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What is a Status Certificate!
Every resale condominium agreement of purchase and sale should be conditional on the review of a status certificate. A status certificate is a disclosure document produced by the Condominium Corporation’s Board of Directors (the “Board”) and it discloses the state of the condominium corporation, the building and the particular condominium unit. More specifically, it discloses the following:
1) Common Expenses: How much common expenses are due; if any common expenses are in arrears; whether there are pre-paid amounts for common expenses; and whether the Board is anticipating an increase to common expenses for any particular reason.
2) Budget: Whether the Condominium Corporation’s budget is accurate and whether they anticipate a deficit or a surplus; whether common expenses increased since the budget and or whether special assessments (meaning that a sum will be owed by each individual unit but will not be part of the common expenses) need to be levied as a result of the last budget.
3) Reserve Fund: How much money is in the reserve fund; how much will be contributed in the fiscal year; and how much if any monies are allocated from the reserve fund to cover minor or major condominium expenditures for repairts or otherwise. Also it will disclose the date of the last reserve fund study which according to the Condominium Act should be every three (3) years.
4) Legal Proceedings and Claims: Whether the Condominium Corporation is subject to any court or tribunal proceeding with respect to any claims from personal injury, human rights to claims against the builder for deficiencies.
5) Leasing of the Units: Basically how many condominium units are leased to tenants. This may be important for someone who desires to not live in a mostly tenanted building for a variety of reasons.
6) Substantial Changes to the Common Elements, Assets or Services: This is important because these changes may result in an increase to common expenses or a special assessment on the units; and
7) Insurance: Whether the Condominium Corporation has secured all the necessary insurance for the building and the Corporation.
Along with the Status Certificate, the Condominium Corporation will also include a reserve fund study/table showing the projected amounts based in the reserve fund on the last study and the condominium declaration along with accompanying documents such as various agreements the Condominium Corporation is subject to and the rules of the condominium.
The status certificate will not disclose things such as pet and barbecue (on the balcony) provisions. Those items can be found either in the declaration and or rules. Also the status certifiacte may not disclose whether the current unit owner made substantial renovations to the particular unit with the Board’s approval if the Board was not aware of it. Therefore if renovations were conducted, new purchasers should make sure they were done with the Board’s approval otherwise, the new owner is responsible for those renovations should they not be approved and ordered to be reversed or rectified.
Before buying a condominium, it is imperative to have a qualified lawyer to review the status certificate carefully and even call the property managers in order to obtain further information on any items that may cause a red flag.
