Buying a Strata? Understand the depreciation report estimates!

Buying a Strata? Understand the depreciation report estimates!

Depreciation Reports or Reserve Fund Studies are a useful tool that enable strata corporations to better plan for future repair and/or replacement, and maintenance of common property and common assets over the life of the assets. 

Special levies are a fact of life when buying into a strata, you will never completely avoid it. As an owner you should view these as an investment in the maintenance and of your home. However no one wants to purchase a home and immediately be saddled with a large special assessment.

From a buyer’s point of view, depreciation reports are a tool that can give them a better understanding of:

The likelihood that they may have to pay additional special levies, because of  inadequte funding of the Contingency Reserve Fund (CRF), to pay for future projects.

That being said, when looking at depreciation reports, it’s important to recognize that the cost estimates represent a “best guess”. The engineer comes on site and does a visual inspection of the strata’s common property and common assets and they do their best to predict the life span of the essential components and when the strata will have to repair and/or replace and how much this might cost.

It’s important for buyers to take the time to thoroughly review the depreciation report along with the Strata minutes in order to assess the condition of the complex and the likely hood of special assessments and when to expect them.

If you're non inclined to read documents, there are a few companies your can pay that provide strata review services such as Condo Clear and Eli reports; they provide a summary of key areas. 

If you're thinking about buying into a strata, contact me or call 604-514-9667

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