A status certificate can make or break your deal.
A condo status certificate is an important document that outlines the financial health of your condo building. As a buyer, it’s absolutely crucial that you get a copy of it and review it before finalizing any condo unit purchase.
The certificate outlines whether the condo has an adequate reserve fund for repairs, whether maintenance fees are likely to go up, lawsuits involving property management, and the financial state of the condo corporation.
The information in this document will tell you if the building and its governing body are in good financial health.
What does the status certificate actually contain?
- Copies of the condominium declaration, by-laws and rules
- Information about the maintenance fees
- The management contract
- Insurance information
- The minutes of the last general meeting, usually held annually
- The current budget for the condominium corporation
- Latest reserve fund study. The study should state the amount in the reserve fund, within 90 days of the date of the status certificate, and any plans to increase the reserve fund
- Information about special assessments
Do I need to get a condo status certificate?
It’s usually one of the main conditions in the Agreement of Purchase and Sale, so yes, whether you’re a buyer or seller, you usually need to access it at some point.
If you’re a buyer, your lender may require it. Banks want to know if there might be any unanticipated liabilities in advancing your mortgage.
Even if you’re the seller, it’s important to review your condo status certificate since you’ll want to know if there’s something amiss that might make a buyer walk.
How do I get a copy?
The building’s property management should be able to get a copy to you in no time at all. Most companies even provide a digital copy that can be emailed to the lawyers or realtor. However, don’t be surprised if they provide you with a hard copy. Believe it or not, some management companies are still operating with last century’s technology.
Legally, a copy must be delivered to the buyer within 10 days of requesting it. The buyer’s lawyer would typically have 2-5 days to review it, not including weekends.
I absolutely recommend that you get an expert to review your condo status certificate. Sometimes, important information can be buried in legal documents that even an experienced condo Realtor might not catch. Even if you are very familiar with the building it is always a good idea to have your lawyer take a look at the document again and in most cases the lawyer will request it even if the condition to review the certificate wasn’t included in the offer.
What should I look for in the certificate?
You need to get your lawyer to look over the condo status certificate.
But when reviewing it, there are things you should look out for:
- Are maintenance fees likely to go up enough to have a significant impact on my monthly expenses?
- Are there any pending lawsuits against the property manager, the developer, or the condo corporation?
- Does the seller have “clear title” to the condo (which shows that their payments are in good standing)
- Are there any special assessments that you need to know more about? A special assessment is an additional payment that a condo board has to impose when unexpected shortfalls or unexpected expenditures occur in the budget, such as replacing expensive systems. As soon as the condo board knows about this fee increase, it needs to be included in the status certificate.
➤ For A Complete Step By Step Checklist Check Out: Condo Purchase Checklist for Toronto Buyers
What happens if I buy a condo, but I find out later that something wasn’t included in the status certificate that should have been?
This is a broad question, so let’s use a real-life example: Kitec plumbing. Kitec plumbing was used in a number of new construction buildings between 1995 and 2007 as an alternative to copper tubing. It was supposed to be non-corrosive, but as it turned out, it actually corroded at a faster rate when running high-temperature water.
Many of the buildings that used Kitec have sent special assessment letters to owners to pay for their share of replacing the plumbing. The cost? About $5,000-$7,000 per unit.
If your new unit had a Kitec plumbing issue, but it wasn’t included in the status certificate, you might be off the hook for paying it.
If, ultimately, the lawyers agree that you’re not on the hook for the plumbing cost, don’t fret – the seller wouldn’t have to pay either. That cost would be spread out among all of the other unit owners.
Do I need to hold onto the condo status certificate?
Your condo board or management office should always have a copy ready, but that’s no reason why you shouldn’t hold on to one yourself. It is always a good idea to keep a copy of it, you never know when you might need to refer back to it.
Is there anything else I need to know?
Feel free to ask me any questions you may have! You can either call/text me at 416-500-5360 or send me an email at rashid.notash@rogers.com and ask away!
