Reserve Fund Analysis

A Reserve Fund Analysis, or Strata Depreciation Report in the case of reports done under the Strata Act,is a budget planning tool which identifies the current status of the reserve fund for a particular property, as well as a stable and equitable funding plan to offset ongoing deterioration, resulting in sufficient funds when those anticipated major expenditures actually occur. The reserve study consists of two mainparts: the physical analysis and the financial analysis. The physical analysis includes a condition assessment of the common elements of the property, such as the roofing system, elevators, or the building envelope. The financial analysis focuses on the funding of the contingency reserve fund and provides a minimum of three funding models to assist Strata Councils, so that they can best meet their financial goals when major system replacements become necessary. Strata Depreciation reports map out a 30-year projection of the maintenance and replacement of the Common Property.

This report document is often prepared by an outside independent consultant for the benefit of administrators (Owner or Board of Directors for commercial properties or Strata Council Members for a property with multiple owners) of a property. Reserve studies can be created for many types of properties such as resort (shared vacation ownership) properties, apartment buildings, worship facilities, private schools, private (golf/social) clubs, office buildings, malls, public buildings, etc.

All Strata Corporations in BC comprising 5 units or greater must address the Depreciation Report requirement. They can vote to waive the requirement through a 75% vote of owners at an Annual General Meeting or Special General Meeting (which defers the requirement), or complete their report on a 3 year recurring cycle. New Strata Corporations must comply within 6 months of their 2nd AGM by either conducting the report or successfully waiving the requirement. A Strata Corporation which waives the requirement is simply extending their deadline by 18 months. In order to waive the requirement indefinitely, the Strata Corporation would need to vote 75% in favor of waiving at every subsequent AGM or SGM.

ASTTBC-PI inspectors who attain the certification designation of RRFA or RRFA(L) are qualified to provide Stata Depreciation Reports commensurate with their experience and training. What separates them from other “qualified persons” is their superior inspection knowledge, which provides a more realistic condition assessment of the main systems, as opposed to a general “typical expected” system replacement which does not accurately account for maintenance. Hiring an ASTTBC-Certified Registered Reserve Fund Analyst gives Stratas a more realistic condition assessment of their valuable assets, allowing them to more accurately plan for the eventual replacement of these systems.