurance must
(a) be on the basis of full replacement value, and
(b) insure against major perils, as set out in the regulations, and any other perils specified in the bylaws.

Definitions for section 149 of the Act
9.1    (1)  For the purposes of sections 149 (1) (d) and 152 (b) of the Act, “fixtures” means items attached to a building, including floor and wall coverings and electrical and plumbing fixtures, but does not include, if they can be removed without damage to the building, refrigerators, stoves, dishwashers, microwaves, washers, dryers or other items.
(2) For the purposes of section 149 (4) (b) of the Act, “major perils” means the perils of fire, lightning, smoke, windstorm, hail, explosion, water escape, strikes, riots or civil commotion, impact by aircraft and vehicles, vandalism and malicious acts.

Minimum liability insurance
9.2  For the purposes of section 150 of the Act, the strata corporation must obtain and maintain liability insurance for a minimum amount of $2 000 000.

Given this, it is highly recommended that strata lot owners obtain insurance for their strata lot for the following:

• It is extremely important that owners know that the insurance policy for the Strata Corporation does not cover personal belongings in case of a loss.  If personal belongings are damaged from a loss, such as, but not limited to, a water escapement, fire or sewer back up, only a strata lot owner’s personal policy will cover belongings.  Each owner and tenant should purchase insurance coverage for his/her belongings.  Additional living expenses should also be added to a personal policy in case the need to live elsewhere while the strata lot is being repaired arises.

• Owners must ensure they are covered personally for any upgrades to the unit.  The Strata Corporation’s insurance policy only insures original fixtures.  An example of this would be hard surface flooring in a unit that originally contained carpet when constructed.  

• A personal policy should also include a Strata Corporation deductible section in case a strata lot owner, tenant or someone associated with the strata lot causes damage.  Personal insurance policies offer a strata deductible, which then reimburses the deductible imposed by the Strata Corporation on the strata lot owner due to a claim caused by the owner or tenant.  Sometimes this deductible is built into the insurance package and other times it is offered as optional coverage for an additional premium.  It is recommended to review the amount of available insurance coverage for the strata deductible with your insurance broker.  Please refer to your most recent Notice of Call (agenda) for your Annual General Meeting (AGM) to obtain a copy of the Strata Corporation’s insurance policy.

For example, if a strata lot owner, tenant, or individual associated with the strata lot overflows a sink or a bathtub and the Strata Council finds that the owner, tenant or individual associated with the strata lot was the cause of the resulting damages, the Strata Corporation can sue the owner for the insurance deductible.  This amount can be several thousands of dollars.

• All strata lot owners must maintain all items within their own strata lot.  If a leak occurs from these items; the strata lot owner will be responsible for all repair costs or the insurance deductible if a claim is filed.  The below list includes some of these items, but is not exhaustive:

o Tiles and grout on shower and bathtub enclosures;
o Washing machine hose connections;
o Dishwasher connections;
o Fridge water connections for ice makers;
o All visible pipes under sinks;
o Toilet supply lines;
o Toilet seals and;
o All appliances.

• Owners may wish to consider employing a professional contractor to carry out regular inspections and maintenance of these items.

Section 161 of the Strata Property Act contemplates that an owner may obtain his or her own insurance to cover risks that are not covered by the Strata Corporation’s policy.

Owner’s insurance
161  (1) Despite the Insurance Act or any other law, an owner may obtain and maintain insurance for any or all of the following:
(a) loss or damage to the owner’s strata lot and the fixtures referred to in section 149 (1) (d)
(i)  against perils that are not insured by the strata corporation, and
(ii)  for amounts that are in excess of amounts insured by the strata corporation;
(b) fixtures in the owner’s strata lot, other than the fixtures referred to in section 149 (1) (d);
(c) improvements to fixtures referred to in section 149 (1) (d);
(d) loss of rental value of the owner’s strata lot in excess of insurance obtained and maintained by the strata corporation;
(e) liability for property damage and bodily injury, whether occurring on the owner’s strata lot or on the common property.
(2) Despite this Act, the Insurance Act or any other law, an owner of a strata lot in a bare land strata plan may obtain and maintain insurance on buildings or fixtures built or installed on the strata lot.

Additionally, some Strata Corporation bylaws require each strata lot owner to have personal insurance and state that strata lot owners are responsibility for the deductible amount, or any damage up to the deductible amount in the event of a loss. 

Section 158 (2) of the Strata Property Act also provides that the Strata Corporation is permitted to sue a strata lot owner to recover any deductible paid by the Strata Corporation.  Furthermore, some Strata Corporations have adopted bylaws requiring a negligent or careless owner to pay the deductible without the Strata Corporation needing a court order to confirm this negligence or carelessness.

