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

In BC, strata corporations with five or more strata lots are required to obtain depreciation reports. The owners can waive this requirement (for 18 months) by passing a 3/4 vote at a general meeting, and they can continue to waive this requirement at subsequent general meetings.

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

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

1. So, are strata corporations required to follow any of these cash-flow funding models in their depreciation report?

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

2. So, 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 pay for all its anticipated capital expenditures) is to analyze the depreciation report and compare that with:

  • The strata’s current financials, as well as

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

3. So, how do I actually do this?

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

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

  • How much the strata is currently saving for the future.

This give buyers a more accurate estimate of how much they can expect to pay in special levies, specific to the strata lot their are looking to purchase. That’s it for this week. If you have any suggestions for other topics you’d like us to cover, please let us know at
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