Many first-time home-buyers are electing to make a condominium their first home purchase. The burgeoning condo market of Toronto, coupled with ever-increasing prices for homes, may signal a shift that the strong condo market is here to stay. One of the most important factors in the due diligence stage of purchasing a condo for every purchaser should be a review of a status certificate.
What is a Status Certificate?
A status certificate, and accompanying documents, are a detailed report of the condominium corporation that you are about to purchase a condo unit in. It discusses, among other things, if you own a parking spot or locker, the company in charge of managing the property, and whether the condominium is being sued by anyone. The role of the status certificate is not to scare off would-be purchasers. Rather, it serves as an important tool in the process of a purchase and sale transaction.
Review of the Status Certificate
When you purchase a condominium unit and retain a lawyer to assist you with the transaction, one of the recommendations your realtor will make is that you allow them to purchase a status certificate on your behalf. After payment has been submitted to the requisite condominium corporation for a status certificate, they will provide you with a copy that details many important facets of the condo you are about to purchase.
Usually, the first item in the status certificate will discuss whether the condo you are purchasing is in default of payment of what is known as ‘common expenses.’ Common expenses are monthly fees collected by the condominium corporation, generally for items such as regular maintenance of the building and common areas, utilities, and insurance for the common element areas (areas that are shared with all of the condominium unit owners). The status certificate tells the potential purchaser the amount of the common expenses, whether the seller is in default in the payment of their common expenses, along with when they are due.
The status certificate also stipulates the budget and reserve fund of the condominium corporation. A purchaser will want to ensure that the amount the condominium corporation has set aside is adequate to cover any planned expenditures.
A status certificate sets out whether the condominium corporation is a party to any legal/court action and/or has a judgment registered against it. A status certificate that lists the condominium corporation as a party to a legal proceeding and/or having a judgment rendered against it should be an automatic red flag and warrant further investigation.
The relatively small expense of ordering a status certificate and having it reviewed by your lawyer is something any potential purchaser of a condo needs to consider.
If you have recently sold or purchased a property and require assistance, or if you have other questions related to real estate you can call Tejpaul Grewal at 416-682-7055 or by email or Patrick Shing at 416-682-7054 or by email.