Insurance deductible
158  (1) Subject to the regulations, the payment of an insurance deductible in respect of a claim on the strata corporation’s insurance is a common expense to be contributed to by means of strata fees calculated in accordance with section 99 (2) or 100 (1).
(2) Subsection (1) does not limit the capacity of the strata corporation to sue an owner in order to recover the deductible portion of an insurance claim if the owner is responsible for the loss or damage that gave rise to the claim.

In order to ensure that you have adequate coverage in place, each strata lot owner should provide a copy of the Strata Corporation’s certificate of insurance that is contained in the Notice of Call (agenda) for each Annual General Meeting (AGM). 

Review and report on insurance
154  The strata corporation must
(a) review annually the adequacy of the strata corporation’s insurance, and
(b) report on the insurance coverage at each annual general meeting.

Each strata lot owner is strongly encouraged to obtain proper insurance coverage and ensure that if they have tenants in their unit, that their tenants also obtain adequate insurance.

Filed Under: Uncategorized

Depreciation Report

February 23, 2011 By

The provincial government introduced amendments to the Strata Property Act with Bill 12 (Strata Property Act, 2009) on March 23, 2009 and it received second reading on March 31, 2009.   While numerous changes were made; the implementation of depreciation reports will be discussed in this article.

The Amendment Act (Bill 12) substantially repealed Section 94 (Strata Property Act, 2009 ) and replaced it with provisions requiring that all existing and future strata corporations obtain a depreciation report.  The report must estimate the repair and replacement costs for “major items in the strata corporation and the expected life of those items”.  These “major items” will be prescribed in the regulations by future order-in-council.

94 (1) The strata corporation may prepare a depreciation report estimating the repair and replacement cost for major items in the strata corporation and  the expected life of those items to assist it in determining the appropriate amount for the annual contribution to the contingency reserve fund.

94 (2) A depreciation report may contain information based on the guidelines for depreciation reports as set out in the regulations and may be in the  prescribed form.

The Amendment Act requires that the report be prepared by “qualified persons”.  It is suggested that this will include accountants, surveyors, engineers and architects among others.

If the strata corporation has not previously completed such a report, they will be required to do so within two years of the coming into force of this provision.  If  a strata corporation has already obtained a report that complies with the provisions, they will not need to obtain a new report at this time, but will need to have updates completed to comply with the  provisions that will be determined. 

The strata corporation can release themselves from their obligation to complete a depreciation report by a resolution passed by a 3/4 vote at an annual or special general meeting, or if the strata corporation is a member of the prescribed class. The prescribed class, according to the legislative record, will include bare land strata developments and small strata developments, i.e. duplexes.

The provincial government has yet to provide a complete definition of the report requirements and it is hoped that it assists strata corporation’s in addressing long term planning and integrated maintenance.  Planning is required for each strata corporation to protect the common asset as maintenance is the best way to maintain the building systems and reduce costs.  Long term planning and maintenance will prolong the life cycle of the building systems, allow Strata Corporation’s to plan renewals without emergencies and reduce premature failures of systems and costly resultant damage. 

Permitting strata corporation’s to opt out of a depreciation report with a ¾ vote will not ensure that those strata corporation’s who currently do not perform long term planning and maintenance will do so.  This will widen the dividing line between maintained and neglected strata corporations and potentially defeat the intent of the Amendment Act (Bill 12).

While the provincial government could remove the word “may” from Section 94 of the Strata Property Act, thus making each strata corporation perform a depreciation report; would these reports actually be utilized, or would they just collect dust on a bookshelf?  Furthermore, is implementation even possible in some strata corporation’s who have insufficient operating and contingency reserve funds?  This is a reality as some buildings have never implemented plans and their capital costs are rapidly increasing, making their building unsellable.

Owners are one of the major obstacles when it comes to funding and undertaking capital projects.  Some owners believe that they pay their monthly strata fee and it covers all strata corporation costs including capital maintenance, while others feel that they will be moving and do not want to pay for improvements that will be enjoyed by others.  In western Canada, property value is traditionally high with strata fees being low. 

If the completion of depreciation was mandatory and a mechanism was provided to make implementation compulsory, it may result in well maintained strata corporations.

Furthermore, simple depreciation reports will not alter much. Capital reserve studies would be more beneficial as it would provide “a long range financial planning tool that identifies the current status of the capital reserves, integrates operational schedules for maintenance and planning and provide a funding plan.” 

Given that the specifics surrounding implementation and requirements have yet to be established; all owners are encouraged to participate in the open public consultation process at http://housing.gov.bc.ca/housing/strata.htm.

Filed Under: Property Management, Uncategorized



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