Condo & HOA Depreciation Reports in Canada

In Canada, depreciation reports (also known as reserve fund studies in some provinces) play a crucial role in the long-term financial planning and stability of condominium communities.
These reports provide condo corporations and owners with a clear picture of the current state of the property and the anticipated costs of maintaining and replacing its common elements over time.
By outlining necessary capital repairs and estimating when and how much they will cost, depreciation reports help ensure that adequate funds are being saved to cover future expenses.

What is a Depreciation Report & Reserve Fund Study?

A depreciation report (also called a reserve fund study) is a professional evaluation for strata corporations, condos, and HOAs. It assesses the condition, lifespan, and replacement costs of major common property components.

Inventory and Condition Assessment

The report lists key elements like roofs, walls, elevators, plumbing, HVAC, fire systems, and shared amenities. Qualified professionals inspect these and estimate their remaining useful life based on materials, maintenance, environment, and usage.

Long-Term Cost Projections and Funding

It forecasts when repairs or replacements will be needed over 20 to 30 years, estimating costs adjusted for inflation. The report includes a timeline of expenses, current reserve fund status, and funding scenarios to help plan contributions and avoid surprise special assessments.

Importance for Strata and HOA Communities

These reports support long-term financial planning, protect property values through timely maintenance, and improve transparency for owners and buyers. They help maintain adequate reserve funds and reduce financial risks.

Regular Updates

To stay accurate, reports must be updated every 3 to 5 years to reflect wear, inflation, and completed repairs, keeping plans current and compliant.

Regulatory Context and Update Frequency

In British Columbia, under the Strata Property Act, depreciation reports are mandatory for strata with five or more lots and must be updated every five years (since July 2024) with no deferral allowed. Ontario and Alberta require reserve fund studies every three and five years, respectively, ensuring reports reflect current conditions.

Main Regulatory Changes from July 1, 2024 for BC

As of July 1, 2024, significant changes to depreciation report requirements came into effect in British Columbia under the Strata Property Act. Now, all strata corporations with five or more strata lots must obtain a depreciation report every five years without the option to defer this by a 3/4 owner vote, which was previously allowed. Corporations without a current report (or with reports dated before December 31, 2020) have a grace period to comply:

• Metro Vancouver, Fraser Valley, and the Capital Regional District must complete reports by July 1, 2026.
• More remote areas like the Southern Gulf Islands and Bowen Island have until July 1, 2027.

New strata corporations created between July 1, 2024, and July 1, 2027, must obtain their first depreciation report within two years of their first annual general meeting and every five years thereafter. After July 1, 2027, owner developers will be required to contribute financially to the first depreciation report, with minimum payments scaled by the number of lots.
This regulatory tightening means strata and condo boards in BC must be proactive in commissioning and updating depreciation reports to comply with the law and maintain financial transparency and stability.

Key Components of a Depreciation Report

1. Inventory of Common Elements: Lists all major building components and shared property elements under the responsibility of the condo or strata corporation.
2. Condition Assessment: Professionals evaluate the current state of each component, estimating wear and remaining lifespan based on maintenance history, materials, and environmental factors.
3. Cost Estimation: Projects the expenses for repair or replacement, adjusted for inflation and market conditions to provide realistic future cost forecasts.
4. Timeline of Repairs: Details when specific repairs or replacements are expected, enabling strategic financial planning.
5. Funding Models: Presents various reserve fund contribution scenarios, allowing boards to balance financial health with owner fee impacts.

Who Do You Hire for a Depreciation Report?

Once a depreciation report is needed, strata, condo, or HOA boards should follow key steps to ensure a smooth, compliant process that results in a reliable report.

1. What Should a Condo or HOA Board Do Before Hiring a Professional?

Boards should prepare by gathering relevant documents to ensure an accurate assessment and smooth process. Key preparations include:

• Financial Records: Operating budget, reserve fund balance, and pending capital expenditures.
• Maintenance Documentation: Repair invoices, maintenance logs, and previous reports.
• Legal Documents: Strata plans, bylaws, easements, insurance, and any legal records.
• Assign Contacts: Designate board members to liaise with the report provider.
• Digitize Files: Convert large documents to electronic formats for easy sharing.

