Are Stratas Required to Follow any of the Cash-Flow Funding Models in their Depreciation Report?

One of the requirements set out in the Strata Property Regulation is that, to be compliant, depreciation reports must include:

  • At least three cash-flow funding models for the contingency reserve fund, related to the maintenance, repair and replacement of capital expenditures over the next 30 years.

1. Are strata corporations required to follow any of these cash-flow funding models from their depreciation report?

The answer is no. Strata corporations are not bound by any of the models or recommendations made in their deprecation report. In our experience, the vast majority of strata corporations do not adopt a specific model. In fact, we rarely see that happen.

2. How can I tell if a strata is saving enough for the future?

The only way to tell if a strata is saving enough for the future, to cover all its anticipated capital expenditures, is to analyze the depreciation report and compare it with:

  • The strata’s current financials, and

  • The capital work the strata has completed since obtaining its depreciation report.

3. How do I actually do this?

Unfortunately there is no quick or easy way to do this. That’s why, in our reviews, we create a custom funding model based on:

  • The estimates provided in the strata’s depreciation report,

  • How much the strata currently has in its contingency reserve fund (CRF), and

  • How much the strata is contributing to its CRF annually.

This analysis and custom funding model provide buyers with an estimate of potential future special levies specific to the strata lot they are considering purchasing. By understanding the strata’s financial health and future expenditures, buyers can make more informed decisions and better anticipate future financial obligations associated with their potential purchase. This proactive approach helps avoid unexpected costs and ensures that buyers are financially prepared.


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