Are you condo hunting for the first time? If so, you’ll likely encounter some unfamiliar concepts along the way. A term that often causes confusion among first-time buyers is “status certificate.” While you might not know what this document is, obtaining one for the condo you’re thinking of purchasing is crucial.
Put simply, a status certificate provides critical information about a unit and the financial health of the condo corporation that oversees it. With the help of a legal expert, you can use it to determine whether a building is well managed—before you sign on the dotted line.
If you’re searching for the right condo, here’s what you’ll need to know about its status certificate…
What status certificates contain
When you receive your status certificate, it will come as part of a packet pertaining to the unit you’re considering. Inside, you can expect to find financial statements, information about maintenance fees, and disclosures related to any relevant legal issues or lawsuits. It should also contain the condo corporation’s budget and the minutes from the board’s most recent committee meeting.
In addition to the info listed above, here are some of the specific things to look for in your status certificate package.
The declaration, bylaws, and rules
A condo declaration is crucial to the formation of a condominium corporation. Essentially, it’s a set of documents that contain basic information about a building. Examples include the boundaries of units, and the amount that each owner will pay for common elements (expressed as a percentage of the overall budget). Bylaws lay out how a building is governed, while rules relate to what owners can and can’t do (with regard to pets, noise, parking, etc.)
The most recent reserve fund study
A condo’s reserve fund contains money that’s been set aside for unexpected repairs and replacements in common areas. To determine how much should be in a given fund, a specialist must complete a study within the first year of a building’s incorporation (and every three years after that). Your status certificate will contain the most recent report.
Information about special assessments
A special assessment is a financial contribution that unit owners must pay in addition to their monthly fees. It may be levied by a board to cover a specific cost, such as an unforeseen expense or a legal judgment against the building. Within your status certificate, you’ll find information about existing special assessments, if there are any.
Why you need to obtain a certificate
By carefully reviewing your status certificate, you can learn how smoothly your prospective building is run. Poor management could lead to extra costs, future maintenance problems, and even potential issues when you attempt to exercise your rights as a condo owner.
Fortunately, you should be able to spot some of the most common red flags in your certificate. These include a badly-balanced budget, a reserve fund containing an insufficient amount, or pending litigation (which may or may not be a bad sign, depending on the circumstances).
Of course, it’s also important to ensure that any building you’re considering will suit your lifestyle. For this reason, you should read the rules and bylaws within your certificate carefully.
How to get a status certificate
To obtain a copy of a status certificate for a unit, simply submit a written request to the condo corporation along with the required fee ($100). In Toronto, the seller will often be willing to pay this amount for you (this aspect of your purchase is negotiable). Within 10 days, you should receive your document.
You will have a limited amount of time to review your certificate before signing your Agreement of Purchase and Sale—typically 48 to 72 hours. Fortunately, your agent may be able to negotiate in order to extend this period if need be. Remember that it’s important to have your legal representative look carefully at your certificate before your sign your purchase agreement.
Obtaining and reviewing your status certificate is just one step in a successful condo purchase. To ensure that the process goes smoothly, work with a real estate professional with condo expertise.
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