Understanding the Status Certificate Review

Reading Time: 4 minutes

Most condo sales are conditional upon a "Status Certificate Review".

But we haven't done a great job explaining what that means.

So here's a technical definition: A condo 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 english - it's a health check for a condo to make sure everything is in order and there are no hidden problems.

I thought it'd be helpful to provide context about the things we're looking at and how they can affect the deal.

But first, let's clear up a common misconception: reviewing a condo's status isn't a binary thing. It's not "approved" or "not approved" like a financing condition.

It's more akin to a home inspection. We look closely at all the details, share what we find, and then decide if buying the condo is the right decision for that particular person(s).

For the sake of this explanation, I can break it down into five (5) main areas that we're looking 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.
   
   We're 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
   We verify that the monthly common expense matches the MLS and confirm that there are no arrears (unpaid fees) by the current owner.
   
   The 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.
   
   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.
   
   Our job as 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.
   
   Realtors and buyers must 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.

Again, this is far from a binary thing. It’s about doing the homework to ensure your client understands the risks of what they're buying inyo and can make an informed decision to move forward with their purchase.