Strata Tip of the Week – Depreciation Report Funding Models: Do Stratas Have to Follow Them?

A depreciation report estimates the cost of maintaining, repairing and replacing major items the strata corporation is responsible for over the next 30 years. It also includes different ways the strata could plan to pay for that work, called cash flow funding models.

But is a strata required to follow any of these models? No. However, understanding what the models show, and what they don’t, can help buyers, owners, council members, strata managers and Realtors better understand a strata’s future financial outlook.

1. What Is a Cash Flow Funding Model?

A cash flow funding model shows how a strata corporation could pay for major repairs and replacements over the coming years. It considers how much money the strata already has saved in its contingency reserve fund (CRF), how much it chooses to contribute to the fund each year, and whether special levies from owners might also be needed to cover future costs. Under Section 6.2 of the Strata Property Regulation, a depreciation report must include at least three cash flow funding models, each showing a different approach to funding future expenses.

Comparing the models shows the trade-off between paying more now and potentially paying more later. Higher CRF contributions generally mean higher strata fees now but may reduce the need for special levies later. Lower contributions can mean lower fees now but potentially larger special levies in the future.

2. What Determines How Much the Strata Actually Saves?

A strata can choose a different approach from the funding models in its depreciation report, but under Section 6.1 of the Strata Property Regulation, its annual CRF contribution must be at least 10% of the amount budgeted for the operating fund contribution.

Under Section 103 of the Strata Property Act, the strata must approve a budget for the coming year at each annual general meeting. Council prepares the proposed budget, including the CRF contribution, but it’s the owners, by majority vote, who ultimately decide how much will be added to the CRF through the budget they approve.

At Condo Clear, we find that while every strata contributes to its CRF each year, the vast majority don’t base those contributions on a specific funding model, at least not over the long term. That’s why our reviews include an estimate of potential future special levies for the specific strata lot, based on what the strata is actually doing today.

3. How Can You Tell If a Strata Is Saving Enough?

The depreciation report alone won’t tell you whether a strata is saving enough to avoid future special levies. To get a clearer picture, compare the report’s cost projections and planned work with:

• The strata’s current savings, including its CRF balance and annual CRF contribution
• The major work completed since the report was prepared
• Any newer reports, quotes or meeting minutes showing changes in costs or upcoming projects

This helps you assess whether the strata’s current approach is keeping pace with its anticipated needs. Remember that projected costs are estimates, and actual costs can change.

4. Why This Matters

For buyers and Realtors, this comparison can help identify whether a strata’s current saving approach is likely to result in special levies in the future. Under Section 59 of the Strata Property Act, the most recent depreciation report, if one exists, must be attached to the Form B, so it should be part of the documents you review.

For owners, council members and strata managers, the funding models can help inform annual budget decisions by illustrating the potential trade-off between higher strata fees now and special levies later. Owners can also use this information to decide whether to set aside savings of their own, in case the strata’s CRF contributions are likely not enough to avoid future special levies.

A depreciation report is a valuable planning tool, but its funding models are options, not obligations. Comparing the report with the strata’s actual financials and completed work gives you a clearer picture of where the strata stands and what it may need in the future.

At Condo Clear (https://condoclear.ca/), 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 (https://condoclear.ca/email-sign-up/) 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: October 26, 2026

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