Of buyers don't properly read depreciation reports
Average upcoming repair costs in BC buildings
Years maximum between required updates in BC
Under the BC Strata Property Act, all strata corporations with 5+ units must obtain a depreciation report every three years. This detailed assessment examines building components, estimates repair costs, and projects reserve fund needs.
However, 85% of buyers don't know how to properly interpret these reports. They often focus on the summary page while missing critical details that could signal major upcoming expenses.
💡 Key Insight:
A depreciation report isn't just about building condition—it's a roadmap to future financial obligations. Understanding it can save you from surprise assessments and help negotiate better purchase terms.
What to focus on: The executive summary contains the 3 most important pieces of information: total upcoming costs, reserve fund adequacy, and immediate repair priorities.
🔍 Key Numbers to Extract:
Red flag language: Watch for phrases like "immediate attention required," "significant deterioration," or "urgent replacement recommended." These indicate problems that could trigger special levies.
How to read condition ratings: Most reports use a 1-5 scale where 1 = excellent and 5 = failed. Focus on high-cost items (roof, elevators, parkade) with ratings of 3 or higher.
📊 Priority Assessment Matrix:
Focus on these high-impact components: Roof systems ($200-500K), elevators ($150-300K), building envelope ($300-800K), parkade membrane ($150-400K), and HVAC systems ($100-250K).
Calculate reserve fund health: Divide current reserve balance by annual budget. A healthy ratio is 25-50%. Below 20% indicates potential financial stress.
💰 Financial Health Indicators:
Excellent (50%+): Well-funded, minimal special levy risk
Good (25-50%): Adequate reserves, manageable future costs
Concerning (10-25%): Potential for moderate special levies
Poor (<10%): High risk of significant special assessments
Look for funding gaps: Compare recommended annual contributions vs actual contributions. Large gaps indicate the strata is underfunding future repairs.
Create your expense timeline: Map out all projected costs by year for the next 5-10 years. Look for years with clustered expenses exceeding $500K+.
📅 Timeline Red Flags:
Inflation factor: Most reports use 2-3% annual inflation. In today's market, consider if these estimates are realistic for construction costs in BC.
Decode engineering language: Engineers use careful language to convey urgency. "Recommend further investigation" often means they found something concerning but need more detailed analysis.
🚨 Critical Phrases to Watch:
Pay attention to disclaimers: If engineers note limitations in their inspection (inaccessible areas, weather conditions), consider what wasn't evaluated and potential hidden issues.
Don't risk misreading critical details. Let Aria's AI analyze your depreciation report and highlight key risks and opportunities.