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New Rules a Boon For Property Owners

Published originally by the Comox Valley Business Gazette, Jan/Feb 2012

Strata corporations must commission a depreciation report before December 2013.

The provincial government’s decision to require strata corporations to maintain a fund for maintenance and repairs is great news for consumers, says a Comox Valley real estate appraiser.

In December, the B.C. government enacted changes to the Strata Property Act that make it mandatory for strata corporations to evaluate the anticipated costs to renew or replace common property and to maintain a reserve fund to cover anticipated expenses. Common property can include things like balcony railings, fences and other equipment and fixtures shared by individual strata owners.

“The regulation change does a lot to protect strata owners and prospective buyers,” says Dan Wilson, a real estate appraiser with Jackson & Associates and the Comox Valley’s representative for Vision Property Advisors Inc. “The leaky condo fiasco of not long ago demonstrated how individual property owners can be on the hook if the strata doesn’t have enough reserve funds to cover repairs.”

Under the new rules, strata corporations have until December 2013 to commission a depreciation report, which includes an inventory of all common property and estimates the cost of renewals and maintenance.

Concurrent with the regulation change was another amendment that allows prospective strata property buyers to request a copy of the depreciation report. This amendment, says Wilson, gives consumers a significant advantage when shopping for real estate.

“Without a depreciation report, the buyer has no guarantee that the strata fee won’t double overnight to cover some unforeseen expense,” he explains. “There’s a huge variation in strata fees on the market. But a $75 fee without a depreciation report carries a much higher risk of escalating versus, say, a $100 fee with a report and a sufficient reserve fund.

“Though strata corporations can vote to exempt themselves from the new regulation,” he adds, “I think we’ll see that the market will force them to comply. Units in stratas that can’t show they’re fully funded will sell at a discount.”

The easiest way for strata corporations to obtain a depreciation report is through a company such as Vision Property Advisors, a partnership of five certified reserve fund planners that formed a year ago to address the then-forthcoming regulation change. To request a consultation and estimate, call 250-338-7323 or email dan@visionpa.com.

To learn more, visit www.visionpa.com.

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