When selecting professionals, boards should choose qualified experts authorized by provincial regulations (e.g., engineers, architects, certified reserve planners) with relevant experience, liability insurance, references, and independence from conflicts of interest. The Appraisal Institute of Canada provides standards for professional appraisals that can guide your selection process.

2. How Long Does It Take to Get a Depreciation Report?

The timeline typically ranges from several weeks to a few months, depending on property size, complexity, document availability, and inspection scope. Early preparation can help shorten the process. Boards should allow enough time when requesting proposals and expect possible delays if documentation is incomplete.

3. Who Pays for the Report?

The cost is usually covered by the strata or HOA, funded through:

• Contingency Reserve Fund (CRF): Commonly used for capital planning expenses.
• Operating Fund: Included in the annual budget and paid via regular fees.
• Special Levy: Used if costs exceed budget, requiring owner approval.

Costs vary by property size and complexity, from a few thousand dollars for small communities to higher amounts for larger ones. Boards should communicate costs clearly to owners and seek budget approval.
In some provinces like BC, new strata corporations must obtain their first report within set timelines, with funding options including operating funds or special levies. The report must be retained permanently and provided to owners, often attached to property disclosure documents like the Form B Information Certificate as required by the Real Estate Council of British Columbia.

Summary Table

By following these steps, strata and HOA boards can ensure they hire the right professionals, manage the process efficiently, and fund the report responsibly, setting the stage for accurate long-term financial planning and property maintenance.

How to Interpret a Depreciation Report

Interpreting a depreciation report involves analyzing several critical data points:

• Remaining Useful Life: Pay attention to parts of the building or property that are getting old and may need repairs or replacement soon. This helps you plan for upcoming costs.
• Projected Costs and Timing: Understand when major repairs or replacements are expected and how much they might cost. This gives you a clear picture of future expenses.
• Reserve Fund Adequacy: Check if the current reserve fund and planned contributions will cover these future costs. This helps spot any gaps in funding early.
• Funding Scenarios: Look at different ways to collect money from owners to keep the reserve fund healthy and fees manageable.

Using tools like Eli Report’s Financial Health Assessment can make this easier. Eli Report quickly pulls out the key information from the depreciation report, highlights any financial risks, predicts if special fees might be needed, and compares your budget to similar properties. This helps boards and owners make smart, informed decisions without getting overwhelmed by the details.

Why Are Depreciation Reports Important?

The main purpose of a depreciation report is to ensure that condo corporations are financially prepared for future capital expenses. By having a long-term financial plan in place, the community can:

Avoid special assessments

When reserve funds are insufficient, condo boards may issue special assessments to cover unexpected repair costs, requiring owners to pay a lump sum. A well-funded reserve, informed by an accurate depreciation report, minimizes the risk of such assessments.

Maintain property value

Regularly scheduled repairs and maintenance help keep the building in good condition, preserving its market value. A building with a healthy reserve fund and proactive maintenance plan is more attractive to potential buyers, according to market data from the Greater Vancouver Real Estate Board.

Provide financial transparency

Depreciation reports offer transparency to current and prospective owners, allowing them to understand the financial health of the community. This can influence buying decisions and foster trust in the condo corporation.

Get a Plan in Place

A depreciation report does more than assess current conditions—it creates a living, actionable plan for future maintenance and funding. This roadmap helps strata, condo, and HOA boards prepare for repairs and replacements while keeping the plan updated as circumstances change.

1. Proactive Planning

The report provides a schedule of anticipated maintenance and capital expenses over 20 to 30 years, based on component lifespans and cost projections. Following this plan allows boards to:

• Schedule repairs in advance, avoiding costly emergencies.
• Adjust budgets and fees predictably, reducing sudden special assessments.
• Communicate transparently with owners about how funds are used.

