Shopping for a condo? Then you’ve probably heard about the “Status Certificate.” So, what is a Status Certificate, and why is it so important when it comes to buying a condo?
Under the Condominium Act, 1998 (“Act”) – the legislation that regulates condominiums – if requested to do so, a Condominium Corporation (“Corporation”) is required to provide a Status Certificate package which generally contains information about the financial health and legal status of both the Corporation in general and the specific unit one is looking to buy. This package features a range of documents, including the Corporation’s registered Declaration, Rules and Regulations, By-laws, Insurance Certificate, Reserve Fund Study, Budget and more.
All these documents provide important information about key aspects of the condo that buyers might be most concerned about, along with the do’s and don’ts of condo living:
- the amount of the monthly common expense for the unit in question;
- whether the current owner has failed to pay any of the common expenses;
- if there are any legal proceedings against the Corporation;
- how many units are leased;
- if any special assessments have been levied against the unit;
- the balance of the Corporations’ Reserve Fund; and,
- if the Corporation’s insurance policy is valid.
The Status Certificate can also help determine if there are certain lifestyle restrictions implemented by the Corporation. For instance, the condo Corporation may not allow short-term rentals, or it may provide that each unit can only be occupied by one household pet. This may be problematic for a potential purchaser who intends on using the unit as an Airbnb rental, or if multiple pets are in the picture. Likewise, it is also common for Corporations to limit the activities that can take place in the unit or on the common elements, with unique rules for decorations, window coverings, and balcony activities for instance. It is wise for a buyer to fully understand all the restrictions or limitations imposed by a Corporation to avoid buying a unit that will not be compatible with the owner’s planned use.
When a lawyer reviews the Status Certificate all these issues are highlighted so that buyers can make a more informed decision. Furthermore, an experienced lawyer will know and easily spot the issues that can potentially become problematic – and with almost twenty years of real estate experience we’ve dealt with and solved our fair deal of issues! This is why a potential condo buyer will often include a condition in the Agreement of Purchase and Sale allowing for a lawyer to review the condominium documentation. With a clear understanding of the restrictions and limitations set by the Corporation, buyers who are not satisfied with the document have the opportunity to step away from the deal, instead of being stuck in a property that doesn’t match their lifestyle.
 Condominium Act, 1998, SO 1998, c 19 at s 76(1).