You might have heard a lot about the condo status certificate in the past.
But do you really know what it means?
It is one of the most crucial documents for those who are looking to purchase a condominium. To avoid any hassles later, be thorough with understanding the details of a condo status certificate.
Let’s explore all about the status certificates (or what’s previously called Estoppel).
What is a condo status certificate?
A status certificate is a document provided by the condominium corporation to the buyers of condos that are up for reselling.
As per Section 76 of the Ontario Condo Act, [1] this document provides essential information, such as the financial status of the unit, as well as the condominium corporation.
The status certificate discloses to the owner the details about the fees and if there is going to be any large effect implemented. There is information regarding lien, arrears, or legal implications that might be implemented on particular units in Ontario.
What does a condo status certificate include?
Aside from the information regarding the fees, increment, legal actions, and arrears, there are various other things included in the status certificate.
The condo status certificate also contains by-laws, condo declaration, budget, management contact, reserve fund, rights reserved, insurance, and rules.
There is also information about lawsuits and rules involving the board and corporation, along with minutes of the last annual general meeting.
The status certificate might not have information in case the legal action hasn’t started yet. There are some dispute resolutions that aren’t included, such as arbitration and mediation. The status certificate might not have any information or rules about the same.
Therefore, even the cost for these alternative dispute resolution might not be included in the status certificate. These might be reflected in a declaration for special assessments, though.
Here are some of the things that are a part of a condo certificate:
- The total money remaining in the reserve fund as per the reserve fund study.
- Information regarding the current owner and if there is a pending amount for common monthly costs.
- Information about the increment in fees for common costs.
- Rules and insurance for the common areas.
The financial statements in the document should outline the common expenses along with the receipts for the budget of the current year. This will provide clarity on the finances of the real estate property.
In case there is a real estate property management company servicing the building, then it is the property manager who prepares this document.
All the prospective buyers must get this certificate within a period of 10 days from the requesting date. After receiving the status certificate on request, you and your real estate lawyer will have about 48 to 72 hours to go through the document.
In Toronto, Ontario, a status certificate will be deemed stale if it’s 30 days older. So, make sure you have an updated version. It’s best to consult your lawyer to go through the right process.
Should you get a condo status certificate?
Your condo unit might not be an issue, but how is the condominium being managed?
By getting this certificate, you are able to help the prospective buyers to get an intimate account of the legal as well as financial circumstances.[2]
This will have information about the building and the unit. The certificate might also be necessary for the lenders who are financing the units.
The status certificate will be necessary to show if there are any unanticipated or additional liabilities that can come up with the purchase. A buyer should pay proper attention to the reserve fund of the board or corporation.
This should be given proper attention to find out if there are sufficient funds to cover the ongoing maintenance work along with the repair of major capital items.
Also, the board of directors should be responsible for the finances of the condo building. In case the finances are unbalanced or if there is a depleted reserve fund, this might be a red flag.
The status package will have all the information about pets, balcony BBQs, and details about the common areas. So, it is crucial to go through the regulations, rights reserved, by-laws, insurance, and rules of the building before purchasing the suite. There shouldn’t be any surprises later on.
How much does it cost to get a condo status certificate?
The Condominium Act allows the property manager or the board of directors to charge a fee of $100 for the status certificate.
However, the prices for the certificate can be increased if you are requesting an expedited status certificate. In case the locker or parking space belongs to another condo corporation, then the prices may vary.
This is only applicable when there is a prospective owner of the reselling condo unit. In Toronto, Ontario, it is the seller who pays the certificate amount. However, in Ottawa, Ontario, the buyer has to pay for the same and not the seller.
You can order a status certificate by requesting to the board or by simply ordering it online. There are multiple services that are making the process of ordering a certificate simpler.
What happens when the status agreement doesn’t include something?
In case there is some maintenance or replacement work post the buyer signing the resale agreement, and if that point is missing from the certificate, it can lead to some serious issues.
If such a situation arises, the owners might simply refuse to pay the levy, and there can be serious issues between the manager and the owners.
In most cases, the condo corporations and managers have a clear idea of the common expenses that are forthcoming. There might not be clarity on the exact amount, but still, an idea about the requirement for additional funds is pretty clear.
In case there was a mention of such costs, the owner might not have considered buying the unit.
So, the failure to announce a special assessment or an increment in the fees or even a crucial costs from the reserve fund can lead to false advertising. All these should be updated as per the annual reserve fund study.
If there is a clear mention of the special assessments in the status certificate, then the owner cannot refuse to pay. It is of utmost importance if you are the buyer that you should go through the status certificate thoroughly.
Summing up
Condo status certificates can be extremely useful for the lenders. These status certificates provide them a clear understanding of the finances of the real estate property.
They’ll help you with a clearer picture of the condominium units that you plan to buy. So, make sure you have this certificate and go through it thoroughly before buying the unit.
A financial advisor and real estate lawyer are the best persons to consult if everything is proper and in place. Lawyers can not only help you go through the certificate thoroughly but also represent you in court. So, get an experienced lawyer to tackle all the prospective legal actions.
If you are buying a condo, make sure you go through the certificate and the orders thoroughly. These orders in the agreement will help you understand the insurance terms, reserve fund, and other crucial details for buying a unit.
Did you enjoy this article? See Precondo’s homepage for more information on properties for sale, rent and pre-construction properties.
References:
- https://www.ontario.ca/laws/statute/98c19
- https://condoinformation.ca/owners-money-facts/status-certificate.html
