Until recently, a BC strata corporation could defer obtaining a depreciation report by passing a three-quarters vote at its annual general meeting (AGM). In practice, that often meant an otherwise overdue depreciation report was postponed while the strata focused on more immediate priorities.

That option is no longer available.

On July 1, 2024, new regulations were introduced to ensure long-term financial transparency for strata corporations. These regulations require strata corporations to obtain updated depreciation reports at specified intervals.

So, why does this matter for REALTORS®?

REALTORS® need to understand the new depreciation report requirements in order to protect their clients from both strata corporations that are not compliant with the new requirements and potential surprise special levies, and to ensure accurate property valuations.

New Frequency and Scope Requirements

Under the new requirements, strata corporations with five or more strata lots (including bare land strata corporations) must now obtain a depreciation report every five years, and this report cannot be deferred by a vote. Previously, the requirement was to update depreciation reports every three years, but with the ability to defer obtaining these reports with a three-quarters vote one year prior to the due date for the new depreciation report. Each deferral was for 18 months, but the report could be deferred again with another three-quarters vote held within the proper time.

Bare land strata corporations are also bound by these same depreciation report requirements since they often manage significant infrastructure, such as roads and utilities.

It is important to note that the new requirements do not apply to strata corporations with four or less strata lots.

Critical Deadlines for Existing Strata Corporations

Under the new regulations, strata corporations that do not have a depreciation report – or strata corporations that obtained their most recent report prior to December 31, 2020 – need to obtain new depreciation reports prior to the following dates:

• July 1, 2026: For corporations in the Metro Vancouver, Fraser Valley, or Capital Regional Districts (excluding islands accessible only by air or boat).
• July 1, 2027: For all other areas of BC, including Bowen Island and the Southern Gulf Islands.

What Happens if a Strata Doesn’t Comply?

While the Strata Property Act and Strata Property Regulation do not impose an express automatic fine, offence, or administrative monetary penalty for failing to comply with the depreciation report requirements, non-compliance may nevertheless have meaningful consequences.

An owner, tenant, mortgagee, or other interested person may seek a court order requiring the strata corporation to comply. Prolonged or unjustified non-compliance may also create governance concerns for council members, who are required to act honestly, in good faith, and with the care, diligence, and skill of a reasonably prudent person in comparable circumstances.

In addition, the absence of a current depreciation report may create practical disclosure and due diligence issues in connection with sales, refinancing, and other transactions, and may raise concerns for insurers, lenders, purchasers, and mortgage applicants regarding the strata corporation’s capital planning and potential future special levies. So, although there is no automatic statutory penalty, non-compliance can result in court proceedings, costs, governance disputes, and increased scrutiny in sale, financing, insurance, and lending contexts.

Requirements for New Developments

New strata corporations with five or more strata lots must also comply with the new depreciation report requirements.

A strata corporation established on or after July 1, 2024, and before July 1, 2027, must obtain its first depreciation report within two years of its first annual general meeting. A strata corporation established on or after July 1, 2027, must obtain its first depreciation report within 18 months of its first annual general meeting.

Additionally, for a new strata corporation with five or more strata lots established on or after July 1, 2027, the owner developer must contribute to the contingency reserve fund for the first depreciation report the lesser of:

• $30,000; and
• $5,000 plus $200 per strata lot.

This contribution must be paid no later than the first annual general meeting. REALTORS® assisting with pre-sale purchases should consider whether the anticipated strata corporation and developer will be subject to these requirements, the potential effect on future strata budgets and fees, and whether the developer’s contribution has been noted in the proposed budget attached to the disclosure statement.

Professional Standards and Report Content

Effective July 1, 2025, strata corporations must obtain depreciation reports from a qualified person with the required knowledge and expertise who falls within one of the prescribed professional categories:

• Engineers (including professional licensee engineers)
• Architects (including architectural technologists)
• Applied science technologists (including certified technicians)
• Accredited appraisers
• Certified reserve planners
• Professional quantity surveyors

The depreciation reports must have a 30-year projection of repair and replacement costs, three cash flow models for funding the contingency reserve fund, a mandatory executive summary, and specific inclusions for air conditioning and ventilation systems where applicable.

Due Diligence: The Agent's Role

REALTORS® should review the Form B for the most recent depreciation report, along with the financial statements for the strata corporation. REALTORS® should also review the cash-flow models, current contingency reserve fund balance, and planned work to help clients identify questions about anticipated capital costs and the potential for future special levies. An overdue or missing depreciation report may warrant further investigation by the buyer.

Conclusion: Strengthening the Strata Market

While the new regulations are more onerous for strata corporations, they aim to provide more transparency and accountability for strata lot owners and potential buyers. The hope is that these new regulations will ensure strata corporations continue to repair and maintain their buildings to ensure the longevity of the developments, support informed budgeting, reduce the risk of unexpected special levies, and help strata corporations plan for major repair and renewal work.

REALTORS® should verify the date of each depreciation report and the qualifications of its writer (for reports obtained on or after July 1, 2025) when listing or offering on a property.

Summary of Important Dates

Existing strata corporation with no depreciation report or a report older than December 31, 2020, must obtain a new report by:

• July 1, 2026: For corporations in the Metro Vancouver, Fraser Valley, or Capital Regional Districts (excluding islands accessible only by air or boat).
• July 1, 2027: For all other areas of BC, including Bowen Island and the Southern Gulf Islands.

New strata corporations:

• Established between July 1, 2024, and July 1, 2027, must obtain their first depreciation report within two years of their first AGM.
• Established on or after July 1, 2027, must obtain their first report within 18 months of their first AGM.

New developments:

• For a new strata corporation established on or after July 1, 2027, the developer must fund the first depreciation report by paying the lesser of $30,000 or $5,000 plus $200 per strata lot into the contingency reserve fund.

For more information, check out the BC Government’s Strata depreciation report requirements page.

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