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Insurance Appraisals and Depreciation Reports
Why use Pacific Rim Appraisals for Your Depreciation Reports and Insurance Appraisals in British Columbia ?
Pacific Rim Appraisals Ltd. has been:
What is the Purpose of an Insurance Appraisal ?
The main purpose of an insurance appraisal is to ensure that the entire property; materials, labour, professional fees, overhead, contractor’s profit, taxes and insurance are adjusted to reflect the current costs for the area that the property is located.: e.g. different building costs in Victoria, Vancouver, Kelowna vs. the Gulf Islands vs. Tofino etc.
What is Included in an Insurance Appraisal ?
For a high end residential home the report is approximately 10 to 12 pages long and a commercial and/or multi-family project can be 20 to 30 pages long. The appraisals will include a complete description of the home and/or multi-family project etc. Its location including exterior and interior photos, building sketch and an itemized cost break down of the structures including the main home and any other improvements located on the property. The structures include adjustments for quality of interior and exterior finishes, built-in appliances, number of bathrooms, fireplaces etc. etc. An allowance for demolition and removal costs associated with clearing and preparing the site for the replacement building is taken into consideration. Allowances to bring the original structure up to the current Municipal Codes for fire protection, parking, handicap access and play areas are considered.
Why are Insurance Appraisals Needed ?
The costs for construction has sufficiently altered in the last couple of years and especially in areas where there is a current labour shortage thus many high end residential homes and multi-family/commercial properties are currently under insured. The insurance appraisal also gives a complete documentation of what is located on the property as of a specified date. E.g. The Kelowna fires several years ago created a great deal of argument of what was of the site after it was not documented in any sort of manner.
Legally speaking according to the Strata Property Act:
149 (1) The strata corporation must obtain and maintain property insurance on
(a) common property,
(b) common assets,
(c) buildings shown on the strata plan, and
(d) fixtures built or installed on a strata lot, if the fixtures are built or installed by the owner developer as part of the original construction on the strata lot.
(2) For the purposes of subsection (1) (d) and section 152 (b), "fixtures" has the meaning set out in the regulations.
(3) Subsection (1) (d) does not apply to a bare land strata plan.
(4) The property insurance must
(a) be on the basis of full replacement value, and
(b) insure against major perils, as set out in the regulations, and any other perils specified in the bylaws.
6.2 (1) For the purposes of section 94 of the Act, a depreciation report must include all of the following:
(a) a physical component inventory and evaluation that complies with subsection (2);
(b) a summary of repairs and maintenance work for common expenses respecting the items listed in subsection (2) (b) that usually occur less often than once a year or that do not usually occur;
(c) a financial forecasting section that complies with subsection (3);
(d) the name of the person from whom the depreciation report was obtained and a description of
(i) that person’s qualifications,
(ii) the error and omission insurance, if any, carried by that person, and
(iii) the relationship between that person and the strata corporation;
(e) the date of the report;
(f) any other information or analysis that the strata corporation or the person providing the depreciation report considers appropriate.
(2) For the purposes of subsection (1) (a) and (b) of this section, the physical component inventory and evaluation must
(a) be based on an on-site visual inspection of the site and, where practicable, of the items listed in paragraph (b) conducted by the person preparing the depreciation report,
(b) include a description and estimated service life over 30 years of those items that comprise the common property, the common assets and those parts of a strata lot or limited common property, or both, that the strata corporation is responsible to maintain or repair under the Act, the strata corporation’s bylaws or an agreement with an owner, including, but not limited to, the following items:
(i) the building's structure;
(ii) the building's exterior, including roofs, roof decks, doors, windows and skylights;
(iii) the building's systems, including the electrical, heating, plumbing, fire protection and security systems;
(iv) common amenities and facilities;
(v) parking facilities and roadways;
(vi) utilities, including water and sewage;
(vii) landscaping, including paths, sidewalks, fencing and irrigation;
(viii) interior finishes, including floor covering and furnishings;
(ix) green building components;
(x) balconies and patios, and
(c) identify common property and limited common property that the strata lot owner, and not the strata corporation, is responsible to maintain and repair.
(3) For the purposes of subsection (1) (c), the financial forecasting section must include
(a) the anticipated maintenance, repair and replacement costs for common expenses that usually occur less often than once a year or that do not usually occur, projected over 30 years, beginning with the current or previous fiscal year of the strata corporation, of the items listed in subsection (2) (b),
(b) a description of the factors and assumptions, including interest rates and rates of inflation, used to calculate the costs referred to in paragraph (a),
(c) a description of how the contingency reserve fund is currently being funded,
(d) the current balance of the contingency reserve fund minus any expenditures that have been approved but not yet taken from the fund, and
(e) at least 3 cash-flow funding models for the contingency reserve fund relating to the maintenance, repair and replacement over 30 years, beginning with the current or previous fiscal year of the strata corporation, of the items listed in subsection (2) (b).
(4) For the purposes of subsection (3) (e), the cash-flow funding models may include any one or more of the following:
(a) balances of, contributions to and withdrawals from the contingency reserve fund;
(b) special levies;
(5) If a strata corporation contributes to the contingency reserve fund based on a depreciation report, the contributions in respect of an item become part of the contingency reserve fund and may be spent for any purpose permitted under section 96 of the Act.
(6) For the purposes of section 94 (1) of the Act, "qualified person" means any person who has the knowledge and expertise to understand the individual components, scope and complexity of the strata corporation’s common property, common assets and those parts of a strata lot or limited common property, or both, that the strata corporation is responsible to maintain or repair under the Act, the strata corporation's bylaws or an agreement with an owner and to prepare a depreciation report that complies with subsections (1) to (4).
(7) The following periods are prescribed:
(a) for the purposes of section 94 (2) (b) of the Act, 3 years;
(b) for the purposes of section 94 (2) (c) of the Act, 18 months;
(c) for the purposes of section 94 (3) (a) of the Act, the one year period immediately preceding the date on or before which the depreciation report is required to be obtained.
(8) A strata corporation is prescribed for the purposes of section 94 (3) (b) of the Act if and for so long as there are fewer than 5 strata lots in the strata plan.
[en. B.C. Reg. 238/2011, Sch. 1, s. 2.]
Besides legislation, common sense is a large reason to have an insurance appraisal and a depreciation report. All parties involved; the owners, strata council members, property managers, insurance brokers and underwriters should rely on the expertise of a qualified appraiser to help determine a fair and justifiable replacement cost and a qualified reserve planner to plan for future capital expenses with a depreciation report. Pacific Rim Appraisals Ltd. personnel are qualified as both reserve fund planners and insurance appraisers.
Areas That We Service for Insurance Appraisals and Depreciation Reports:
Greater Vancouver Area and the Fraser Valley including Whistler
All Areas of Vancouver Island including
All of the Gulf Islands
Northern BC including
100 Mile House
Sun Shine Coast Including
Victoria Office Nanaimo Office Richmond Office
Toll Free Phone 1-866-612-2600 Toll Free Fax 1-866-612-2800 email: email@example.com