If you have ever considered buying a resale condominium, you have probably heard the words ‘status certificate’ and wondered why the phrase keeps coming up.
Neither the word ‘status’ nor ‘certificate’ sounds particularly fun. Together, they evoke an image of slogging through tedious paperwork which is the very last thing most people want to think about amidst the excitement of buying a new home.
However, the status certificate is an important document. In fact, it could stand between you and your decision to purchase that resale condominium.
Let’s take a look at what the status certificate is and how it can protect you.
What Is It?
The status certificate is a comprehensive document containing information about two key condo matters: the unit you are buying, and the condo corporation that the unit belongs to.
When it comes to the specific unit or apartment within the building, the status certificate outlines how much the common expenses are and whether these are paid and up to date. In addition, it contains information about any special assessment that may have been charged against the unit and the purpose of that assessment.
Special assessments are designed to cover a budget shortfall that may occur in the course of operations. For example, if major repairs or renovations are needed that the condo corporation budget is not sufficient to cover, a special assessment may be levied to cover those expenses.
The special assessment is then added to the unit owner’s common expense fee as a one-time charge.
The status certificate also includes information about the condo corporation to which the apartment unit belongs. You will find the basics of the corporation such as the address for service along with names and addresses of the directors and officers.
Also included in the status certificate is a copy of the condo corporation declaration, bylaws, and rules, its budget, and details about the reserve fund.
Finally, you will find insurance details for the condo corporation in the status certificate along with information about any legal issues that might be pending.
Why Could It Matter To You?
Understanding the contents of a status certificate can have major implications for buyers of resale condominiums.
Critical information is found in these documents that can provide insight into how well the building or condo corporation is being managed.
Since a condo corporation is responsible for the management of an entire building, usually through a third party like a property management company, how well or poorly that building is maintained has implications for the owners living there.
For example, if the plumbing system is not properly maintained over the years and the condo corporation, through its board of directors, fails to make the necessary repairs, problems could arise. Perhaps water begins leaking into individual units, or a flood occurs immediately above the fitness centre.
Any major repairs that follow can have financial repercussions for unit owners.
Why? Because if a condo corporation’s reserve fund turns out to be insufficient, it may become necessary to divide up the cost of the major repairs amongst the condo unit owners.
This is where the special assessment comes in. The cost of a renovation could be a big financial hit to an owner’s common expense fee.
How Can The Status Certificate Protect You?
The contents of a status certificate tell a reasonably complete story about how well a condo corporation is managed.
In securing a copy of this document for the unit you may be about to purchase, you are taking an important step in protecting yourself against unwelcome financial surprises.
Even better, you do not actually need to be a legal expert to interpret the contents of the status certificate.
Your REALTOR® will recommend that you send the document directly to your real estate lawyer for review. Your lawyer will know what to look for and how to interpret the status certificate, and will alert you to any areas of concern.
Once you have this information, you can make an informed decision about whether or not you still wish to proceed with the purchase.
Most homebuyers will opt to include a condition in an offer to purchase that provides several days to first obtain and then review the status certificate with legal counsel. This allows you time to obtain a professional opinion on how well managed the condo corporation is that you are considering joining.***
Reference: Condominium Authority of Ontario (CAO)(2021).
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