RESOURCES

When looking to buy a condominium property it is important that a status certificate is obtained for the property and that it is reviewed by your lawyer. The status certificate will give you as a prospective buyer additional information about the property and the condominium corporation in general. The status certificate will come as part of a package of documents from the condominium corporation which should include the condominium corporation’s declaration, by-laws, rules, current budget, most recent audited financial statements and a summary of their most recent reserve fund study.

The status certificate can be used to compare the information being provided by the seller for the property against the information provided by the condominium corporation in a status certificate. The status certificate will indicate the total number of property units owned by the owner, identified by their legal description of “unit” and “level” (such as a parking spot being legally described as Unit 100, Level A). In a multi-story condominium usually the main property suite, parking spot and locker will have separate legal descriptions with their own separate “unit” and “level” identifiers. You can use the information provided by the status certificate to determine the correct “unit” and “level” identifiers for the different property units that should be inserted into your agreement of purchase and sale for the property.

The status certificate will confirm the amount of money that the present owner is paying for their monthly common element fee payable to the condominium corporation. The status certificate will also indicate whether the property owner is in arrears with respect to their common element fee payments. If a property owner is in arrears, they will be in default with the condominium corporation. If the default of the property owner persists, the condominium corporation can register a lien against the title for the property of the defaulting owner. If there is a condominium lien against the property it will have to be removed by the defaulting owner before ownership for the property can be properly transferred to a new owner.

The status certificate will also indicate whether a condominium corporation is involved in litigation. When there is an indication that the condominium corporation is involved in litigation it is important to determine what sort of litigation the condominium corporation is involved in and try to determine how the litigation will impact upon the finances of the condominium corporation.

Reviewing the condominium corporation’s declaration, by-laws and rules can give you as a potential buyer additional information on the restrictions that may exist (such as smoking restrictions or pet restrictions). Knowing the rules and restrictions that exist for the condominium corporation is important when determining if buying the property will match your lifestyle.

Reviewing the current budget, audited financial statements and the summary of the reserve fund study for the condominium corporation will also give some insights into the financial health of the condominium corporation and can give insights into whether a special assessment may be required in the near future (a special assessment is a direct payment to the condominium corporation from the property owners in addition to the monthly common element fee payment). The status certificate will provide an unaudited figure for the reserve fund and you can compare that number provided against the figure that the reserve fund should have based on the most recent reserve fund study. The audited financial statements will sometimes disclose prior special assessments to pay for unforeseen costs, upcoming financial commitments that the condominium corporation has entered into and the audited financial statements will indicate surpluses and deficits.

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Spencer S. Duggan is an Associate with Kormans LLP. His practice areas include employment issues, the purchase and sale of businesses, mergers, joint venture agreements, organizing business structures, shareholder agreements, re-organizing existing businesses and corporate structures, leasing, commercial real estate, debt finance and dispute resolution. You can reach Spencer at sduggan@kormans.ca

All blog entries are for your reading pleasure only and are not posted to provide legal advice. For your matter, we encourage you to consult with a lawyer to review and discuss your specific facts and circumstances.