Strata Tip of the Week – When Is a Depreciation Report Outdated?

by Condo Clear

A depreciation report can become outdated far sooner than many people expect. In some cases, information in the report may begin to lose accuracy only a year or two after the report is completed. The answer depends on how well the report’s assumptions still match real-world conditions, and how much the strata’s circumstances have changed since it was prepared. Understanding when and why this happens requires looking at the report’s purpose, its underlying assumptions, and the many factors that can shift over time.

In British Columbia, strata corporations with five or more strata lots must update their depreciation report at least every five years. But the five-year requirement is simply a legal minimum, not a guarantee that the information will remain accurate for that long. Economic changes, increases in construction costs, shifts in maintenance planning, and new regulatory requirements can all affect the accuracy of the information.

Understanding when a depreciation report no longer reflects the building’s current circumstances is an important part of recognizing its limitations and making informed decisions.

Why Depreciation Reports Matter

A depreciation report outlines the estimated repair and replacement costs of a strata’s major components over a 30 year period. When accurate, it helps:

Councils plan for maintenance and long-term financial needs.
Owners understand future expenses.
Buyers and sellers assess upcoming projects and potential risks.
Professionals such as Realtors, lawyers, and other advisors provide clearer guidance to their clients.

A depreciation report is only useful when its assumptions are considered in the context of current conditions. If real world changes are not taken into account, the report may give an incomplete or misleading picture of the strata’s financial outlook.

The Assumptions Behind Every Depreciation Report

Depreciation reports are built on assumptions that can change over time. These include, among others:

Expected changes in inflation.
Assumed interest rates for contingency reserve fund (CRF) investments.
Estimated service life of building components.
Projected costs of goods and services.

If these assumptions no longer reflect real-world conditions, the usefulness of the report decreases.

Examples of What Can Make a Report Outdated

A depreciation report may fall out of date for various reasons. At Condo Clear, we often see older reports that no longer reflect current conditions because key assumptions have changed over time. Some common situations include:

1. Higher Than Expected Construction Costs – Construction and labour costs in BC have increased significantly in recent years. Older reports may underestimate the costs of upcoming projects.

2. Market and Industry Changes – Contractor availability, supply chain issues, and broader economic trends can affect pricing and timelines.

3. Shifts in Maintenance or Replacement Plans – If a strata accelerates, defers, or adds projects, the financial projections in the report may no longer align with the building’s actual needs or current realities.

4. New Legislation or Building Code Requirements – Changes to safety, environmental, or accessibility standards can introduce work that was not anticipated in earlier reports.

5. Upgrading Instead of Replacing Like-for-Like – Depreciation reports often assume that components will be replaced with similar materials or systems. In practice, stratas sometimes choose to upgrade components, improve energy efficiency, or change materials entirely. These choices can significantly increase or change the cost of a project compared to what the report projected.

When a Depreciation Report May No Longer Be Accurate

In BC, a depreciation report for a strata with five or more strata lots is considered current for regulatory purposes if it is less than five years old. However, a report may become less reliable well before that timeline. Its findings may no longer be “current” if, among other reasons:

Inflation differs significantly from the report’s assumptions.
Market conditions have raised or lowered construction and labour costs.
Major repairs were completed earlier or delayed because of new findings.
New information has emerged about the building’s condition or risks.

Relying on a report that no longer reflects present conditions can lead to poor decision making for councils, owners, buyers, and others using the report to understand the building’s financial outlook.

Some situations may justify updating a depreciation report before the mandatory five-year mark. These include:

Significant differences between projected and actual costs.
Changes to the building’s maintenance or replacement schedule.
New information about the condition of key components.
Shifts in legislation or building codes.
A general need for greater accuracy during periods of rapid economic change.

Updating a report early is not always necessary, but in some cases it can help a strata plan more effectively and reduce uncertainty around upcoming expenses.

Interpreting a depreciation report can be challenging, particularly when comparing its projections to current conditions. At Condo Clear, we often help clients understand the findings in their reports and how they relate to long-term planning. If you have questions on how to interpret your depreciation report or what it means for your strata, we are always happy to help. Clear interpretation supports better decision making for councils, owners, buyers, and anyone relying on the information.

What to Keep in Mind When Reviewing a Depreciation Report

Regardless of your role, some useful questions to ask when reviewing a depreciation report include:

When was the report last updated?
Have major projects been completed, added, removed, or postponed?
Do the projected costs still seem realistic today?
Has legislation or building codes changed since the report was prepared?
Has the building’s condition changed based on recent inspections or assessments?
Have owners or council made decisions that differ from the assumptions in the report?
Has the strata adopted new priorities that were not anticipated in the report?

Depreciation reports remain an essential tool for long-term planning, but they are only as reliable as the assumptions behind them. Understanding how real-world conditions can shift over time helps councils, owners, buyers, and professionals use these reports more effectively and avoid relying on information that may no longer be accurate.

At Condo Clear, we review strata documents every day and share these insights to help buyers and owners feel more confident navigating strata living. Sign up for our Strata Tip of the Week Newsletter to stay up to date with the latest strata news and articles.

That’s it for this week. If you have any suggestions for other topics you’d like us to cover, please let us know at info@condoclear.ca.

Author: Mugurel Mic; Last Edited: December 9, 2025

Disclaimer: The information provided is for general purposes only. It is not intended to provide legal advice or opinions of any kind. No one should act, or refrain from acting, based solely upon the materials provided, any hypertext links or other general information without first seeking appropriate legal or other professional advice.

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