2. Keeping the Plan Current

Regular updates—typically every three to five years—are essential to reflect wear, inflation, completed repairs, and changing conditions. Updates involve re-inspections, cost revisions, timeline adjustments, and reserve fund reassessments, ensuring the plan remains accurate and actionable.

3. Benefits of an Ongoing Plan

By treating the depreciation report as a dynamic tool, boards can:

• Maintain financial stability with a clear view of future needs.
• Demonstrate good governance, building trust and protecting property values.
• Adapt flexibly to new regulations, repairs, or owner priorities.

4. Simplifying Updates with Technology

Tools like Eli Report help boards track maintenance needs, benchmark reserve funds, summarize key findings, and receive reminders for report updates—making ongoing management easier.

A depreciation report is the foundation of continuous planning. By following and regularly updating it, strata councils and condo boards ensure their communities remain financially healthy, well-maintained, and attractive for years to come.

Legal Requirements for Depreciation Reports in Canada

Different provinces have varying regulations regarding depreciation reports. Understanding these differences is crucial, especially when comparing strata vs condo terminology and requirements across the country:

British Columbia

Under the Strata Property Act, depreciation reports are mandatory for condo corporations with more than five units. These reports must be updated every three years unless the owners vote by a 3/4 majority to waive the requirement.

Current Laws:

• Mandatory for all strata corporations with five or more strata lots.
• Update Frequency: Every five years (as of July 1, 2024).
• Deferral: The previous option to defer with a 3/4 vote has been eliminated; all eligible strata corporations must comply.
• Transition Deadlines:
  • Metro Vancouver, Fraser Valley, and Capital Regional District: Must have a current report by July 1, 2026.
  • Other regions (e.g., Southern Gulf Islands, Bowen Island): Must comply by July 1, 2027.
• New Strata Corporations: Created between July 1, 2024, and July 1, 2027, must obtain their first report within two years of their first AGM.
• Developer Contributions: After July 2027, developers must contribute to the cost of the first depreciation report, scaled by number of units.

Implications for Boards:

• Strata councils must proactively schedule and budget for regular reports—failure to comply can result in legal and financial risks.
• Reports must be made available to all owners and prospective buyers (usually attached to the Form B Information Certificate).
• Boards should plan for the cost in their annual budgets and communicate the importance of compliance to owners.

The British Columbia Real Estate Association (BCREA) provides additional guidance on compliance with these regulations.

Ontario

The Condominium Act requires that condo corporations conduct a reserve fund study every three years, with a site inspection conducted every six years. This is overseen by the Condominium Authority of Ontario (CAO).

Current Laws

• Reserve Fund Studies are mandatory under the Condominium Act, 1998.
• Update Frequency: Every three years.
• Site Inspection: Required every six years (i.e., every other study must include a physical inspection).
• Qualified Providers: Must be prepared by an engineer or other qualified professional.
• Owner Disclosure: Reserve fund study and funding plan must be shared with all owners.

Implications for Boards

• Boards must ensure timely updates to avoid non-compliance and potential legal disputes.
• The study’s recommendations must be considered when setting annual budgets and reserve fund contributions.
• Transparency with owners is required by law—failure to disclose can affect resale values and board liability.

For more details, see The Reserve Fund Study: What Ontario Condo Owners Need to Know.

Alberta

Reserve fund studies must be carried out every five years under the Condominium Property Act. These reports are mandatory and must be presented to owners as part of the corporation’s financial transparency. The Alberta Condominium Owners Association (ACOA) provides helpful resources for condo boards.

Current Laws

• Reserve Fund Studies are mandatory under the Condominium Property Act.
• Update Frequency: Every five years.
• Qualified Providers: Must be conducted by professionals with relevant experience (often engineers or reserve fund planners).
• Owner Disclosure: A summary of the study must be provided to all owners, and the full report must be available on request.

Implications for Boards

• Boards must plan for the study in advance and ensure timely completion.
• Reserve fund plans should be updated based on study recommendations to avoid underfunding.
• Non-compliance can lead to disputes, special assessments, and reduced property values.

