RESOURCES

Purchasing a condominium in Ontario demands more than selecting the right unit! One of the most important aspects of this transaction is a thorough review of the status certificate. What is a status certificate you ask? It is the statutory disclosure document under section 72 of the Condominium Act, 1998^[1] provided by a condominium corporation within 10 days of receipt of written request to order, which is usually done by a seller or their realtor. This status certificate package assembles key documentation, including the declaration and bylaws, financial statements, insurance particulars and noted ongoing litigation particulars, as well as other material information about the dwelling unit, parking and/or locker units, and the condominium corporation.

The status certificate provides copies of the condominium corporation declaration and bylaws that define the corporation’s governance structure, establishing voting procedures, meeting protocols and the method for enforcing bylaws. The status certificate identifies the specific unit and its proportionate share of common expenses, enabling purchasers to assess how changes to shared common elements may impact monthly common expenses (maintenance fees). It shows the approved budget alongside year-to-date expenditures, facilitating the identification of material variances that could signal under-budgeting or unforeseen repair costs. The document also reveals the current reserve fund balance and confirms whether contributions have been made in accordance with the most recent reserve fund study. A well-funded reserve usually anticipates the future need for large, one-time capital costs, whereas a low balance reserve or missed contributions indicates a heightened risk of financing capital costs by way of special assessments, financing, and/or increases to the monthly common expenses.

The status certificate also includes the building’s insurance details such as who the insurer is, the coverage limits, deductibles, and when each policy expires. If there’s a lapse in coverage or the limits are too low, unit owners could face large out-of-pocket bills after a major claim. If the seller owes any outstanding arrears on the unit, the purchase agreement should either require the seller to pay those arrears before closing, or direct payment of the arrears from the closing proceeds or provide the buyer with a credit in the amount of the arrears on the statement of adjustments.

Decoding a status certificate demands a proper review, analysis and seasoned legal expertise. Our lawyers at Kormans LLP are equipped and available to assist buyers in identifying potential red flags early, negotiate critical terms to help ensure a smooth and stress-free transaction without unwelcome surprises. For a consultation tailored to your needs, contact Kormans LLP at info@kormans.ca or (905) 270-6660.

^[1] https://www.ontario.ca/laws/statute/98c19

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M. W. Faizan is an Associate Lawyer at Kormans LLP. You can reach M. W. Faizan here: mwfaizan@kormans.ca.

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