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  • Lawson, Clark & Oldman

Reviewing the Status Certificate: An Essential Part of Purchasing a Condominium

Condominiums are sprouting up rapidly around Durham Region and are providing an increasingly common route to home ownership. One of the key differences between purchasing a freehold home compared to a unit in a condominium presents itself prior to committing to a binding agreement of purchase and sale – it is the review of the status certificate.

All real estate agents should know to make a condo purchase deal conditional on having the status certificate reviewed by a real estate lawyer. However, in an effort to provide a competitive offer, some purchasers are taking major risks by providing offers without conditions for finding the status certificate satisfactory upon review by their solicitor. This article focuses on why you should always ensure such a condition is included in your agreement of purchase and sale for a condo unit.

Status certificates are important documents in evaluating different aspects of the condominium unit and building, including the corporation and how it is being managed. These documents are not just a few pages titled ‘Status Certificate’; there are numerous documents incorporated by reference and attached, including the condominium declarations, by-laws, audited financial statements, insurance, reserve fund studies, rules of the building and the like. There is vital information in a status certificate that might prevent and discourage a buyer from purchasing a particular unit. Quite simply, by making a purchase conditional on the lawyer reviewing the status certificate, you are making sure the property is suited for you.

Unfortunately, many buyers visit the condominium unit or townhouse and think ‘everything looks good’. Condominium status reviews cover items that are not visible. They mention rules, address extra fees and disclose information that might be detrimental to purchasers, especially those entering the condo market for the first time. Perhaps the most effective way to communicate the importance of status reviews is to provide a few scenarios:

  • You may not be able to take your cat with you – Condominiums have rules such as pet restrictions. If there is a limit on the number, type, or size of pets in each unit, then you might find yourself in a terrible scenario of choosing between the property and your pet. Other worthwhile rules concern visitor parking, noise levels, use of your balcony, leasing your unit, etc.

  • The unit is subject to a special assessment – What does that mean? It could mean the condominium has encountered higher than expected costs, creating budgetary issues, and requires more resources to fund a repair or replacement. Generally, in these types of cases, the amount of shortfall gets divided by the number of unit owners and each owner is simply required to write a cheque to the condominium corporation to satisfy their share. These amounts can range from hundreds to thousands of dollars.

  • Projection of fee increases – While not all fee increases can be anticipated, the reserve fund study will set out the recommended amount of increase each year. Form 13 of the status certificate should also disclose whether there is or will be an increase in the monthly common expenses in the current fiscal year.

  • Disclosure – Status certificates also declare if the condominium is involved in court proceedings or similar legal situations, and should disclose if the condo’s insurance policy covers any such claims. It will also note general concerns which might guide you in focusing on certain areas during your inspection.

Clearly, status certificates are very valuable in providing information not otherwise available about a condominium. However, be aware that status certificates are only valid as of the date they were issued; they can only provide a snapshot of the current status of the condominium, and such status may change prior to your closing date. As such, sometimes an updated status certificate is required prior to closing. We highly recommend that you make the satisfactory review of a status certificate by a real estate lawyer part of your condominium purchase transaction.


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