In 2020 the Province passed legislation amending a handful of provisions of the Strata Property Act (SPA). Not of all of those changes were put into immediate effect. One of those delayed amendments was in relation to depreciation reports. Up until now strata corporations have had the ability to waive getting a depreciation report, either to avoid it altogether or to delay the timing between reports. Soon that will no longer be the case due to the recent enactment of those provisions and related changes to the regulations.
Effective July 1, 2024 ss.94(2) and (3) of the SPA will be repealed and replaced with a mandatory requirement to obtain a depreciation report on or before the dates set out in the regulations and then every five years thereafter.
The timing for the new mandatory report differs based on where a strata corporation is located and when it last obtained a depreciation report. (Strata corporations with fewer than 5 strata lots remain exempt from getting a report).
Strata corporations which obtained a depreciation report in 2021 and onwards will not have to obtain another one until 5 years after the date of that report. For example, if the strata corporation’s most recent report is dated July 2023, they will not need a new one until July 2028.
Where the strata corporation’s last report was obtained prior to December 31, 2020:
• If located in Metro Vancouver, the Fraser Valley and the Capital Regional districts it will have to obtain a new report by July 1, 2026;
• If located outside those areas it will have to obtain a new report by July 1, 2027;
For strata corporations established on or after July 1, 2024 but before July 1, 2027 its first report will be due no later than 2 years after the date of the first annual general meeting.
If a strata corporation is established after July 1, 2027 its first report is due 18 months after the first annual general meeting. For those strata corporations, the owner developer must fund obtaining the report by paying into the Contingency Reserve Fund (“CRF”) (prior to the first annual general meeting) the lesser of:
(a) $5,000, plus an additional $200 multiplied by the number of strata lots in the strata corporation; or
(b) $30,000.
No adjustment is made either way based on the actual cost of the report.
Who is a “qualified person” to prepare the report is also changing. As of July 1, 2025 the report must be prepared by one of the following:
(i) a professional engineer registered as a member in good standing with the Association of Professional Engineers and Geoscientists of the Province of British Columbia;
(ii) a person registered as an architect with the Architectural Institute of British Columbia;
(iii) a person registered as an applied science technologist under the Professional Governance Act;
(iv) a person designated Accredited Appraiser Canadian Institute by the Appraisal Institute of Canada;
(v) a certified reserve planner accredited by the Real Estate Institute of Canada;
(vi) a person designated Professional Quantity Surveyor by the Canadian Institute of Quantity Surveyors.
Currently there is no requirement to contribute to the CRF based on the contents of the report. However, Regulation 6.1(1) (as it always has) requires that the amount to be contributed to the CRF “must be determined after consideration of the most recent depreciation report.” When preparing the budget and setting a contribution figure for the CRF, the strata council should indicate how the proposed contribution amount relates to the amounts in the depreciation report. That way the strata council is able to show that the report was “considered” and not simply ignored.
This article is intended for information purposes only and should not be taken as the provision of legal advice. Shawn M. Smith is lawyer whose practice focuses on strata property law. He frequently writes and lectures for strata associations. He is a partner with the law firm of Cleveland Doan LLP and can be reached at (604)536-5002 or shawn@clevelanddoan.com. He can be followed on Twitter @stratashawn.
