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If you’re buying a condo, having the status certificate reviewed by your real estate lawyer is a critical step.

The status certificate (sometimes referred to as an estoppel certificate) is a document produced by the Condo Corporation that contains the financial and legal health of the corporation. It contains important rules, regulations, rights and obligations that every condo owner must know. Part of the status certificate is specific to the unit you are purchasing and part of it is specific to the condo corporation as a whole. [Related: Why the Status Certificate Review Condition is Important]

The status certificate is usually a few hundreds pages long and has some really critical information that you need to understand.

Reserve Fund & Budget

Part of every monthly condo fee (usually 20-30%) is paid into the reserve fund each month and it serves as an emergency fund for the condo corporation to make non-routine repairs and improvements. Having an adequate amount of money in the reserve fund is essential to having a financially healthy condo corporation.

Your lawyer will provide an opinion as to whether or not they believe the reserve fund and budget are adequate. If it seems out of the ordinary, they’ll seek more information and help you assess the level of risk.

Replacement plans for big-ticket items (eg roof, elevators, heating systems, etc.) will be outlined in the status certificate and your lawyer will be able to see if the associated costs have been budgeted for.

Pro Tip: Make sure you hire a real estate lawyer who is experienced in closing condo sales and reviewing status certificates. While you might get a deal if you hire your Mom’s lawyer in her small town, you could be putting yourself at risk if they aren’t familiar with what’s normal and what’s not.

Warning! If You’re Buying into a Small, Self-Managed Building…

If the condo fees seem too good to be true, they probably are. Self-managed condo buildings in Toronto are notorious for having low condo fees and low budgets and reserve funds. They usually resort to levying special assessments to pay for big-ticket items and emergencies.

Condo Maintenance Fees

Your lawyer will confirm that the condo fees that you agreed to in the Agreement of Purchase sale, and what they cover, are correct. They’ll also review if there are any planned increases and can get additional details about the history of increases in the building too.

Pro Tip: If you’re buying a newly-built condo, expect the condo fees to substantially increase in the first 2 years to reflect the actual maintenance costs.

What’s Owned, What’s Exclusive and What’s Assigned

Parking spots and lockers can be owned (so you use them or sell them separately from the condo), exclusive (so you can use them and pass on the rights to the next buyer) or assigned (so you can use them). Your lawyer will help you understand the difference and what it means to you.

Special Assessments

The status certificate will outline any current special assessments. A special assessment is a levy on condo owners when extra funds are required to pay for repairs, budget shortfalls or boosting the emergency reserve fund. Special assessments can be one-time costs (eg. $10,000 per unit) or can be spread over a number of years (eg an extra $200 a month for the next 3 years).

A good lawyer will also look into the history of special assessments in the building, gather more information as required and raise any red flags with you.

Lawsuits

The Status Certificate contains the details of any pending lawsuits, including judgements against the corporation and any pending lawsuits (both against and by the corporation).

Your lawyer will help you assess what is and is not a concern, by looking at what’s involved in any pending lawsuits, the parties involved, whose side the corporation is on and the potential liability. They’ll also look at the history of lawsuits and identify any red flags.

Not all lawsuits are deal breakers. Lawsuits against the corporation that would be covered by insurance (eg. slip and fall) and frivolous lawsuits aren’t usually huge problems. Lawsuits started by the corporation can be problematic if losing would translate into the owners having liability. For example: The condo corporation has started a lawsuit against a plumbing company for a serious issue with a leaky garage; if the plumbing company isn’t found liable, the condo corp will have to fund any fixes.

Kitec Plumbing

Many Toronto condos and townhouses built between 1995 and 2005 have experienced issues and flooding with Kitec plumbing, a kind of plumbing now banned in Ontario. [Related: All About Kitec plumbing]

If the presence of Kitec plumbing is disclosed in the status certificate, your lawyer will seek additional information (what is the condo corp doing about it and why)

Bylaws and Rules

Newer buildings tend to have loose bylaws and rely on the rules for the day-to-day management of the building. It’s important that you and your lawyer review the rules, so you can understand:

  • Pet restrictions
  • Visitor rules and visitor parking
  • Rules surrounding renting out your unit (for example, most condos now have a minimum term requirement of 6 months if you are renting out your unit)
  • Use of the common elements
  • Requirements if you want to make alterations or renovations to your unit
  • Decor rules – often there are rules restricting the kind or colour of window coverings, what you can store on your balcony, etc.
  • Noise and smells
  • Parking and locker rules (for example, you can only rent a locker to someone who lives in the building)
  • Bike rules
  • Balconies and terraces (for example, no bbq’s allowed on balconies)
  • Obligations re: repairs

While your real estate agent can help you understand some parts of the status certificate, getting an opinion from a qualified real estate lawyer is essential.

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