What You Need To Know About Status Certificates
If you’re in the market to buy a condo in Ontario, you’ll no doubt hear about the Status Certificate. Here’s what you need to know.
What’s a status certificate?
A status certificate (sometimes referred to as an estoppel certificate) is a huge document that contains the financial and legal health of a condo corporation.
It’s usually a few hundred pages long and 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.
Why do I need a status certificate?
When you make an offer to buy a condo, your offer will likely be ‘conditional on the review of the status certificate’ by your lawyer. You’ll generally negotiate a 2-5 day period for your lawyer to review all of the documents to make sure that you aren’t buying into a legally or financially risky condo building.
The Buyer or the Seller can order the status certificate (it’s usually $100) and the condo corporation/property manager will have 10 business days to provide it to you.
Your bank or lender will also require a copy of a current status certificate (less than 30 days old) in order to advance you the mortgage on closing.
What’s does a Condo Status Certificate contain?
In addition to the legal declaration of the corporation, there’s a ton of information in the Status Certificate package:
- Legal registration of the corporation, address and any easements
- Contact information for the Board of Directors and Property Managers
- Whether the unit is current or in arrears in paying the monthly maintenance fees (also known as common element expenses)
- Whether or not there is any special assessment on the unit or building. A special assessment is sometimes levied 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).
- Boundaries of the units – Most Toronto condo owners own the drywall and everything inside it, meaning that everything behind the walls – cables, pipes, wires, etc are the responsibility of the condo corporation
- Duties and rights of the condo corporation and of the individual owners
- Percentage ownership of each individual unit and the amount that unit contributes to the common elements. For example: if there were 50 identically-sized units in a condo, each would own 2% of the condo corporation and pay 2% of the common elements. Of course, most condo buildings have units of varying sizes and the percentage of ownership almost always varies based on the size of the unit (thus the bigger the condo, the more common elements fees they pay).
- Percentage of units that were reported as tenanted in the previous calendar year. This can be an important factor when deciding to buy a condo. Buildings that have a high owner-resident ratio tend to have fewer issues and be better maintained).
Financial and Insurance Information
- Copy of the current budget
- Details of any increases in common elements or special assessments in the current year
- Audited financial statements for the previous year
- Certificate of insurance for the building
- Any requirements on the individual owners to get unit or liability insurance
- List of all agreements the building is party to (eg rental agreements)
- How much money is in the Reserve Fund (think of the Reserve Fund as an emergency fund that the condo corporation can tap into to make non-routine repairs and improvements). Part of every common element fee is paid into the reserve fund each month. Having an adequate amount of money in the reserve fund is essential to having a financially healthy condo corporation.
- A summary of the Reserve Fund Study. A Reserve Fund study is mandated by law for all condos in Ontario and usually occur every 3 years. The purpose of the study is to have a professional examine all the main systems (eg heating, electrical, plumbing) and physical structures (garage, balconies, windows, common elements) and provide a reasonable expectation as to when they will need to be replaced or repaired and an estimated cost.
- Details of any judgments against the corporation (any lawsuits they’ve lost and still owe money)
- Details of any pending lawsuits (both against and by the corporation) – for example, the corporation might be getting sued by an owner for a slip and fall accident, or the corporation might be suing the original builder for deficiencies in the building
Rules, Bylaws, and Regulations in the Status Certificate
Even if you don’t read the rest of the status certificate, make sure to read this part! It will impact your day-to-day enjoyment of the condo.
The rules and bylaws will generally cover:
- Pet restrictions and rules
- 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)
- Balconies and terraces (for example, no bbq’s allowed on balconies)
- Obligations re: repairs
Having the status certificate reviewed by a real estate lawyer is a critical part of buying a condo. It’s the best way to safeguard your investment.