For Alberta-specific regulations, refer to Service Alberta – Condominium Property.

Quebec

Reserve funds are not yet a legal requirement, but new legislation is being considered to mandate reserve fund studies.

Current Laws

Reserve Funds: Historically, Quebec did not require mandatory reserve fund studies.

Recent Changes:

• As of January 2024, Bill 16 (adopted in 2019) is now fully in force.
• Mandatory Reserve Fund Study: All syndicates of co-ownership (condo corporations) must commission a reserve fund study every five years, conducted by a professional technologist, engineer, or architect.
• Transition: Syndicates existing before January 2024 must obtain their first study by January 2027.

Implications for Boards

• Quebec condo boards must now proactively plan for and commission reserve fund studies.
• The study must guide reserve fund contributions and be shared with all co-owners.
• Failure to comply can affect insurance, financing, and resale.

For more information, consult the Régiseur du Québec – Condominiums resources.

Other Provinces and Territories

Manitoba

Reserve fund studies are required every five years for condominium corporations under The Condominium Act.

Saskatchewan

No province-wide legal requirement, but many corporations conduct studies as a best practice or per bylaws.

Nova Scotia, New Brunswick, Newfoundland & Labrador, Prince Edward Island

Requirements vary; some provinces mandate reserve fund studies for new condos and periodic updates, while others leave it to the discretion of the corporation or require it only if specified in the declaration or bylaws.

Yukon, Northwest Territories, Nunavut

No statutory requirement, but best practices are encouraged.

Key Takeaways for Condo, Strata, and HOA Boards

• Stay Informed: Laws are evolving, especially in Quebec and BC. Boards must keep up-to-date with provincial requirements and deadlines.
• Plan Ahead: Schedule reserve fund studies in advance and budget for their cost.
• Hire Qualified Professionals: Ensure compliance by hiring engineers, architects, or certified reserve fund planners as specified by your province.
• Communicate with Owners: Share reports and funding plans transparently to build trust and avoid surprises.
• Follow Recommendations: Use the study to guide reserve fund contributions and maintenance planning—this is not just a legal requirement, but a best practice for financial health.

Summary Table: Provincial Requirements for Depreciation Reports (2025)

Legal requirements for depreciation reports and reserve fund studies are tightening across Canada. Condo, strata, and HOA boards must be proactive, diligent, and transparent to ensure compliance, protect property values, and maintain financial stability for their communities.
The Canadian Condominium Institute (CCI) provides nationwide guidance on reserve fund study best practices.

Challenges of Underfunding

One of the biggest challenges condo corporations face is underfunding their reserve funds. While the depreciation report provides a roadmap for saving, some condo boards may choose not to follow its recommendations fully. This is often due to a reluctance to increase monthly condo fees, which can make the units less appealing to buyers in the short term. However, this can lead to long-term financial issues for the community, including large special assessments or the inability to address necessary repairs.

A 2017 study in British Columbia found that over 50% of condo buildings were underfunded in their reserve accounts, leaving many owners at risk of being hit with substantial special assessments to cover necessary repairs. At Eli Report, we believe this number is now even higher.

This issue is especially relevant when considering why condo fees differ across Canada, as lower monthly fees may indicate insufficient reserve contributions.

Final Thoughts

Depreciation reports are essential tools for managing the financial stability of condo communities in Canada. They provide a clear and realistic picture of the future costs of maintaining a building’s common elements, ensuring that condo boards can plan ahead and avoid placing undue financial burdens on owners. By ensuring that these reports are regularly updated and their recommendations followed, condo corporations can maintain property values, prevent surprise costs, and ensure the long-term health of their communities.

Professional strata management can help ensure depreciation reports are properly implemented and maintained, providing essential oversight for this critical aspect of property management.

Wondering about your condo’s latest depreciation report? Run an Eli Report to get a summary of key issues, a forecast of special levies, and benchmarked budget.