New strata property regulations approved by BC government – Greater Vancouver Real Estate News 2012
Highlights of the new regulations
Depreciation reports help strata corporations plan for future repair and maintenance costs. The report will help owners determine how repairs will be funded and the amount that could be contributed to the CRF. The most recent report will also be provided to potential purchasers.
Depreciation reports are now mandatory for all strata corporation with two exemptions:
- strata corporations which have less than five units; and
- strata corporations which have more than five units but exempt themselves through an annual three-quarter vote. If a three-quarter vote expires, strata corporations will have 18 months to get a depreciation report.
A depreciation report must be updated every three years, and must include:
- an onsite inspection and inventory of common property and building systems such as the building’s structure, exterior including roofs, decks and doors; the building systems such as electrical, heating and plumbing; utilities such as water and sewer, parking and landscaping;
- a schedule of anticipated maintenance, repair and replacement costs for common expenses projected over 30 years which includes potential interest and inflation rates; and
- a financial forecasting section which includes anticipated maintenance, repair and replacement costs and at least three cash-flow funding models for the contingency reserve fund.
Who can prepare a depreciation report?
The regulation does not specify qualifications. Strata developments can range from two-unit duplexes to bare land to low-rise wood frame buildings to high rise towers. The legislation leaves it up to the strata corporation to select a qualified person and requires that the depreciation report include the person’s qualifications, whether the person has errors and omissions insurance and the relationship between that person and the strata corporation.
Non-exempted strata corporations have until December 13, 2013 to comply.
A depreciation report is a key document for REALTORS® because property buyers, lenders and insurers will use the report to gain a better understanding of potential costs and risks associated with a property.
Contingency reserve funds
Previously, an annual three-quarter vote was required to make contributions to the reserve fund if it exceeded 100 per cent of the annual operating expenses. Strata corporations now don’t have to fund contingency reserve funds (CRF) above 25 per cent of the operating budget and can make additional CRF contributions by a majority vote.
Form B Information Certificate changes
As of March 1, 2012, strata corporations must attach copies of the following documents to Form B:
- the rules of the strata corporation;
- the current budget of the strata corporation;
- the owner-developer’s Rental Disclosure Statement, if any; and
- the most recent depreciation report (if any).
By January 1, 2014, strata corporations must also provide additional information to prospective buyers on parking and storage allocated to the strata lots.
Strata corporations may use the revised Form B sooner than these dates. The government plans to publish a guide to these changes sometime in 2012.
These regulation changes were developed after extensive consultation with strata owners and corporations, legal experts and other professionals. In addition, 1,800 British Columbians participated in an online consultation survey.
For information on the new strata regulations, visit: www.housing.gov.bc.ca/strata/regs
If you have any real estate questions or if you are thinking of buying or selling your home, please contact James Louie Chung, Metro Vancouver REALTOR® — Real Estate Agent at [email protected] or call / text ( 6 0 4 ) 7 1 9 — 6 3 2 8 today!