When it comes to buying your home, you’re going to likely get an email from your REALTOR with a bunch of documents. In there somewhere could be a cheeky little document called a Depreciation Report.
What is it?
Good question, I’m glad you asked! A Depreciation Report is a lengthy document which will cover the integrity and lifespan of every element of the building. So this ranges from the building entrance door, up to the parkade membrane, plumbing and everything in between.
How do I read it?
Ask your Realtor to help you on this. Don’t forget, it covers pretty much everything so there is A LOT of information. But typically it will have something like the following:
This is a super simple way a lot are laid out. A picture of the particular element, the year it was installed, how long it typically lasts for, along with a year it needs to be replaced and notes.
This is pretty much the bulk of it, however some will be laid out differently.
What if there are upcoming changes? Should I not buy?!
Where this document covers everything, it’s natural that there will be SOME (at least) changes coming up. The key is to look at WHAT is on the near horizon. Your Realtor can work with you on what is overall important to watch out for, and what you personally may be cautious of.
A report is not the ‘be all, end all”. If the report shows there may be some work coming up in 2020 to the parkade door motor for example; if the motor is operating fine in 2020, it’s very unlikely repairs or a replacement will take place. The report is just saying “OK, this motor was installed in 2005 and on average, has a 15 year life expectancy”. They take this information and note down a replacement date of 2020 (15 years after installation as the life expectancy is 15 years from installation.) This is a proactive way of the building planning ahead for repairs and knowing what’s upcoming, rather than operating in the blind.
What happens when these repairs are coming?
Assuming the repair comes about and needs to go ahead, the owners in the building will partake in a vote of repairing/replacing, and how to pay for it. The payment may be taken from the contingency reserve fund, in the form of a special assessment/levy or a combination of both. Don’t forget, the voters in this are also fellow owners like yourself so will not want to spend money unnecessarily either. The vote needs to be by a ¾ majority to be put into place.
My building doesn’t have one?!
Depreciation reports are NOT mandatory so a lot of buildings will not have them. A building which has one should be seen as a proactive measure to get ahead of the curve of building maintenance. If your or your proposed building does not have one, you should comb through the other documentation provided, along with an inspection of the unit.
So overall a Depreciation report is a good thing! It’s to stay ahead of the curve and give a rough blueprint of maintenance procedures over the coming years. It should be taken as a positive and also not as a definite. Providing you make sure you are happy with the upcoming maintenance projects, this should not be a deterrent from your property.
If you have any further questions on this topic, you can always reach out to us directly and we are happy to help!
Thanks again and until next week,