The Condo Status Certificate: A Complete Guide

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What is a Condo Status Certificate?

A Condominium Status Certificate is a document that provides information about the financial and legal status, as well as the overall health of the Condominium Corporation.

It offers prospective buyers an opportunity to review critical information about the unit and the building.

The status certificate can reveal potential red flags, such as errors in legal descriptions, special assessments, financial deficiencies, and legal issues - all factors that impact a buyer's decision.

A full review of the status certificate by an experienced real estate lawyer is standard practice in Ontario. It helps protect buyers from any hidden surprises or potential issues that may arise after the purchase, ensuring a smooth and well-informed transaction.

Contents of a Status Certificate

A Condo Status Certificate contains information about both the specific unit and condominium as a whole.

This is communicated through various documents such as condominium declarations, by-laws, rules, reserve fund studies, and financial statements. Status certificates also provide details about legal descriptions of the unit and any associated parking space or storage locker, details about the common expenses (maintenance fees), common elements, and any outstanding or upcoming special assessments.

Key contents of status certificates include:

• Current copies of the condo declaration, Board of Directors, by-laws, rules and regulations.
• Financial details including the budget for the ongoing fiscal year, the latest audited financial statements, and the auditor's report.
• A detailed assessment of the reserve fund's status, projected monthly maintenance fees, and the latest reserve fund study findings.
• A statement regarding the unit's common expenses and any overdue payments.
  Information regarding any increments in common expenses, along with the reasons behind such increases if applicable.
• Disclosure of any special assessments levied against the unit or unit owners since the previous year's budget, accompanied by explanations.
• Contact details of directors and officers of the condominium corporation.
• Certificates of insurance pertaining to all existing insurance policies.
• Noteworthy legal matters such as outstanding judgments or ongoing litigation involving the condo property or ownership

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How to Obtain a Status Certificate?

Anyone is eligible to request a status certificate. Corporations can charge up to $100 and must provide it within 10 days.

Requesting and receiving a Condo Status Certificate is a straightforward process, but it's important to be aware of the steps involved:

Submit a Request: The buyer, their real estate agent, or their lawyer should submit a written request for the Condo Status Certificate to the condominium corporation or its management company. Most condos have an online form or portal to facilitate the request.

Pay the Fee: There is a fee associated with obtaining a Condo Status Certificate, up to $100. This fee covers the cost of preparing the document and is paid by the party requesting (usually the buyer).

Allow for Processing Time: By law, the condominium corporation has up to 10 days to provide the Condo Status Certificate after receiving the written request and payment. However, in many cases, you may receive the document sooner.

Delivery Method: The Condo Status Certificate is usually delivered electronically, often as a PDF file, but it can also be provided in hard copy upon request.

Reviewing the Status Certificate

Most resale condo transactions are conditional upon a "Status Certificate Review".

A condominium status certificate review is a detailed examination of a condominium's legal and financial documents to assess its overall health and compliance with relevant regulations.

In simpler terms - it's a health check for the condominium corporations to make sure everything is in order and there are no hidden problems.

But reviewing a condo's status isn't a binary thing. It's not "approved" or "not approved" like a financing condition. It's more similar to a home inspection. A lawyer will look closely at all the details, share what they find, and help the buyer decide if moving forward is the right decision.

For the sake of this explanation, we can break it down into five (5) main areas that lawyers look at during a review:

1. Legal Ownership and Description
   The status certificate clarifies the legal ownership of the unit, including a precise description of the property. This prevents future disputes and confirms the exact unit being purchased.
   
   Lawyers are also looking to confirm whether the unit comes with parking and a locker, and if these are deeded or exclusive use - making sure this matches the Agreement of Purchase and Sale.
   
2. Common Expenses and Arrears
   They verify that the monthly common expense matches the MLS Listing and confirm that there are no arrears (unpaid fees) by the current owner.
   
   The status certificate should also outline what is covered under the fee, such as maintenance, utilities, and amenities, etc.
   
3. Reserve Fund
   The reserve fund is money for the condominium corporation, set aside for major repairs and replacements. A lawyer reviews this financial information against the "Reserve Fund Study" to confirm its thoroughness, accuracy, and compliance with legal standards. A new reserve fund study is required every 3 years in Ontario.
   
   This process helps identify potential financial risks and ensures the condominium's long-term financial stability.
   
4. Litigation Against the Condo Corporation
   Any ongoing or pending litigation involving the condo corporation requires thorough investigation, as legal actions can have significant financial and reputational impacts on the condo.
   
   The job of the lawyer is to assess the nature of any litigation, potential outcomes, and possible effects on unit owners, including financial strain or loss in property value. Context is key here.
   
5. Rules and Lifestyle Impact
   Lastly, the status certificate provides insight into the rules and regulations of the condominium. These rules may affect the lifestyle and enjoyment of the property, including pet restrictions, renovation policies, and leasing rules.
   
   It's important understand these regulations to ensure the property meets the buyer’s lifestyle needs and expectations.

The review of a status certificate is really about piecing together the details to form a complete picture.

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Summary 

A Condo Status Certificate is a snapshot of a condominium's financial and legal health. Most Agreements of Purchase and Sale include a condition allowing the buyer to review a status certificate before finalizing the transaction. It's necessary to have an experienced real estate lawyer perform a review of the status certificate, to verify specific unit information, financial statements, rules & regulations, and legal matters.

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If you have questions about Condominium Status Certificates, or or any other real estate legal matter, we're here to help. As real estate law specialists, our mission is to provide the clarity and direction you need to protect your property rights.

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