Tuesday, 29 September 2015
What is a condominium status certificate?
Condo ownership typically gives you a right to vote in condo meetings on things like rule changes but it also means shared responsibility for corporate obligations and expenses, like maintenance of all the common area (known technically as common elements). This includes lawn care, snow removal, and in apartment buildings stuff like cleaning and upkeep of hallways elevators.
This should all be covered by your monthly condominium fees, with a portion also going into a legally-mandated reserve fund which the condo corporation uses to replace various building components and carry out repairs. The reserve fund is used for a wide range of items, such as roof replacement, window updates, new carpeting, and so on.
The condo corporation should be carrying out a professional review of the reserve fund and expected repairs, looking into the future by at least several years, to make sure the reserve fund is reasonably adequate. If significant repairs are required that can not be put off and the reserve fund isn't sufficient to pay for them, that is where owners can see special assessments to make up the difference.
Obviously, one of the most important things to consider when looking at a condo purchase is whether the reserve fund is appropriate for the age of the condo complex or building. New condo developments obviously has smaller reserve funds because they haven't had time to build them up, and repair costs should be fairly minimal in the first few years. Established condominiums on the other hand should have a healthy reserve fund built up. But how do you know?
Here enters the "status certificate". Don't let the name fool you, though. The name might make you think of a certificate from school and imagine a one-pager. But a proper status certificate, with the usual attachments, is actually a somewhat thick package of paper. (unless your lawyer requests it online, of course, because then it's just a long multi-page file) It should include all the financial information for the condominium, including budget documents, reserve fund information, and whether the unit itself is in arrears or not, and any special assessments. It also includes a copy of the condominium's by-laws and rules. If you're interested in reading the source law, the Condominium Act, 1998 spells out [the minimum requirements in Section 76].
When making an offer on a condo, you should include a condition for your lawyer to review the status certificate. Unless the seller has already requested a copy, you'll have to request one and wait for it to come. Legally, the condo corporation is supposed to deliver it within 10 day of receiving the written request and payment (maximum $100 as per the Condominium Act, 1998). As such, this condition is usually for a couple of weeks.
Once received, your lawyer will review all the documentation and either give a thumbs-up or bring to your attention any points of concern. From there, you can make an informed decision whether to proceed with the purchase or not.
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