Why a Condo’s Status Certificate is Important
Buying a unit in a condo building or a townhouse condominium complex is in many ways similar to purchasing a single-family home but with a few key differences, perhaps the biggest being the inclusion of a ‘conditional on status certificate approval’ clause in your offer. In the simplest terms, this clause gives your lawyer some time to review a specific document prepared and issued by the condo corporation. If unsatisfied with its contents, you can decide not to move forward with the purchase.
But what exactly is in the status certificate?
Broadly speaking, it contains information regarding the operational, legal and financial health of the condo corporation, as well as the status of the individual unit. This includes but is not limited to:
- The parking and locker unit level(s) and number(s), if applicable, to confirm that they correspond with those set out in the MLS listing and/or your offer (Agreement of Purchase and Sale), and whether they are owned or exclusive use
- Statement of common expenses (also known as maintenance fees), amount payable by the unit and whether the current owner is up-to-date with the payments or in default
- Particulars of any increase in common expenses for the unit since the date of the current budget year, as well as reasons for the increase
- Statement concerning any special assessments relating to the reserve fund since the date of the budget for the current year, including reasons for such assessments
- Status of any lawsuits being taken against the condo corporation
- Details of any outstanding judgments
- Current budget and the most recent audited financial report
- Info concerning any applications regarding amendments to the declaration
- Copy of the current declaration, bylaws and rules, which explain how the corporation runs and any limitations on owners like restrictions that prohibit them from having pets or certain types of pets
- A listing of various current agreements (for example, management and insurance)
- Owner compliance with current agreements regarding modifications that relate to the unit
- Particulars concerning the most recent reserve fund study and the amount of the fund, including any current plans to increase the fund
- Number of units leased for the fiscal year preceding the status certificate date
- Certificate or memorandum of current insurance policies
- Any planned or proposed additions, alterations or improvements to the common elements, other assets of the corporation or services
Without knowing this information, a buyer is at risk of purchasing a condo that could result in many problems, issues and costs down the road.
Generally, in a seller’s market where it’s more likely that multiple people will bid on the same property, the current owner will purchase the status certificate before or upon listing their property for sale. The expectation is that interested buyers will have their lawyer review it by the scheduled offer presentation date so that all offers, if any, are ‘clean’ or free from any conditions, resulting in a firm deal upon acceptance. The status certificate can be ordered for a cost of $100, after which the condo corporation must provide it within 10 days. The person who has paid for the status certificate can also inspect certain agreements like management and insurance contracts. Copies are provided upon written request for an additional fee.