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The British Columbia Financial Services Authority (BCFSA) has recently announced significant amendments to the Strata Property Regulation under the Strata Property Act, which are set to impact the way depreciation reports are handled by strata corporations. These changes are particularly relevant for strata corporations with five or more strata lots and carry important implications for real estate licensees and developers. Set to come into effect on July 1, 2024, with specific transitional provisions, these amendments aim to enhance the long-term financial planning and maintenance strategies for strata properties.
Key Changes to Depreciation Report Requirements
Depreciation reports are crucial tools that provide a comprehensive assessment of the physical condition of strata buildings and their infrastructure. These reports aid strata corporations in making informed decisions about necessary maintenance and repairs, ensuring financial preparedness for future needs. The recent regulatory amendments make several important changes:
- Elimination of Indefinite Deferrals: Strata corporations can no longer indefinitely postpone obtaining a depreciation report by securing an annual three-quarters vote.
- Extended Timeline for Reports: The frequency of required depreciation reports has been adjusted from every three years to every five years.
- Enhanced Report Quality: Moving forward, depreciation reports must be obtained from a pre-approved list of qualified professionals, ensuring higher standards and reliability.
- Developer Contributions: Developers establishing new strata corporations on or after July 1, 2027, must provide initial funding for depreciation reports. This funding—a minimum of $5,000 plus $200 per strata lot, not exceeding $30,000 in total—should be deposited into the strata contingency reserve fund by the date of the first annual general meeting.
Transitional Provisions and Timelines
The amendments include transitional provisions that outline specific deadlines by which both existing and new strata corporations must comply with the new requirements for obtaining depreciation reports. These provisions are detailed in the Order of the Lieutenant Governor in Council 204 – 2024, which real estate professionals are encouraged to review thoroughly to advise their clients accurately.
Implications for Real Estate Licensees and Developers
For Real Estate Licensees: Real estate professionals, particularly those licensed to offer strata management services, need to be well-versed in these changes to provide correct guidance to their clients. It is crucial for licensees working with strata councils to familiarize themselves with the new timelines and requirements to ensure their clients are compliant with the updated regulations.
For Real Estate Developers: Developers should note that while the amendments take effect in 2024, the requirements for providing funding for depreciation reports kick in on July 1, 2027. This will affect disclosure statements or amendments under the Real Estate Development Marketing Act (REDMA) for developments expected to be completed on or after this date. Developers must ensure that the budgets disclosed in these statements comply with the new funding requirements to avoid potential legal complications.
Consultation and Additional Resources
Given the complexity of these changes, consulting with a legal expert in strata property law is advisable. Additional resources and detailed information about the amendments can be found on the Government of B.C.’s Strata Housing website, through official news releases, and by reviewing the Strata Property Regulation and the relevant governmental orders.
As these changes represent significant shifts in the responsibilities and expectations placed on strata corporations and developers, staying informed and proactive is essential for all parties involved in the real estate sector.
A depreciation report provides a comprehensive assessment of the physical condition of strata buildings and infrastructure, aiding in long-term financial planning and maintenance strategies for strata corporations.
The amendments will come into effect on July 1, 2024.
The amendments removed the ability for strata corporations to indefinitely defer obtaining a depreciation report by obtaining an annual three-quarters vote.
Strata corporations are now required to obtain a depreciation report every five years instead of every three years.
Strata corporations must obtain depreciation reports from a list of qualified professionals.
Developers are required to provide new strata corporations, established on or after July 1, 2027, with funding for depreciation reports. The funding must be at least $5,000, plus $200 per strata lot, up to a maximum of $30,000.
The funding must be paid into the strata contingency reserve fund no later than the date of the strata corporation’s first annual general meeting.
Developers must amend their disclosure statements to include a budget that complies with the new funding requirements for a depreciation report to ensure continuous, accurate disclosure.
Additional information can be found on the Government of B.C.’s Strata Housing website, the Government of B.C. News Release, the Strata Property Regulation, and the Order of the Lieutenant Governor in Council 204 – 2024.
The amendments include transitional provisions that outline specific deadlines by which existing or new strata corporations must obtain depreciation reports. These provisions detail the dates and conditions under which these reports must be secured to comply with the new regulations.
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